CORVERA GOLF & COUNTRY CLUB GOES INTO ADMINISTRATION
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.