El blog de Maria

Murcia – Trampolin Hills

As a direct result of the Preliminary Diligences procedure filed in the Mercantile Court No.1 in Murcia regarding Trampolin Hills, the following conclusions and evidences were obtained by the Costaluz-Decastro legal teams:

• Existence of Special accounts in La Caixa, Cajamar and Banco de Sabadell
• Existence of two guarantee instruments: (1) by Caixa, office located in Santa Catalina, Murcia, (2) By Swiss Financial Corporation, which is illegal as the entity is not authorized in Spain.
• Possibility of making all companies of the Trampolin Group liable of same breaches.

Caixa plays an important role in regards to liabilities of off plan advanced payments in this development as, together with holding one special account, it issued a guarantee instrument for the refund of off-plan amounts. These instruments, according to recent Case law by the Supreme Court cannot have financial or time limits.

The last Court sentences in Murcia regarding “in vigilando” obligations of banks who received off plan amounts in their accounts are as follows. All of them mention recent decisions by the Supreme Court:

SAP Murcia 4 08/09/2016: STS 16 January, 30 April & 21 December 2015: It explains the full doctrine of the Supreme Court with regards to vigilance and due diligences that must be performed by Banks receiving off plan deposits.

SAP Murcia 1, 04/07/2016: Also on liability of Banks receiving amounts according to Law 57/1968:  STS 21/12/15; 09/03/2015; 17/03/2016; 24/06/2016

SAP Murcia 4, 5/5/2016: Liability of Bank where developer opened the account to receive off plan stage payments

LEY 57/1968 – RESPONSIBILITY OF THE FINANCIAL INSTITUTION – BANK OR INSURER

On 16 December, the Mercantile Court Number One of Murcia declared, at the request of creditors represented by the Costaluz Lawyers & DeCastro legal teams, the insolvency and administration of Corvera Golf & Country Club SL, and the assets of this company are now suspended.

The administration of Corvera will give greater clarity for claims against banks that accepted buyer’s off-plan deposit amounts for properties at Corvera and also against the guarantor banks or insurance companies.

Claims due to delay in delivery of the properties can be directed against the Banks in the light of recent important Supreme Court Sentences that are declaring, with forcefulness, the responsibility of the developer’s Banks as guardians of the security of those deposits in off-plan purchases.

This responsibility is given in two different scenarios, both confirmed by the jurisprudence of the Supreme Court according to Spanish Law, LEY 57/68:

(1) Liability of the financial institution that receives amounts paid by off-plan buyers into an account opened by the real estate developer, if the property is not completed on time.  These banks are responsible, for the return of the off-plan deposits plus interest.

(2) Liability of the guarantors, even though individual guarantee documents have not been given to purchasers: the understanding of General Guarantee agreements signed between developers and insurers or banks has always been interpreted by the Supreme Court in favour of the buyer for the full amount paid to the developers bank account by the buyer irrespective of any arbitrary limit included in the General Guarantee.

Banks also responsible if there were urban irregularities

A recent Supreme Court ruling also holds off-plan property developer banks liable if the development is not completed due to urban irregularities. The reason for this strong protection to the purchaser of first and second residences is in the eminently protective nature of LEY 57/68, which gives rights to the buyer which are of an inalienable nature.

This jurisprudence contributes to the regeneration of the trust in second homes in Spain that was sadly eroded due to the unscrupulous behaviour of many of those involved in the last real estate and financial bubble.

There is a ten-days short notice for possible creditors to be added to the list so contact us TODAY for a quick valuation of your real possibilities and offer of budget

Moratalla, Murcia, Eastern Spain

Following the Sentence issued by the European Court of Justice in December 2016 regarding the retroactive effect of nullity of abusive Floor clauses (Cláusula Suelo), Spain’s Supreme Court has now ordered Spanish banks to refund their clients all the money they over-paid due to the Floor Clauses. The Supreme Court Sentence was issued on 15 February 2017.  The full text of the Supreme Court Sentence has not yet been published, just an abstract of the decision is known at present.

What is a floor clause?

These clauses set a minimum interest rate that borrowers would have to repay, even if the reference index (Euribor) dropped below the minimum interest rate, as happened from 2009 onwards.  Therefore mortgage holders with this clause in their loan were unable to benefit from the fall in the Euribor.

It is not specifically the Floor Clause that is illegal but the way it was included in mortgage contracts without its effect being fully explained to the customer.  This lack of transparency and lack of information is the reason this clause is deemed abusive.

What does this New Court Supreme Court ruling add?

With this February 2017 Court sentence, Supreme Court Case Law is now clear on the refunds that are due if a Floor clause is considered abusive due to a lack of transparency.  Refunds must be paid from day one of the client being overcharged, instead of only from May 2013 as was decided by our Supreme Court back in 2015.  Legal interest will also be applied to all refunded amounts.

How should I Claim?

A refund procedure is being prepared by the Government.  Once the bank has received the claim from the client, it will have three months to present an offer of settlement.  If an agreement is not reached in this time, a judicial action (Lawsuit) will be necessary.  Special Courts are also being created for these cases.

