Did you pay in advance in order to acquire a property that eventually was not built?
In spite of the fact that this situation might sound strange, this problem has been arisen with great frequency in the Spanish courts recently due to the effects caused by the economic crisis of 2008 and probably in the coming months because of the situation created by the pandemic of COVID 19.
In the years following 2008, thousands of real estate developers in Spain went bankrupt due to the economic crisis, and this situation caused thousands of purchaser to lose the money invested in acquiring properties by private contract in housing complex that eventually were not completed.
In most cases, the purchasers had paid a percentage of the value of the property into the developer’s bank account, and on the basis of many such deposits, the bank issued a loan to the developer in order to build the complex, or the bank account was used by the promotor merely to manage the sales.
Consequently, once the buyers realized that the property was not going to be finished, if they claimed the money back, the developer could not return such amounts deposited in the bank account because of the bankruptcy.
However, there is a possibility to present a lawsuit against the bank where the money was deposited, and this is feasible thanks to Spanish legislation law 57/1968 (which has been modified by the law 38/1999).
The law imposes to the bank the obligation of requiring to the promotor the opening of a special bank account with a guarantee of refunding in case the promotion is not finished, but the main characteristic of that law is that the bank is not consider as a guarantor but as joint responsible with the developer as per Law 57/1968.
In order to present the lawsuit against the bank we only need to probe two factors:
- We must demonstrate that the bank had knowledge of the payment in advance and the reason of that payment
- We must demonstrate that our client is a consumer, he should have bought the property for him, as a residence. The law 57/1968 can´t be used in case the buyer is a business or an investor.
The bank must refund to the buyers not only the anticipated amounts but also the legal interest from the date of the payments were done.