NEW!!! - GREAT NEWS!!!! - SUPREME COURT CONFIRMS BANK LIABILITY FOR DEPOSITS UNDER LAW 57/1968

In a judgment just issued, the Supreme Court, ruling on a cassation, states the obbligation of BBVA, Banco Popular and SGR before the buyers of the failed development Santa Ana del Monte in Jumilla (Murcia).

The Supreme Court states in this ruling that the right to be refunded for the buyers comes out from the guarantee policy, and not from the individual certificate, and that the mere payment of the agreed amounts puts the buyers under the protection of the policy, as this kind of guarantees are considered as a collective insurance.

This confirms the line of reasoning held by us and other firms in our claims against the banks, and it's great news for all buyers not refunded yet, and also for those claiming before courts and waiting forn a definitive ruling of their case.

Find below a link to the relevant piece of news:

http://www.legaltoday.com/actualidad/noticias/el-supremo-dictamina-que-la-falta-de-un-aval-individual-en-las-polizas-colectivas-no-impide-estar-asegurado

Hi Emilio,  sounds like great news.  how would this affect me?  do you think BBVA will still appeal against the First Instance Court judgement which ruled that the bank must refund my deposit,  pay me interest and pay all legal costs? In fact, it would be nice to know exactly what are BBVA appealing against.  Is it all three points or just about the interest and/or legal costs?

all the very best,

John

Sounds great Lucas Asociados, but does this require a second identical SC ruling for other Judges to adhere to this ruling? Could they choose to ignore this ruling in their interpretations? Also are interest and costs referred to in Ley 57/68 and has case law been established in this regard to act as consistent disincentive for Banks to keep appealing as standard practice?

Many thanks for your updates.

Supreme Court is doing a great job when applying Law 57/68

Agreed Maria!

My ongoing concerns relate to the judiciary however, as when does this actually become case law and are judges NOW obliged to adhere to this particular Supreme Court ruling relating to Generic Bank Guarantees, or will Generic BG claimants against the Bank be left fighting more and more Bank appeals?

Many thanks.

Preferentially for you., my dear EOS forum members. ( It is almost 10 years now together!!)

Translation into English of main parts of recent, most relevant Supreme Court decision on Law 57/68 and lack of individual guarantee

Law 57/1968 General Guarantee to ensure the repayment of amounts paid on account. Failure to issue individual certificates.

According to (1) the protective spirit of the Law, recently highlighted by the Chamber, which requires assurance or guarantee of the amounts paid in advance, and

                       (2) the fact that a collective guarantee has been agreed to cover any repayment obligations of the developer in regards to the advanced amounts perceived from  buyers, a copy of which has been delivered along with contracts of sale,

 it is clear that the risk is directly covered, without the need of  issuance of  an individual guarantee in respect of which the buyer has no responsibility. -


Cassation Appeal BBVA and SGRCV

8. Paragraph Five: It is jurisprudence of this Court that article. 1 of Law 57/1968 allows the buyer to act jointly and severally against the developer and its insurer or guarantor  to demand repayment of the advanced, when "construction does not timely  start or does not reach good end" . [Judgments 476/2013, of July 3; 218/2014 of 7 May and 218/2015, of April 22]. This same law also allows the buyer to claim just against the guarantor or insurer without having to sue the developer for breach of contract.

This Court has also stated that the guarantee covers all amounts paid on account of the price,  even if the insurance policy sets a lower maximum amount because otherwise art. 2 of Law 57/1968 and Art.  68 of the Insurance Act would be violated [Sentences 476/2013 of 3 July and 779/2014 of 13 January 2015].

11. Paragraphs Third, Fourth and Fifth:   Provisions 1, 2 and 3 of Law 57/6 can be violated  under the guise of the existence of a general guarantee as the buyer  does not have to know that he should still receive an individualized endorsement. In that scenario, the buyer is at the mercy of the degree of diligence of the developer, depending on if he requests the certificate of guarantee or not.

According to (1) the protective spirit of the Law, recently highlighted by the Chamber, which requires assurance or guarantee of the amounts paid in advance, and

                       (2) the fact that a collective guarantee has been agreed to cover any repayment obligations of the developer in regards to the advanced amounts perceived from  buyers, a copy of which has been delivered along with contracts of sale,

 it is clear that the risk is directly covered, without the need of  issuance of  an individual guarantee in respect of which the buyer has no responsibility. -

  The buyer who has  paid advanced amounts should not weigh on  the gross negligence or willful misconduct of the developer who fails to require certificates or individual guarantees.

In conclusion:

 i)  Guarantor, once General Guarantee is signed and premiums are perceived, needs to cover the guaranteed event, which is to refund the amounts received, together with  interest as provided in the legal standard, in regards to the development the guarantee is linked to.

 ii) the issuance of the certificates or individual guarantees, by the insurer or guarantor, for each of the buyers, legitimizes these to enforce them, according to art. 3 Law 57/1968; AND

 iii) the absence of the corresponding individual guarantees does not preclude the obligation to repay the  advanced amounts, with interest, is covered for buyers who have entered into a purchase agreement and delivered these advance payments, under the existence of the General Guarantee.

