A couple of days ago, BBC News readers woke up to a tantalizing headline for failed Spanish property investors: “up to 100,000 UK investors in Spanish homes could get payout”. The BBC quoted a Barcelona-based law firm, Spanish Legal Reclaims (SLR), on the round figure of investors who could in line for a full refund.
A fortnight ago, we almost anticipated the BBC’s article when stating various 2015 Supreme Court rulings had confirmed its support for banking, insurance and, notably, off-plan property consumers:
Off-plan property deposits: In May 2015, and the in December 2015, the SC ruled that property developers are responsible “in any event” of down payments made by consumers on off-plan properties, provided the bank was aware of the purpose of the payments.
The ruling, along with two prior ones, addressed the issue of bank’s duty of care towards consumers, in line with the provisions of the 1968 Act on Deposit Guarantees on Off-Plan Properties.
But whilst the rulings are encouraging for anyone caught in the 2008 off-plan property debacle, not every investor will qualify.
As a rule of thumb, investors will have the right to claim from banks who failed to guarantee deposits in the following circumstances:
- That the bank was aware the deposits were for the purpose of building off-plan property; proving ‘awareness’ is pretty simple inasmuch as banks ought to have known that hundreds of thousands of Euros going through developer’s accounts were from property investors. There have been cases where funds were remitted to UK accounts operated by real estate or intermediary companies, a situation that complicates matters. The “Ocean View Properties” off-plan property scandal comes to mind here.
- That the properties we not completed or, if completed with delay, that the buyer had formally exercised his right to terminate the contract for breach of contract before the developer had obtained the license of occupancy. Banks–and Courts for that matter- are aware that many thousands who were no longer interested in completing on finished properties will file claims for the return of their deposits.
- That the buyer was not a property investor i.e. buying several units for reselling, in which case he/she will not be classed as a consumer under the 1968 Act.
As with most legal matters, a case-by-case analysis will be required to establish the feasibility of a legal claim.