Another Horror Story… This One Self Inflicted Though
A client of ours has lost sleep over a Spanish property transaction and we cannot possibly help. The story is a mixture of error, oversight, greed and ultimately theft which has the potential of landing our client in a criminal court.
It all starts when our client, the seller (let’s call him Mr Smith) is about to sign over title deeds to the buyer of his property (lets call him Mr Jones) after having exchanged private purchase contracts. As Mr Smith had a mortgage, we phoned up his bank to give them notice of the impending closing at the Notary office and ask them to attend to formalize the cancellation of the mortgage deed. The bank kindly advised that they had no one available to attend on that particular date and so it was agreed between the seller’s bank (BBVA) and the purchaser’s bank (Bankinter) that Bankinter would transfer the amount of the outstanding mortgage to BBVA by interbank transfer (which is a safe method of transferring prior to singing the deeds).
As it happened, the transfer was made and all parties concurred at the Notary office where the transfer of title was effected and Bankinter signed the mortgage loan agreement. It is after this when the problems started… Our client, Mr Smith, when sorting the outstanding matters and preparing to transfer the proceeds of the sale, realized that his account had been credited with the sum of the loan he owed and which had been transferred by Bankinter. Mr Smith, who had expected to find €50K was delighted to find €150K and unconcerned about the consequences he decided to transfer the full sum to his UK account. He did not seemed curious as to how his account had received such windfall, nor what the consequences would be if he appropriated what was clearly not his, or even what would the Inland Revenue say about this rather hefty and inexplicable sum.
When his bank realized the mistake, they tried to recall the transfer to UK, but it was late. Following a few unreturned calls and emails, our client eventually accepted a mistake had happened and proposed to return the funds to his bank. Meanwhile Bankinter and its lawyers had started to get nervous because Mr Jones mortgage had not been cancelled, and were threatening legal action.
Mr Smith had taken €100K and proposed to return the same amount, but, as he had sent the funds to his UK account and 12 months had elapsed, the exchange rate was to affect him horribly. The result was that he now had to buy €100K, a currency now 30% more expensive! To add to his problems, his bank, who was now being sued by Bankinter for negligence, decided to send him legal notice of criminal action for misappropriation (the Spanish Penal Code envisages the action of intending to keep monies received by mistake).
Surprisingly, our client in an attempt to find “the guilty party”, turned on us and accused us of poor advice for his problems, i.e. not informing him that he was likely to receive a sum which was not intended for him, and in an even funnier twist, he demanded from us the extra €30K it would cost him to buy €100K. Needless to say, his demand was rejected, and, given the breakdown in the solicitor/client relationship, we decided to give him “the sack”.
This specific problem was clearly a mistake on the part of BBVA because the transfer received in Mr Smith’s account should have been frozen, as it is customary, until used to cancel the loan. This oversight could have also been avoided by BBVA attending the Notary and cancelling the loan simultaneously to the purchase and new loan formalizing. However, BBVA representatives, instead of getting off their lazy asses and walking 10 minutes to the notary, said the magical words: don’t worry, I will do it mañana mañana!!