Maria,

This is great news. We are part of a group action (it has been chaotic to say the least) but simply some of us have received the correct and positive sentence i.e. refund of deposit plus interest from first hearing and then appeal. However, banks and our own legal representation have referred to supreme courts.

This recent decision gives us confidence that we will be able to keep our deposit and interest but for some strange reason we was not awarded our legal costs even though we won our part of our case. Is there any way these can be reclaimed or considered by the supreme courts as over 20,000 Euros ?

We would like to take this opportunity to congratulate all those creditors who bought in HERRADA DEL TOLLO and announce, with pleasure that, our law firm has won a SUPREME COURT JUDGEMENT which will help all the creditors who has lost their deposit, to recover their investments in all the supposition. Up to now, banks have been refusing to pay back the bank guarantees because there was not an individual bank guarantee, the creditors voted on favour of the agreement, or the purchase contract was not cancelled or was cancelled after the agreement ( this was one of the steps needed to be taken according with Law67/58 ) . This new Judgement won in the SUPREME COURT by CARLOS MEORO and PILAR ALONSO ratified the previous Supreme Judgements dated on 13th January, 29 January and 30 April 2015.

 

It is very IMPORTANT to let you know that this great news will probably have an expiry date on the 1th January 2016, as the Bank guarantee law will be derogated then and instead a new Law will be lodged called LEY 20/2015, 14 July . There is still enough time for taking action! There is no reason now for failure. Creditors (with bank guarantees and without bank guarantees) will have every chance to recover the investment they lost.

 

We will be meeting HERRADA and SAN JOSE CREDITORS in Jumilla on the 20th October 2015 and we will have meeting in the UK at the beginning of November 2015. One of our offices is located in Manchester so clients can have individual meetings to discuss this matter at our premises. We will inform you about date, time and place, but in the mean time please feel free to contact us for further details sending a private message. 

I have been reading Law 20/2015 again today ( this law will apply to advanced payments made from 1th of January 2016 on) . I honestly find it very right and same protective as Law 57/68.

The only weaker point for the buyer might be that deadlines are reduced to 2 years after breach of contract by developer. But, considering buyer is someone who has advanced payments for his own dwelling or holiday house, as he will be constantly monitoring the building process, two years will be more than enough for the request to be made after the breach.  

Positive aspects:

- It establishes that Guarantees come into force from the moment Work License exist. This is clearly disausive for buyers to risk money before Work License exist.

- It keeps maintaining Banks as safeguards of the system as if guarantees do not exist, they are liable

- It gives 30 days to both developer and guarantoor for the refund of amounts since these being requested by buyer.

- It keeps publicity obligations about Insurer/ Guarantoor and Special Account ( Publicity has contract nature)

- It keeps administrative sanctions to developers due to lack of guarantees

In my opinion it is very  healthy that every financial transaction made prior to existence of Work License is left out of the guaranteeing system. Healthy for Banks, developers and buyers all together.

It is also healthy that claim deadlines are shorter as this will discriminate, real, attentive buyers to those who are not.

AlonsoHaroSolicitors,

Has there been some misunderstanding here, as Keith Rule recently advised that " All off-plan property deposits paid prior to 1 January 2016 will still be covered by LEY 57/1968." therefore the expiry date deadline and reference to the Bank Guarantee Law being derogated then that you made mention of, is not relevant to those offplan purchasers who placed their deposits and suffered breach of contract prior to 1st January 2016, is it?

Or are you suggesting that the Supreme Court rulings associated with Ley 57/68 will no longer hold strong for those who placed deposits prior to 1st January 2016 but make claims after January 1st 2016?

I think claimants need clear and precise information about this so that they are not misled.

This message was last edited by ads on 01/10/2015.

Ads

LEY 20/2015 will come into effect on 1 January 2016 and will cover all off-plan deposits paid from 1 January 2016 onwards.

Off-Plan deposits paid prior to 1 January 2016 will be covered by the Law in place at the time the deposit was paid which was LEY 57/1968.  Relevant Case Law applicable to LEY 57/1968 will also be still be applicable to deposits paid prior to 1 January 2016.

I am not sure why Alonso Haro Solicitors are saying that the recent Supreme Court Sentence 322/2015 dated 23/09/2015 will "probably have an expiry date on the 1th January 2016, as the Bank guarantee law will be derogated then and instead a new Law will be lodged called LEY 20/2015, 14 July"

There could be a legal conflict if the “ nacimiento del supuesto de hecho” (legal term), which translates as “ the birth of the assumption made” which occurs when Law 57/68 has been put in force, but other facts/documents which are required to finalize the legal process (such as a contract cancellation) in order to claim the investment, take place under the new law 20/15, 14 July. This could be a severe legal conflict. This is our legal point of view and is what we advise.

