Two Contract Law Professors of Cadiz and Seville Universities which are part of our team agree that liabilities of the Banks that receive deposits in off plan purchases can be claim against just provided we can locate money transferences being made to a Bank account held by a developer, even when there is no reference to development and unit and even if the private purchase contract for which those deposits were paid, do not mention about Law 57/68 nor the specific Bank account.
They both also agree that there is no such a thing as formal special account and when Law 57/68 talks about “special” means an account which is being “separated, differentiated” of any other account held by the developer. Supreme Court in Spain has reiterated in a good number of occassions that the set up of a “ special” Bank account is an obligation of developer and bank and therefore, the lack of this, can never be detrimental to buyers. (Supreme Court decisions dated 22nd of September 1997, 1st of December 1998, 15th of November 1999, 8th of March 2001 and 19th of July 2004)
Navarra Supreme Court dated 22 of December 2008, which has the same value as Supreme Court ones declared that it is the developer who needs to deposit these amounts in a Special Account and the Bank needs to request the developer to do so and to mention this account in the sales contract. The Bank also needs to request the developer to obtain the necessary guarantees.
The Bank which receives deposits for off plan purchases has two obligations by law: 1) to separate developer´s own funds from funds paid by buyers as advanced deposits 2) to require the developer to obtain the necessary guarantees to protect these deposits.
Any breach of these obligations turns into a refund devolution by the Bank.
It is a very simple idea: Banks which received deposits are liable for refund if the building is not started or finished on time and the Bank Guarantees were not constituted. This comes from provision 1.2 of Law 57/68.
Valladolid 3 Court Decision 180/2010, in its legal argument number four also mentions the obligation of the Bank to request the hiring of the Guarantee according to what it is established in provision 1.2 of Law 57/68.
Court of First Instance 57 in Madrid in a Court Decision dated April 2010 establishes that the receiver Bank, knowing that the amounts of the account were advanced deposits for off plan purchases, should have request the developer to meet the legal obligations established in that Law ( separated account, constitution of Guarantees. As the Bank did not perform this duty, the receiver Bank is jointly and severally liable with the developer for the refund of advanced amounts plus legal interests.
Enough with a general Bank Guarantee
Regarding a different type of liability of Banks in off plan purchases, that liability attached to the issuing of a Guarantee, Vélez-Málaga 1 and Burgos Appeal Court has also established that once there is a general Bank Guarantee, individual claimers can claim their deposits back from the Bank who issued those general Bank Guarantees, despite the non existence of individual certificates of Guarantees.
BANKS FOR PEOPLE: HEALTH FOR ECONOMY