A landmark decision: The Supreme Court delivers a new blow to the Spanish banking system. Spanish banks will be forced to return millions of Euros to EU consumers buried in failed building promotions.

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Dear Readers, clients and friends,

Last month, we posted an article about the landmark Supreme Court’s decision that will force Spanish banks to return millions of Euros to EU Consumers.

Due to the significant number of enquiries received over the past few weeks from people who missed the opportunity to read this article, we are glad to post it again for those who didn’t have the opportunity to read it the first time.

In a landmark Judgment of December 21st 2015, (STS 5263/2015), the Spanish Supreme Court,- taking as a reference point the important 57/1968 Act,- has set a new legal precedent, by ordering banks to refund all the large deposits paid in advance mainly by UK Buyers to developers, in order to buy off-plan properties in Spain that were never built.

Until now, the usual procedure available for the victim in order to claim the deposit back was to sue the developer or Builder. However, in practice, the majority of Spanish Builders went into liquidation or filed for bankruptcy, which made an almost impossible task to recover any money back.

However, the Supreme Court’s decision judgment gives now a new hope to those thousand of off-plan property buyers who have failed to get their money back from the Builder.

The “ratio decidendi” of the Supreme Court’s Judgment can be summarized as follows:

Regarding Off-plan properties governed by the Act 57/1968, the Banks or credit institutions that might accept any income deposits paid by buyers into the Developer’s account, but without requiring for the establishment of a special separate account and the corresponding bank guarantee, will be liable to reimburse to the buyers, the full amount of the off-plan deposits paid.

The Court decision affirms that Off-plan deposits should be guaranteed in any event and regardless of private conventions agreed between developer and bank.

Likewise, the ruling confirms that it is abusive and contrary to the Act 57/68, to make conditional the validity of a “collective guarantee” granted to the builder, to the issuing of a specific individual bank guarantee certificate given to the Buyer.

Otherwise, the bank could easily deny liability at the event of payment’s default by the negligent builder.

In other words, Off-plan property buyers are bestowed with an “inalienable right” to have their off-plan deposit underwritten, and this right that cannot be waived by banks that failed to grant individual bank guarantee policies to buyers, under the pretense of having issued a collective insurance cover.

To sum up, the essential requirements in order to be able to claim against the bank would be the following:

1º) The lawsuit must be initiated against the bank that financed the construction building process and received the deposits paid by the buyers. It is irrelevant if the bank might have actually opened a separate account for the deposits paid or not. (see the Supreme Court decision, 16th January 2015. No Rec. 2336/2013)

2º) The bank must have failed its duty to request confirmation from the developer about the granting of the bank guarantee certificates to the buyers

3º) The buyer must prove that it has been impossible to claim the money back from the developer, due to the situation of insolvency of the developer (i.e. the builder has gone into liquidation).

4º) Lastly, the dwelling must NOT be physically or legally completed (i.e, no licence of first occupation). Those cases where the developer received the deposits and never built anything on the land, are the ones that stand a higher chance of success.

“Ricor Abogados&Solicitors” has a strong legal team with proven extensive experience in all areas of law. We run an independent and cost effective Law Firm helping clients across a range of legal services in Spain, from corporate and individual civil&criminal litigation, and we are proficient in conducting successful civil claims against developers and banks.

Our high rate of success is subsequently explained by the fact that we continually provide complete and “home-made” tailored solutions to individuals and businesses alike. If you kindly check our testimonials section of our website www.ricorbogados.com, you will find plenty of testimonials form real clients who put their trust in our Firm and they are all now all extremely grateful to our Firm for the excellent work and protection offered, which fills us with a lot of professional pride.

We hope that this information is useful for you.

Thank you very much again for your attention and should you be affected by this serious problem (or by any other legal need or problem in Spain), please do not hesitate to contact our Firm and we will be delighted to help you.

We look forward to giving you a personalized service and the benefit of a high quality and cost effective advice.

Yours sincerely,

Mr. Oscar Ricor Morales.

“NON-PRACTISING ENGLISH SOLICITOR IN ENGLAND AND WALES”, under the “Solicitors Regulation Authority” (SRA) SRA number 519196 and practicing Spanish Solicitor under the “Colegio de Abogados de Orihuela”.


Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author Mr Ricor is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in legal action.

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