The Supreme Court has recently found Banco Popular, SGRCV and BBVA responsible to pay the money back to buyers of off-plan resorts, for not issuing the compulsory individual bank guarantees.
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, might be in luck today due to a very well expected Judgment from the Supreme Court of Spain.
The Court has ordered these entities to pay 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 inalienable rules contained in Law 57/68 are compulsory to developers, banks and insurance companies. The breach of these obligations by professionals -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 Supreme Court has made clear 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 to 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 interests.
- 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.
One of the main articles of 57/1968 Law is art. 1: “The bank receiving upfront payments in the developer’s special account must request the existence of those Bank Guarantees under its own responsibility”.
How can I recover my money?
1. How could I make a claim?
When you purchase an off-plan property, the advance payments are paid in instalments during its construction.
So what happens if once all your payments have been made, the developer goes bankrupt or can’t complete the construction and deliver the property? At this point, you should know that the developer, in order to protect the buyer, should have taken out a bank guarantee to cover the buyers’ payments in case the property is not delivered on time.
If you find yourself in this situation, you can claim the amounts lost, plus the corresponding interest from the financial institution which received the instalments but you will need to act quickly before your action might expire.
2. What do I need to know about bank guarantees? How about if I do not have one of these?
The Supreme Court in its judgement of 23 September 2015, as well as in that of 21 December 2015 confirming this doctrine, states that with this guarantee, the institution in subject directly covers the guarantee risk, and even if there was no guarantee, this does not exempt the bank from having to return the money. This guarantee also covers all contributions, even when a lower quantitative limit is established.
3. What happens if the guarantee only partly covers the payments made?
Your claim can be carried out despite not knowing whether a guarantee was signed, and also when a guarantee states that it covers only part of the amounts paid.
4. Am I required to prove payments with bank documents?
In the event of a legal claim directly against the entity, it is advisable, but not essential, to have the bank documentation that proves the payments made. However, it might be sufficient to prove payments with any important document but it will be down to the Judge discretion. Our recommendation will be to provide the bank transfer with the concept on it.
5. How do I know if there is a bank guarantee in place?
With the information in the private sales agreement or the policy, in the case that you have been given a copy, you can visit the bank in question or the Court administrator and enquire whether there is an existing bank guarantee.
If you bought a property off-plan, you paid a deposit down or even made stage payments, whether you received the compulsory individual bank guarantee or not, you should consult an expert lawyer in order to know if you can claim back your off-plan payments.