Spanish Off-Plan Property Deposits Reclaim

The ruling states that, in purchases ruled by the 57/1968 Spanish Act, banks are bound by and responsible for the deposit amounts received from purchasers if they have received such deposit payments in a developer’s bank account without the requirement for a special account to be opened and with the necessary guarantees.

The aforementioned 1968 Act states that any deposits paid towards the purchase of an off-plan property must be deposited in a special bank account and separated from any developer’s funds. Therefore, banks are responsible for requesting the appropriate guarantees. As per the ruling, banks are liable for those amounts paid by purchasers to developers if they have failed to open a special and separate bank account to receive those funds in.

Sentences issued by the Supreme Court on 16 January 2015, 13 January 2015 & 30 April 2015 confirm the responsibilities of the financial institution including the fact that the obligation to pay the amounts in the special account lies with the seller and not the buyer.

This line of Buyer Protection jurisprudence culminates with the recent Sentence 733/2015 of 21 December 2015 in which the doctrine is set as follows: ‘In off-plan house sales governed by LEY 57/1968 financial institutions that accept income from buyers in an account opened by the developer, without opening a Special Account and requiring the relevant security, must be responsible to the buyers for the total amounts paid into accounts in the financial entity’

The basis for the claim for a refund of an deposit for an off-plan property in Spain has been established by a the Supreme Court, the latest was December 2015, which have established the following:

• A developer is legally required to provide a Bank Guarantee to the buyer where the property is not yet finished and where no Licence of First Occupation (LFO) has been obtained.
• The full amount of money paid prior to completion of the Spanish Porperty is guaranteed, not just the amount set out in the guarantee, even if this right appears to have been waived by the buyer.
• It is the developer’s obligation (not the buyer’s) to ensure that deposit funds are placed in a special account. The fact that the developer did not do this does not affect the buyer’s rights to a refund of deposits paid.
• Even if the developer did not comply with their legal obligation to give the buyer a bank guarantee, the bank with whom the funds were held is still jointly responsible for refunding this money to the buyer because the bank had a duty to ensure that the developer had complied with its legal obligations.
• The bank (or insurer who issued the guarantee) are jointly and severally liable which means that the buyer can sue the bank or the insurance company without having to first sue the developer.
• The banks can be sued regardless of whether there was a bank guarantee in place or not.

What does all this mean to me?

• You could now litigate for a full refund of your off-plan stage payments (plus legal interests) despite never have been issued a bank guarantee (or been issued an incorrect or partial one).
• The statutory limitation was confirmed to be 15 years as from the first payment.
• Unlike before you could now litigate and file a claim against the lender skipping the developer altogether. This change has associated two major benefits: you save yourself protracted litigation time chasing a developer and most significantly you can now file a claim directly against a bank, which has money, leaving aside developers which in most instances had gone under (so there was little to no chance to recover the funds as their assets had been legally seized by creditors who were first in the pecking order following insolvency procedures).

If you have lost money when buying off plan property in Spain, we can help you.

As your right to claim may be subject to a deadline westrongly advised you to contact us as soon as possible.

Please send us your case to despacho@bianquipons.com and we will get in touch as soon as possible in order to get your money back.