An Orihuela Townhall Scandal

As you may have seen from my previous posts, In 2003 I  bought an off plan house from Atlas ( liars), through Tecnologia Urbanistica (bandits) and useing lawyers Aroca Sequier ( Incompetent). Firstly the house was never built ( Colinas Del Lago) but we were offered houses on another urbanisation. I moved in in Jan 2005. We are still on builders water and electric but have to pay for these services. Our Urb like many others, is not complete. We managed to get electric meters fitted which of course we had to pay for and we read them every month and one of our community works out the bills. Fine so far except we have NON PAYERS who have amassed large bills. We are by law not allowed to cut them off so our President organised for a company to fit the main cables in the surrounding road so that we could have individual contracts with Iberdrola. We all payed nearly 550 euros to have this work done ( except the non payers) but that was over a year ago. Since then the paperwork has shuffled around between the company doing the work, our administrator, The Orihuela Townhall etc etc. Of couse it got lost and found a few times. Now that everything seems to be in order ORIHUELA TOWNHALL ARE ASKING FOR A BOND FROM US OF 12,000 euros in case the road gets damaged!!!!!!!!!!!!!!!!!!!!!! Of course I doubt very much we would ever see this money back.

So here we have a case where we are doing our best to fix our predicament and ORIHUELA TOWNHALL  seems to be doing everything it can to make life difficult. Does anyone have any suggestions what we can do? And I don't mean going to useless lawyers and our useless Administrator. ABSOLUTELY SCANDALOUS. And NO, I still don't have my Escatura!

Can't say I'm suprised at the town hall, the are all pretty much the same.

We have had the same situation but with the water and every now and then the local water company cuts us off...even though it's illegal for them to do this.

Anyway, I really don't think there is much you can do.  You will probably have to pay the bond to get the work done, it is normal (ish) and you ARE supposed to get it back. 

By the way, if you don't have an esctritura, does that mean you don't have the licence of first occupation either?  Either way, you normally need the "boletin" to hook up to services but if you don't have the licence I don't see how you got to this stage at all, they don't normally allow you to fit meters with the boletines.

Justin

Hi Justin - yes we have the 'boletin' but no Licence of first occupation. What a mess. Thankyou Atlas et all.

We now have one of the opposition parties at The Townhall trying to help us out. According to our President it's looking hopeful.

LEY 57/1968 Won Case in First Instance Court against BANCO SABADELL for our client who purchased an off-plan property from the developer Tecnologia Urbanistica at Colinas De La Zenia Elite Fase III in Orihuela Costa

We were pleased to inform our client recently that we had won their case against Banco Sabadell (formerly Banco CAM) in the First Instance Court.

The client paid their off-plan deposit according to the Purchase Contract to the developer’s bank account at Banco CAM (now Banco Sabadell).  The client did not receive an individual Guarantee for their off-plan deposit from the developer, Tecnologia Urbanistica or from Banco CAM.

The First Instance Court has now found the Bank guilty according to its legal obligations under Article 1.2 of LEY 57/1968.  The bank must refund the amount paid to the developer’s account plus interest at the legal rate from the date the money was paid into the account.  Legal costs were not imposed on the Bank due to the fact that the Judge is of the opinion there was conflicting jurisprudence regarding banks liabilities according to LEY 57/1968 at the time the Lawsuit was filed and the Bank submitted its written defence.

Re: YOUR CASE AGAINST BANCO DE SABADELL S.A.
PO xxxx/2015

Please find attached Sentence No. xxx/2016 from the First Instance Court No.1 in Orihuela.

Your case against BANCO SABADELL has been won.

The final paragraph of the First Instance Sentence delivered on 5 September 2016 and notified on 5 September 2016 states:

“Upholding the Lawsuit filed by xxxxxx against BANCO DE SABADELL S.A. with the following pronouncements:

1. I declare the legal responsibility of the entity BANCO DE SABADELL S.A. pursuant to Article 1.2 of LEY 57/1968 and therefore condemn the financial entity to refund the sum of xx,xxx Euro, being the amount deposited in the account opened by the developer in the said bank.

