El blog de Maria

"Banks’ Role in Overseeing Off plan developments Payments: A Complex Stance from Spain’s Supreme Court"

Introduction:

• Recently, Spain's Supreme Court has been clarifying how banks should control money given to them for building projects that haven't started yet.
• The Court's decisions show two main ways of thinking: one that sticks to the original law (Law 57/68) to protect buyers, and another that seems to favor banks, making it easier for them not to follow this law strictly.

1. How Banks' Responsibilities Have Evolved:

• A 2019 court decision said that banks shouldn't have to dig too deep into where the money from buyers comes from, especially when there are middlemen involved. This was a bit of a change from an earlier 2015 decision, where the court said banks need to watch over any deposit paid into a developer´s bank account in advance for homes under the law.
• Later rulings, including one in 2020, stated that banks aren’t supposed to be overly responsible for checking every payment made to developers, especially if someone else is making payments for the buyer.

2. Sticking to the Original Idea of the Law:

• However, some other court decisions have stuck to the original idea of the law. For example, a 2023 ruling mentioned that the bank knew about some payments made into an off plan developer´s bank account and therefore should be aware of where the money they receive is coming from.
• More rulings in 2021 and 2022 supported this idea, saying banks should know when they’re getting down payments for houses.

3. A Practical Look at Banks' Responsibilities:

• Some court decisions give good examples of how banks should understand their role. For instance, a 2019 ruling pointed out that in a small town setting, a bank should know what’s going on with the money for house projects.
• Another ruling in 2019 agreed, saying that banks should be able to identify advance payments from homebuyers.

Conclusion: Keeping an Eye on Money and Legal Responsibilities, and the European Commission Involvement:

• The court’s decisions on how banks should handle advance payments for homes that aren’t built yet are still changing and have different shades of interpretation. It's important to get these rules right in the future to protect people who pay in advance for homes.
• Under a 1993 anti-money laundering law, banks must watch over financial transactions, including those in real estate. They need to know who's involved in each transaction to ensure everything's transparent and legal.
• Some court rulings that don’t make banks check these payments closely can be questionable. They seem to go against common sense and might even need a look from a constitutional perspective.

Costaluz Lawyers is actively filing complaints to the European Commission. They argue that the Supreme Court's doctrine contradicts the European Union law in matters of contract and consumer rights. This involvement indicates a significant concern over the Supreme Court's interpretation and its alignment with broader European legal standards.