Contact in Spain
Spain: +34 932 20 44 40
UK: 0800 098 8033
US: +1 415 651 8449

Spanish Property Deposit Refund

Spanish Property Buyer’s Deposit Refunded as no license of first occupation

The Supreme Court in Madrid has refused an appeal by the developer of  La Reserva de Marbella, and confirmed the decision of the Regional High Court in Malaga that the company must refund the buyer’s deposit that they had handed over in 2003 for the purchase of a property to be built on the new complex in Marbella , plus legal interest, due to their failure to provide a license of first occupation.

The problems with the urbanisation arose, as with so many similar new-build urbanisations in the area, as a result of the status of the land on which the building took place, not having been designated in the Municipal Plan as land on which residential properties could be built.

In the Court of First Instance, the court ruled that the failure by the developer to provide a license of first occupation to the purchasers of the property (the application was expressly rejected in 2006 by the Marbella Town Hall as it did not conform to the Area Plan) was a breach of contract that permitted the purchasers to cancel the contract and have the purchase monies returned along with legal interest.

Fundamental Breach

The Regional High Court  agreed with the lower court, stating that there was a fundamental breach of the contract by virtue of the failure by the developer to provide a license of first occupation. The concept of ‘administrative silence’ did not create a license by default as a result of the planning irregularities relating to the area and since administrative license does not make legal that which is illegal. The High Court  did vary one point of the lower court’s decision, being  the date from which legal interest became payable, which was confirmed to be the date that the contract to purchase the property was signed.

The developer appealed to the Supreme Court, alleging that the failure to provide a license of first occupation was not a fundamental breach of the contract and that the purchasers’  earlier refusal to pay the full price to the developer meant that they could not later cancel the contract and in fact rendered the absence of a license as a mere excuse to rescind the contract.

 

Deprived of the Enjoyment of that which was bought

The Supreme Court agreed with the High Court and rejected the appeal. The Court found that any breach by the seller that is capable of depriving the purchaser of the enjoyment of that which has been bought would be sufficient to give rise to a right to cancellation of the contract. This was the case whether or not the promise to provide the buyer with a license of first occupation was expressly contained in the contract for purchase or not, or even where the circumstances would suggest that the timely delivery of the license would be possible.

The court also dismissed the appeal based on the prior failure to comply with the contract on the part of the purchasers since the argument was based on the notion that the  administrative obstacles would not render the occupation of the property impossible but would nevertheless make it inevitable that the purchasers would find themselves in a situation of uncertainty with no known end date. This uncertainty would in itself be a sufficient motive for cancellation of the contract and the appeal by the developer must therefore fail.

You may be interested in the following service...

Client testimonials

"Rosa was so very helpful with clarification and quick reply. She was always giving me advices to all stage of my Case, her English is perfect too. I would recommend her, particularly to people who don't speak Spanish."

Esperance Mukamugabo (Oct 01, 2021)

Unfinished Property Claim

Available in the following locations: Alicante, Barcelona, Benidorm, Cadiz, Castellon, Córdoba, El Campello, Estepona, Fuengirola, Gandia, Girona, Granada, Jaen, L`Eliana, La Manga del Mar Menor, Las Palmas, Los Alcázares, Los Cristianos, Madrid, Mazarron, Murcia, Nerja, Orihuela Costa, Oviedo, Palma de Mallorca, Puerto del Rosario, Puzol, Seville, Torrevieja, Valencia, Velez Malaga, Vera.

* If your local town is not listed, a lawyer from our nearest office will be happy to assist you.

Location

1Who is this Service for?

Article 1 of Spanish Law 57/1968 regarding the receipt of advanced payments towards the construction and sale of residential property in Spain, clearly establishes the legal responsibility assumed by financial institutions in whose accounts the advance payments are lodged, where the said financial institutions failed to insist on an insurance guarantee or a deposit by the developer.

So, if you have made a deposit payment towards an off-plan property in Spain that was never completed, you may be able to make a claim against the bank that received the deposit monies from the Constructor, when the bank failed to insist on insurance for those monies.

Our English-speaking lawyers and associated professionals can assist you with your claim against a bank in Spain.

2What does this service consist of?

  • Free assessment of your case
  • Arrange the appropriate documentation to support the case: proof of payments to the developer´s bank and contracts signed
  • Arrange a Power of attorney to allow our lawyers to represent you in the Spanish Courts
  • Bring claim to the Spanish Court and obtain the return of your deposit plus interest
Support services

3Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
  • Fees specified in advance and legally guaranteed.
  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
  • Continuous quality controls and reviews.

Why choose Advocate Abroad?

AdvocateAbroad.com Message
Established more than
10 years ago
Present in 20
European Countries
Over 30,000 client enquiries
successfully managed