2. The amount indicated will accrue interest at the legal rate from the date of payment, or in this case, the date the funds were deposited in the account opened by the developer in Banco de Sabadell S.A.  The interest rate will be increased by 2 points from the date of this Sentence according to Article 576 of the Civil Procedure Act.

3. Without the express imposition of costs of the proceedings”


So BANCO SABADELL is sentenced to refund the amount of xx,xxx€ plus interest at the legal rate from the date the funds were paid into the developer’s account opened at Banco Sabadell.

The Judge did not impose costs on the bank; therefore each party will pay its own costs.

Interesting statements from the Judge in the Sentence were:


“On 12 November 2015 the plaintiffs filed a Lawsuit against Banco Sabadell, requesting the conviction of the bank according to its responsibility under Article 1.2 of LEY 57/1968.  The plaintiff requested the refund of the total amount paid to the developer under the Purchase Contract plus interest & costs, alternatively, the amount actually credited to the Banco Sabadell account opened by the developer, which was 3,000€ less than the total amount.

Banco Sabadell opposed the Lawsuit and said that it had not guaranteed the funds and that the funds were paid to an ordinary current account opened by the developer, over which the bank had no control or monitoring. 

The Preliminary Hearing was held on 8 March 2016 & the Trial was held on 23 May 2016.

Documentary evidence was provided to prove that xx,xxx€ was entered into the former Banco CAM (now Sabadell) account opened by the developer.  However, there is no evidence to confirm that the amount of £2,000 paid by cheque was entered into the developer’s account at Banco CAM.  This leads us to analyze the alternative claim for xx,xxx€ being the amount actually paid to the developer’s account at Banco CAM.

The former Deputy Director of the Banco CAM branch in which the account was held, gave evidence at the Trial.  She stated that the account was an ordinary account opened by the developer and that it was very difficult to control and monitor income in this type of account.

It is a completely reprehensible attitude of the bank knowing that it was an account opened by a developer which was funded largely by amounts paid by buyers to purchase off-plan homes.  However, this does not prevent this account to be considered as a Special Account according to the regulatory framework. 

Therefore, the bank has a legal duty to ensure these funds were guaranteed by an Insurance Certificate or Bank Guarantee.  Having failed in its legal duty, the bank then has a legal liability.

The bank should not allow the opening of accounts or the placing of deposits in those accounts, without first ensuring that the developer has assumed a legal obligation to guarantee the repayment of the funds. 

The bank was fully aware of the business of the developer and the fact that the account was being used to receive funds from off-plan buyers.  The fact that the account was opened as a normal current account, as alleged by the defendant bank, cannot prejudice the plaintiffs as the Supreme Court Sentence of 30 April 2015 confirms.

Banks that receive funds from off-plan buyers into developer’s accounts, although not called Special Accounts, must be responsible to the buyers for the total amounts paid to these accounts opened in its branches.  This doctrine, if there is any doubt, has again been reiterated and confirmed by the Sentences of the Supreme Court dated 9 & 17 March 2016.

As for costs, the plaintiff requested costs to be imposed on the bank.  Even though the Lawsuit has been upheld substantially in its alternative claim for the amount deposited in the developer’s account at the defendant bank, there is more or less uniform criteria in the Courts of this city (Orihuela) and in the Provincial Appeal Court of Alicante, to understand that the question before the prosecution regarding the liability of the Bank according to Article 1.2 of LEY 57/1968, has resulted in contradictory jurisprudence comparable to the existence of doubt.  So I plead the faculty contained in Article 394 of the Civil Procedure Act not to impose costs on the bank.  The Supreme Court Sentence of 21 December 2015 which clarifies the responsibility of financial institutions had not been published at the time the Lawsuit was filed (12 November 2015) or when the bank filed its written defence to the Court”


BANCO SABADELL has 20 working days from the date of notification of the Sentence, which was 5 September 2016, to comply with the Sentence or to file an Appeal to the Provincial Appeal Court of Alicante.

