Your Local Legal Magazine
Page 8 Ignorance is no defence - not even for banks!
Female Focus by Ana Gay
The Supreme Tribunal has given yet another blow to the Spanish banking system. In a judgment dated the 21st December 2015, the high tribunal set case history and ordered the banks to return the money that was deposited by their clients to property promoters, for houses that were never built. Therefore the bank is to return deposits on thousands of “ghost urbanisations”, particularly around the coast, with many sold to British ex-pats.
The key to this is a law from 1968, approved after the scandal that left 10.000 people without homes in Madrid, and that ordered the banks to guarantee the amounts that were paid on account for the properties, something that, in many cases, they did not comply with during the property boom.
This judgement has caused a stir within the legal profession as it
sets a hard doctrine
against the banks, and their risk departments are fuming trying to quantify the amount of compensation.
In June 2004 a lady from Valencia put a deposit on a new build in Denia (Alicante), just below the Montgo, near the town. The urbanisation consisted of 94 houses. In June of the same year, the buyer paid her first instalment, and during the consecutive months she paid 38,500€. The houses were to be finished within a period of two years. The promotion suffered delays in September 2007, when it should have already been finished. The promoters sent letters to say that they were happy to announce that the following week the building would commence! Three years later when the property market collapsed the urbanisation was nowhere near completed. The houses and the savings of many families were vanishing. The buyer sued the bank (the CAM) and the promoter, who had already disappeared, and did not even attend the hearing. It was a difficult case to tackle. But the lawyers sued the CAM for the 11 million euros they had received for the construction. They cited the law of 1968, which established that the amounts received by the bank should be deposited into a special account, and always guaranteed. They stated that this article protected the weaker party, the buyer, and was irrefutable.
With the property boom, 30 years later, this law, established under the dictatorship of Franco, was forgotten.
When the CAM received the lawsuit, they argued that they were not part of the process, that they were a third party separate from the buyers and the promoter, and that if the monies were no longer there, that was not their problem. Judge Marisa Fayos Bonell, of Court Nº. 5 of Denia rejected their defence, claiming that if the CAM had guaranteed the promotion it was to be taken that they should have known that the deposits should be paid into a special account, and that they should have informed the promoter of this, and demand that they provide a bank guarantee or an insurance that would cover the return of the deposits paid. The Judge ruled that the CAM return the monies plus 4% yearly interest.
Over the last few years there have been many judgments like this, although some that have favoured the banks also. The ruling of the 21st December 2015 now sets a precedent and paves the way for future claimers.
If you are affected by this issue or any other legal or tax matter, please do not hesitate to contact us on 96 626 0500 or by email to
anagay@linkpointlegal.com.
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