In 2005, Darren and Mary used their savings to buy a flat in a housing development in Málaga, like many Britons looking for a chance of having a second home in Spain, they signed a deposit contract with a real estate promoter and deposited several amounts into a special bank account indicated for this purpose through different installments.
After two years and after making several payments in installments, the promoter became insolvent and therefore became bankrupt. Darren and Mary are aware that they will not be able to recover their money from the promoter, therefore, they seek legal advice to see if they could recover their deposit by other means.
Many clients such as Darren and Mary have still the chance to recover their money.
Before the last legal modification of January 1, 2016. The Spanish law of 57/1968, of July 27, said that developers or builders who promote housing that are not officially protected, intended for home or permanent family residence, or in the season must guarantee the amounts paid on account by the clients plus the 6% annual interest through a registered insurer or a bank guarantee issued by a bank entity, furthermore, the money must be in a special bank account from which the bank will demand the guarantee under its responsibility.
To claim against the bank entity that guaranteed these deposits, Darren and Mary will have to provide the following:
- Contract signed with the promoter.
- Evidence of the payment made to the promoter by the buyers.
From this very moment, the judicial claim begins, which aims to prove the following:
- That the client bought on an off-plan status.
- That the client put his money for the said purchase.
These two things are proven by the documents that the client must provide.
Another issue that must be resolved in this proceeding, is to prove the contract breached by the promoter which is not difficult to do so considering that most of the promoters have gone bankrupt and the properties that were promoted by them have been repossessed by the banks that financed these constructions.
The bank’s responsibility against the buyer is established by the Supreme Court, which distinguishes the following scenarios:
The Spanish Supreme Court ruled that in the event that there is a general guarantee provided by a bank in favor of the promoter, even if there is no certain guarantee in favor of the buyer, the bank must reimburse all the money advanced by the buyer, along with the interest that corresponds to such amount.
In the event that there was no general guarantee, but there were one or more individual guarantees in favor of one or several buyers in the same promotion, the Supreme Court has also ruled the bank’s liability because the applicable Spanish law did not allow to issue a particular guarantee without previously having a general contract.
In the event that there was no guarantee, neither general nor private (this is the most frequent case), the Supreme Court held that the bank is also liable because banks that received money from buyers without having previously required the promoter to open a special current account and also establishing a guarantee to be able to reimburse money anticipated by the buyer if the house keys’ was not handed “for any reason attributable to the promoter”.
According to the Supreme Court, the Bank’s knowledge that the money was received turns this, into a joint debtor against the buyer, provided that this proves that the bank was aware of this situation.
In conclusion, an exit door is opened for those buyers that, as Darren and Mary, deposited their money in an account in order to buy an off-plan house in Spain.
However, we must say that this claim door will be closed soon because there is a statute of limitations that expires before October 5, 2020, so, we recommend studying your case and starting the claim as soon as possible.
Del Canto Chambers is specialised firm in off-plan banking claims’. We will analyse your documents and will provide you with advice on your chances to recover back your deposit prior to any engagement with our firm.
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