Although any appeal must be submitted strictly within the 20 working day deadline, we may not receive notification of an Appeal or of a firm sentence from the Court for a few weeks after the deadline due to the workload of the Court.

If an Appeal is filed by BANCO SABADELL it will be necessary for us to file an Opposition to the Appeal on your behalf.

When we bought our first place in Spain we insisted on bank guarantees for the money we paid and would not accept our keys or make the final payment without an escritura. This resulted in us moving in almost 18 months later than our neighbours.

We suffered abuse online for saying that we were not taking our keys until we owned the property. We were accused of needlessly worrying those who had taken their keys.

Many of those who had taken their keys had no lawyer or used the lawyer suggested by the developer and handed over their money with absolutely no protection. They would not have done this in the UK so why did they leave their common sense behind when they picked up their passports?

We too were on builders power and water initially. Many of us refused to pay for this until we had an agreement for the way forward to proper supplies from the public utilities. We were informed by our lawyers that it was the builders responsiblity to ensure that we had our habitation certificates and connection to supplies and that they could not legally charge us. It became a mess with some residents feeling morally obliged to pay (despite having no documents no protection or title to their property). I did pay early (but not initially), along with my neighbours. I should not have done, it was the leverage exerted by those that did not pay that resulted in a negociated solution.

I sold the property eight years ago. At that time most people were sorted but there were some who still did not have escritura or habitation cert and were unlikely to get them as their propeties had been built where a hotel or other facilities should have been. The builder has long since left the scene without building any of the facilities he promised. His other deveolpment is still a complete shambles.

So my advice:

Do not buy off plan with advanced payments. Preferably buy second hand (and note that if you really love a development there will be many fire sale properties going cheap in the first years after completion).

If nevertheless you do decide to buy off plan:

Tell the builder that you will pay the total (perhaps 10% deposit) when you have your escritura and habitation cert and be prepared to a pay a premium for this.

If there is substantial work to be done on the site when you do get your escritura, get your lawyer to withhold part of the payment.

If you do decide to buy off plan with advance payments ensure you have bank guarantees, you have a good lawyer from out of the area and you do not accept your keys or make the final payment until you have an escritura and habitation cert.

I believe it is the moral duty of government/regional government in Spain to get builders to give this type of advice to all overseas purchasors or be prepared to be financially responsible. But in my experience the only people who show any moral scruples are the purchasors.

Keep hold of your money until you have what is promised.

Leave your moral scruples at home not your common sense.

The client paid their off-plan deposit according to the Purchase Contract to the developer’s bank account at Banco CAM (now Banco Sable .  The client did not receive an individual Guarantee for their off-plan deposit from the developer, Tecnologia Urbanistica or from Banco CAM.

The First Instance Court has now found the Bank guilty according to its legal obligations under LEY 57/1968.  Article 1.2 of The bank must refund the amount paid to the developer’s account plus interest at the legal rate from the date the money was paid into the account.  Legal costs were not imposed on the Bank due to the fact that the Judge is of the opinion there was conflicting jurisprudence regarding banks liabilities according to LEY 57/1968 at the time the Lawsuit was filed and the Bank submitted its written defence.

So basically then because the bank failed to give an Individual Guarantee from the bank that the client paid the money into, due to the court Judge not being sure of the banks liabilities at the proposed purchase time,  even though they were okay in taking the clients money, and no doubt handing it over to the builder, the buyer has to pay their own costs. 

Sounds to me if the purchaser isn't careful they could / might, end up getting their own money back, which could possibly be soaked up, and plus a tidy bit more,  in paying the costs for all of this.

Something sucks with this Judge, the Bank and Spain's laws on this.

