When a Bank Guarantee was not provided to clients, we have two options:
a) To act against the Bank out of provision 1segundo of Law 57/68 or
b) To act against the lawyer´s insurance company for negligency when conveyancing
Every case is different and the choice of one of the two really depends on facts but, according to the spirit of Law 57/68, I am inclined to ask liabilities against the Banks first.
The lack of closure and control on people´s deposits minimised the risk that Banks placed on these developmemnts which they were financing. Of course the whole development has a mortgage acting as a guarantee for the Bank.
Very precise instructions and strong requirements were on the developer when they borrowed money for building as the Bank was guaranteeing its own mortgaging business.
On their part, developers were protected by their limited liabilities companies, and in the event they failed to repay building mortgages, the Bank would repossessed their developments but nothing personal was at risk either.
Buyers, those who really risked money depositing trust on developers and Banks were fully unprotected by these other two. Law 57/68 asked them to provide guarantees ( developers) and to verify on the existence of guarantees for individual buyers and controlling money deposited in their accounts for off plan project was only used for building purposes (banks).
The problem is that the de-formation of what a bank is, possibly made them, and their regulators uncapable for understanding that they had to look for other interests´ as well.
The good thing is that Law 57/68 exist and Judges seem to be starting to be able to read them under its correct perspective.
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"Playa de Conil", Conil de la Frontera, Spain, by Pablonete, at flickr.com