As an additional note: if you are currently negotiating giving the property back to the bank (Dation) or are in the process of a repossession procedure, the existence of a floor clause can help the efforts to succeed.

Zahara de la Sierra, Cádiz, South western Spain

Spain’s Constitutional Court (CT) has annulled and forced the reform of the municipal tax on capital gains when selling a property.  This tax is commonly known in Spain as Plusvalía municipal, which in theory taxes the revaluation of real estate when it is sold even if the property is sold at a loss.

The Constitutional Court considers unconstitutional taxes that affect “those cases in which the economic capacity taxed by the tax is, not already potential, but non-existent, virtual or fictitious”

The ruling of the Constitutional Court which was unanimously adopted, has partially upheld the question of unconstitutionality raised by the Administrative Court No. 3 of Donostia, in relation to several articles of Regional Regulation 16/1989, of July 5, of the Tax on the Increase of Value of Urban Land of the Historical Territory of Gipuzkoa.

The Court considers that the said tax is contrary to the principle of economic capacity, provided for in the Constitution.

The ruling recalls that the principle of economic capacity is not only present in the tax system as a whole, but must be present in each tax. “It does not fit in our system”, affirmed the Tribunal.

Actions for claiming back this tax have a time-bar of 4 years

A view of Benaocaz, Cádiz, South western Spain

Recent Sentences from the Supreme Court on this interesting matter:

1. STS 20 January 2017 – STS 39/2017

The Sentence relates to contracts which were marketed as “Holiday Clubs” instead of Timeshare resorts. The Supreme Court understands they are under the application of law 42/98 as follows:

“They aim the periodic use of holiday weeks, in pre-acquired turns, in lodgings which can be used in an independent way, with accessory furniture and services, with the payment of an outstanding amount for the acquisition of the right and annual maintenance fees, with withdrawal, resale and exchange options. In short, they are under the objective scope of Law 42/98”

These contracts were formalized with a total lack of submission to Law 42/98: they do not reflect the legal minimum content established in provision 9 of Law 42/98. The consumers could not know what the legal regime applicable to the contract was.

Therefore, they are considered null and void by the Supreme Court in this recent Court decision. This implies that a refund of all amounts paid plus legal interest should occur.

(Involved: Silverpoint Vacations S.L. & Resort Properties Limited)

2. STS 20 January 2017—SSTS 37/2017 & 38/2017

These two Court decisions are interesting because they state that the lucrative character of the acquisitions do not evade the application of law 42/98. Against the argument which affirmed that there existed a financial gain and that this Consumer regulation should not apply, The Supreme Court states that always the revenues are obtained in the private sphere of the buyer and not as a professional, source of the contracts of the said revenues are protected by Consumer Law.

(Involved: Silverpoint Vacations & Resort Properties Limited: Beverly Hills Club, Hollywood Mirage, Club Paradiso)

Alájar, Sierra de Aracena, Huelva, Costa de la Luz, South western Spain

Four of Spain’s biggest banks, Santander, BBVA, CaixaBank and Bankia, have taken account of the legal challenge regarding the floor clauses and have launched an image cleansing operation that will, among other aspects, implement a new generalized model of mortgage deeds in Spain.

The objective is for the Bank to assume some of the administrative costs related to opening a mortgage, which until now have been automatically imposed on the borrower.

A recent Court decision by the Supreme Court has called into question the situation where all mortgage opening costs are imposed on the borrower, including taxes, commissions and other costs incurred in preparing, rectifying and processing mortgages. The Supreme Court has been particularly incisive in dismissing two appeals filed by BBVA and Banco Popular against a complaint filed by the Consumer and Users Organization (OCU).

The big Banks have set up a working group with the collaboration of the AEB (Spanish Banking Association) to find a solution that can be adopted by common agreement among the main financial groups in the country.

The Supreme Court finds that the guarantees incorporated in the deeds are adopted for the benefit of the lender, which does not allow reciprocity when distributing these types of expenses, which usually always fall on the client. This criticism has been instrumental in the proactive attitude of banks to change contract models and to avoid future court cases.

To that end, the expenses of the Property Registry, which ensure the rights of the creditor against third parties, are directly assumed by financial institutions.

The other two large items that decisively increase the cost of mortgages are notary expenses and Stamp Duty; this last one being the most important of all charges that a holder of a housing loan has to assume. At the moment, banks do not seem so committed to the cause of admitting responsibility for such expenses, but it is very likely that social pressure results at least by establishing agreements to distribute the amounts in the future, so that the client only has to assume half the bill that involves the contracting of a mortgage loan.

Financial institutions expect the forthcoming Supreme Court rulings to recognize these efforts with borrowers and help determine Supreme Court case law in a less negative sense for their interests. Not surprisingly, this new attack on the Banks could cost around 18 million euros, a figure resulting from multiplying the six million mortgages registered for the 3,000 euros that, in round numbers, formalization costs imply. In short, a hole that, taken to its final consequences, is four times more than the famous floor clauses.

Sanlúcar de Barrameda, Cádiz, Costa de la Luz, South western Spain