Banco Popular, BBVA, Banco Mare Nostrum and Valencian Building Society S.G.R. have been ordered to pay over 2 million Euros, plus interest, to 40 British investors represented by Lawbird Legal Services.
The rulings were received on the same day and refer to investors who had paid large deposits on off-plan properties in El Pinet, in Alicante, and Costa Palatinum, in Murcia.
Court number 1 in Madrid wrote the following arguments on deciding the outcome:Banco Popular had issued two bank guarantees, one for 19 mm Euros and a further one for 4.4 mm Euros.
- S.G.R. had too issued a guarantee for 5 mm Euros.
- Banco Pastor had offered the developer a counter-bank guarantee which, according to the Judge, amounted to a collective policy to insure off-pan deposits.
For its part, the Appeal Court in Madrid (Section 25) held, in support of the investors, that:
- A recent Supreme Court ruling had concluded that for the 57/1968 Act to apply, the off-plan property should be used for family living accommodation purposes, whether temporary, accidental or circumstantial. This includes “touristic apartments” as they are to be used by the owners as holiday homes, irrespective of their use as an investment for the most part of the year.
- The developer had voluntarily submitted to the 57/1968 Act by producing a general bank guarantee that specifically referred to the Act.
- Off-plan property buyers in Spain have an “inalienable right” to have their off-plan deposit underwritten, rights that cannot be waived by banks who, having issued a collective insurance cover failed however to grant individual policies to buyers.
Banks have been ordered to pay the Courts the designated amounts, or face enforcement proceedings.
Both rulings are available to readers who so request a copy (less information deemed confidential at Lawbird’s discretion).