Buyers who lost their money in an off-plan property in Spain have a chance to recover their money back now.
The Supreme Court in Madrid has recently made very clear the interpretation of the Bank Guarantees Act of 1968. Banks will be responsible to pay the money back to buyers of off-plan, for not issuing the compulsory individual bank guarantees, if the money was paid into the Developers segregated account.
Buyers who received a Bank Guarantee or Insurance Policy to cover the payments made towards their property, or even those who never had it due to the developer or Bank failing to comply with the Law, will be in luck today due to a very well-received Judgment from the Supreme Court of Spain, which has ordered that these entities be paid back to the buyers of off-plan properties all the money they invested, plus legal interests from the time they made the payments.
The imperative and unalienable rules contained in Law 57/68 are compulsory to developers, banks and insurance companies. The breach of these obligations by developers and financial institutions can never be to the detriment of the buyer. This Law 57/68 requires Banks to guarantee all deposited amounts but its wording was interpreted in different manners. However, now the Spanish Supreme Court has made clear recently that:
- If other buyers of the same resort received individual bank guarantees then all buyers should have received them and the fact of not having an individual bank guarantee would not stop them from claiming the money from the bank.
- If the amount covered by the bank guarantee is lower than the money actually paid to the developer the bank should pay back the full paid amount plus interest.
- If there is not an individual bank guarantee but there is a general bank guarantee this should cover all buyers as if they would have received an individual bank guarantee.
- There is no need to sue the developer before suing the bank.
- The bank receiving upfront payments in the developer segregated account must request the existence of those Bank Guarantees under its own responsibility. Otherwise, they will be held responsible for that.
Many buyers of off-plan properties who put a deposit down some years ago, before the credit crunch or even made stage payments to buy a property in Spain, whether they received the compulsory individual bank guarantee or not, could enforce today their rights through art. 1.2 of this Act and ask for compensation if they paid through the Bank and they never received a Bank guarantee.