Dear Maria,

could you please tell us what the rate of legal interest is?

i won my case but my solicitor, for some unknown reason, refuses to tell me what the legal interest rate which i was awarded was.  is it the same rate for everyone within a particular time span?  my contract with the developer stated the interest would be 6% but the amount i received back, after the court case, is about 2%.  it seems my solicitor has kept a lot more than i expected him to keep. i wonder why he refuses to tell me just how much i was awarded. i have received no information in writing from him and nothing which was issued by the court despite a number of requests?

i paid a deposit of euros 63,000.  the initial payment of euros 3,000 was paid in the developers office in Torrevieja using my Barclays Bank debit card and I have a payment slip to confirm this.  the second payment of euros 60,000 was made by bank transfer from my Solbank account in Torrevieja.  At the first instance hearing the court ordered the bank to pay me all euros 63,000 but at the appeal hearing the court ordered the bank to repay only the euros 60,000 made by bank transfer.  i have asked my solicitor why this happened and he refuses to tell me.  i suspect whoever represented me in the appeal court might have been negligent and at fault for this; but it's me who has lost euros 3,000 because of their incompetence.  obviously this is my take on things and maybe it's inaccurate but why else would the solicitor fail or refuse to tell me?

would you be able to question him about this?  i am clearly unhappy with the situation and i believe i should have been given thousands of euros more than my solicitor gave me.

Maria, would you please let me know if you could help me with this?

many thanks,

John A

With regard to non imposition of costs I have to ask the following.

Why should innocent clients have to pay the price re non imposition of costs in these abusively lengthy interim periods prior to achieving SC reaffirmation of INALIENABLE rights?

Why should this be considered the default?

Why should innocents be made to pay the price for circumstances born from Banks’ major negligences and failures to comprehend their obligations with regard to EXISTING law, where they failed to protect clients monies from the outset, where they failed to provide legal BGs and special protected accounts as defined in law, and then subsequently embarked upon manipulative and obstructive ploys, delaying initial provision of evidence, consistently appealing against early judgements, challenging every possible scenario, that has subsequently delayed SC reaffirmation of law?

The Banks appear to have not only compromised clients from recouping their costs in this process, but also during this last decade and beyond there have been many instances where clients have been denied consistent rulings and/or the correct imposition of legal interest from the date monies were first deposited.

But of equal concern is that in this process the Banks have significantly compromised the rule of law to ensure “timely justice” prevails by their standardised approach to appeal and “flood” the justice system with outstanding cases, as they continued (and still continue) to deny their legal responsibilities.

In that process they have also significantly compromised the Spanish Justice system, already overstretched and under-resourced (due in no small part to the worldwide recession once again born by Banks’ non compliance and failures to adequately monitor and regulate against fraudulent and abusive malpractice / misuse of complex products, etc).

But the final irony to all of this injustice is that not only has this placed immense stress upon those who have pioneered to make Banks fully accountable and pay the price for “eventual” SC clarification / reaffirmation of existing law (putting their lives on hold whilst they were made to wait a decade and beyond for return of life savings), but that during this lengthy passage of time the Banks manipulative ploys have used the growing “insecurities” born from inconsistent rulings / interest awards etc to their advantage, and now the non imposition of costs could act as disincentive for others to strive for rightful justice.

Isn't it essential therefore that the judiciary now examine this from a wider perspective?

I have to ask the question therefore, how is moral judicial authority to make Banks fully accountable with full imposition of costs ever achieved for those who have pioneered for justice during these excessively lengthy periods prior to SC clarification, especially when the outcome of this clarification appears to be the REAFFIRMATION of this good and protective existing law?

 I just thank God that there are some good people with honourable intent to educate (Keith Rule and Costaluz) who have recognised these uncomfortable realities and continue to do all in their power to make Banks truly and fully accountable, to educate those of us who have pioneered the fight for justice, to endeavour to provide reassurance along the way, but hopefully in this ongoing process they will continue to bring to the attention of the judiciary and Supreme Court the requirement not only for consistent reaffirmation of clients’ inalienable rights but also now call upon the judiciary to demonstrate sufficient moral authority when reviewing imposition of costs, given all of the above .

could you please tell us what the rate of legal interest is?

I do not know if it is the same thing but I read that the Spanish debtors rate had just been put up to 8% plus the Eurobor rate pa.

Previously it had been 7% plus the EBR. The explanation was that this was the rate a small business could charge larger firms for unpaid debts.

The EBR is currently virtually nothing but was close to 5% 8 years ago.

The legal rate of interest over the past decade has been around 4%.

2006  4%
2007  5%
2008  5.5%
2009  5.5% to March 2009
2009  4% from April 2009
2010 to 2014  4%
2015  3.5%
2016  3%

Interest when awarded, is calculated on a simple annual basis and not as compound interest.  So you do not earn interest on interest.
 

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The Supreme Court Sentences issued on 21 December 2015 and 9 & 17 March 2016 have now clarified the issue of developer’s Banks liabilities according to LEY 57/1968.  This is now confirmed Case Law (jurisprudence) from the Supreme Court.

As we first argued back in 2009, according to Article 1.2 of LEY 57/1968, the bank receiving the off-plan deposit is liable if it does not issue or verify the existence of the legally required Bank Guarantee, irrespective of the type of developer’s account the funds are paid into.  The account will be considered a Special Account according to the requirements of LEY 57/1968 if it is an account opened by the developer and into which off-plan funds are paid by purchasers.  The most important words in Article 1.2 of LEY 57/1968 as we have been arguing for many years are ‘bajo su responsibilidad’ (under its responsibility). 

Although we have seen things very clearly since 2009, unfortunately due to the way the Spanish legal system works, it has taken 4 or 5 years for cases specifically relating to Article 1.2 of LEY 57/1968 to reach the Supreme Court.  But now case law relating developer’s Banks liabilities according to Article 1.2 of LEY 57/1968 is clear.

With regards to interest, we are now finding in most cases interest is awarded at the legal rate from the date the payment was made to the developer’s account.  However, in some cases, interest is only awarded from the date of filing of the Lawsuit.  In these cases there is the possibility of an Appeal to the Provincial Appeal Court, or Supreme Court if necessary, regarding the interest.

The imposition of costs on the Bank is not a clear issue.  In some cases we find that all costs are imposed on the bank, however in other cases mainly for the reasons I will briefly explain below, costs are not imposed on the Bank.

Although we have been clear in our minds for many years regarding the Banks liability according to LEY 57/1968, the fact is that Supreme Court Case Law has only confirmed the issue with the Sentences issued on 21 December 2015 and 9 & 17 March 2016.  Prior to those Supreme Court Sentences, the issue was not clear within the First Instance & Provincial Appeal Courts.  During 2012 to December 2015, there was conflicting rulings regarding this issue, with some regional Courts still finding in favour of Banks particularly when there was no developer’s account titled as a Special Account.

So we are now finding that with regards to costs, if the Lawsuit and subsequent written defence from the Bank (which must be submitted within 20 working days from the date the Lawsuit is served on the Bank), are dated prior to the Supreme Court Sentence of 21 December 2015, which was the first one to clarify the issue regarding the liability of banks according to Article 1.2 of LEY 57/1968, then the Judge will decide not to impose costs on the bank.  Therefore each party will pay its own costs.  This is consistent with Article 394 of the Civil Procedure Act.

Here is the wording normally used by Judges in these cases relating to costs:

“As for costs, the plaintiff requested costs to be imposed on the bank.  Even though the Lawsuit has been upheld regarding the amount deposited in the developer’s account at the defendant bank, there is more or less uniform criteria in the Courts of this city (Orihuela) and in the Provincial Appeal Court of Alicante, to understand that the question before the prosecution regarding the liability of the Bank according to Article 1.2 of LEY 57/1968, has resulted in contradictory jurisprudence comparable to the existence of doubt.  So I plead the faculty contained in Article 394 of the Civil Procedure Act not to impose costs on the bank.  The Supreme Court Sentence of 21 December 2015 which clarifies the responsibility of financial institutions had not been published at the time the Lawsuit was filed (12 November 2015) or when the bank filed its written defence to the Court”

This is certainly how the Judges and Magistrates in the Alicante province are now ruling regarding costs.  Many other regional jurisdictions are also using this understanding when ruling on costs.  But there are regions where the Judge or Magistrate will still impose costs on the Bank.

Although the issue of the Banks liability according to Article 1.2 of LEY 57/1968 has now been clarified by the Supreme Court, unfortunately there is no such specific clarification regarding interest & costs.  The Judges and Magistrates can decide on interest & costs on a case by case basis and according to the rules of the Civil Procedure Act.

Although we have not yet received any First Instance Court rulings on Lawsuits filed after 21 December 2015, I would expect that in those cases if the liability of the Bank is clear according to the recent Supreme Court Case Law, then costs would be imposed on the bank as the ‘issue of doubt’ and ‘contradictory jurisprudence’ no longer exists regarding Article 1.2 of LEY 57/1968.

‘Bajo su responsibilidad’ (under its responsibility) means exactly that………… Banks that receive funds from off-plan buyers into developer’s accounts, although not called Special Accounts, must be responsible to the buyers for the total amounts paid to these accounts opened in its branches.  This Supreme Court doctrine of 21 December 2015, if there is any doubt, has again been reiterated and confirmed by the Sentences of the Supreme Court dated 9 & 17 March 2016.

Thank you so much Keith for the clarification 

Is it also safe to assume that according to the SC jurisprudence that you identified with regard to article 1.2 that any Bank now filing an appeal after Dec 21st 2015 (in their attempt to gain an overruling following a successful first instance ruling in favour of the client) should, according to SC jurisprudence, now lose their appeal and appeal costs should be imposed on the Bank, as the issue of doubt no longer exists?

Hi Kieth,

Regarding legal interest, do the figures that you have quoted over ride any interest amounts stated in the individual purchase contracts?

Sandra - LEY 57/1968 stated 6% annual interest, but this was amended to the legal rate by the Building Act of 1999 - LEY 38/1999.  So normally the legal rate is now applied by Judges & Magistrates.  However, if there is an Individual Guarantee or General Guarantee that states 6% interest then some Judges will award the interest at 6% as per the Guarantee.

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To answer your question:

"Is it also safe to assume that according to the SC jurisprudence that you identified with regard to article 1.2 that any Bank now filing an appeal after Dec 21st 2015 (in their attempt to gain an overruling following a successful first instance ruling in favour of the client) should, according to SC jurisprudence, now lose their appeal and appeal costs should be imposed on the Bank, as the issue of doubt no longer exists?"

Yes.  Appeals relating to banks liabilites according to Article 1.2 of LEY 57/1968 should now be lost if the matter to be judged is as per the 21 Dec 2015 and 9 & 17 March 2016 Supreme Court rulings.  When an Appeal is lost the costs of the appeal procedure are normally imposed on the losing party.
 

Thank you Keith.

We are awaiting the judges decision on our April court case against the bank. It would be poetic justice if the judge awarded us the 6% interest stated in our contract because, in 2008 when we asked to cancel our contract because of late (3 plus years) completion, the bank said that they would refund our money only when a judge said so.

Hi Keith

Can you answer me a question.  My First Instance Ruling was to be heard on the 21 January 2016 in Almeria but I was informed prior to this that the witness from the BBVA Bank was not going to turn up so my Lawyer had 10 days to submit a letter to the Court.  This was ratified by the Court on the 24 February 2016 and I was awarded deposit back, plus interest, plus costs.   Still waiting for deposit to come back but I believe Almeria Court is very busy and bogged down.    

Now regarding the Appeal situation have been informed that the BBVA Bank appealed and was notified by my Solicitors on the 18 April 2016 they probably applied within the 20 days and obviously Almeria Court which is so slow gave them delayed information later on.

I notice on your Blog that if an Appeal is submitted after 21 December 2015 when the Supreme Court said this is ratified do you think in your opinion is it legal for the Appeal Court to uphold my First Instance Court decision on costs and award everything from the First Instance Ruling?

Charlie