However, as I believe that the legal matter can be complex for investors, we will be more than happy to explain any question that clients could have via private message. The new Supreme Court Judgement which we have recently won will be appearing soon in Costa Luz News and it is as reported in Spanish newspapers.

The law which will apply will be that in force when off plan payment was made. 

Thank you all for your replies.

Does this mean therefore that those who have already gained cancellation of contract from successful previous "early" claims for breach of contract against the developer, where successful rulings made provision for return of monies with legal costs and interest subsequently became unenforceable due to developer insolvency/administration, that there should be no legal conflict to regain their monies according to the original rulings (to include interest and costs) from Banks that have subsequent responsibility under a generic BG, according to Ley 57/68?

Also does it mean that those who deposited monies prior to Jan 1st 2016 and suffered developer breach but the developer subsequently went into administration, but who for whatever reason have not as yet submitted claims against the developer/ Bank (as a joint and several responsibility), that they should have their claims honoured, and will not be affected by this new law? Presumably many have been very reticent to submit claims until such time as good case law existed.

Many thanks.

Very good news indeed!!

All protections to the consumers are welcomed!

Now the banks will be taking more care about it and not just letting things happen!

Montse Gómez.

( Abogada-Lawyer)

Montse: THANKS!! You are right! All Consumers Protection Law and Judicial decisions are welcome. We need a market and an economy who has the human person at the center. Truthfully at the center. Consumers Law is a great tool for that.

Ads: I am answering to you below in bold green ( same text as your email):

Thank you all for your replies.

Does this mean therefore that those who have already gained cancellation of contract from successful previous "early" claims for breach of contract against the developer, where successful rulings made provision for return of monies with legal costs and interest subsequently became unenforceable due to developer insolvency/administration, that there should be no legal conflict to regain their monies according to the original rulings (to include interest and costs) from Banks that have subsequent responsibility under a generic BG, according to Ley 57/68? Correct

Also does it mean that those who deposited monies prior to Jan 1st 2016 and suffered developer breach but the developer subsequently went into administration, but who for whatever reason have not as yet submitted claims against the developer/ Bank (as a joint and several responsibility), that they should have their claims honoured, and will not be affected by this new law? Correct. But... there are some Judges who are seeing a late exercise of rights in these cases and applying good faith in Law exercise are not allowing these late claims. It all depends on each case as there might have/have not reasons for prudence. So my advice to these people is to consult with an specialist lawyer. Presumably many have been very reticent to submit claims until such time as good case law existed.

Many thanks.

Many thanks Maria for your honest reply.

This is heartfelt plea to all good lawyers.

For those offplan purchasers who submitted “early claims” and pioneered for justice, taking lawsuits against the developer (prior to bankruptcies etc), many have been subjected to various abusive and circuitous routes to gain justice through the Spanish Justice system, which has understandably impacted on other potential claimants recognising the need to wait for good case law, good SC rulings, to follow joint and several liability actions following developer insolvency etc in support of their claims.

Some during this last decade have been subjected to contra legem rulings, some have suffered developer asset stripping, some have suffered abusive court and judicial ruling delays that have impacted, through no fault of their own, on timely enforcements following successful first instance rulings. Some have witnessed SC admissions being denied due to financial constraints, that have impinged upon timely creation of good case law. Some have been subjected to obstructive delays by original conveyancing lawyers, with little or no action by the Bar Associations to make accountable those who bring their profession into disrepute.

And then we hear of successful cases that have inconsistently been denied interest and/or costs which does little to act as adequate disincentive to the Banks (since they, and sometimes the courts, have profited from retention of deposited monies in the lengthy interim periods) but acts as disincentive to innocent claimants who fear they will not gain full return of their monies, (in some instances highlighting a legal lottery, dependent on where your case/which region your case is heard).

And so on and so forth.

So now a decade on, when we finally gain case law and supportive SC rulings, we STILL witness increasing delays and increasing insecurities as Banks continue their ploys to deny their responsibilities according to existing law Ley 57/68 as they place their appeals as “standard practice” with little account of overwhelming evidence and recent SC rulings.

Is it any wonder then that when we hear such facts as “there are some Judges who are seeing a late exercise of rights in these cases and applying good faith in Law exercise are not allowing these late claims.  “, that where applicable we feel the need for all of the above to be taken into consideration and fought for, so as to consistently make known to the judiciary the “moral and good faith” case for true justice and accountability by Banks that have failed during this sorry saga to demonstrate any moral fibre and have all too frequently demonstrated disrespect for good existing law.

 Lawyers need to thoroughly investigate therefore the reasons why claimants have been reticent to follow through with claims, and for those still willing to make claims, they will need reassurance that they will not continue to be compromised by any or all of the above, and/or that any perceived protectionist behaviour in favour of the Banks will be consistently reported in writing by their legal teams. Only by doing so will any abuse within the system, whether this be compromising delays, contra legem rulings, abuse of the appeal system, non adherence to SC rulings, any form of profiting at the expense of innocent claimants etc be curtailed and eradicated.

This fight for “moral and good faith” exercise should also include all those who have pioneered / are still fighting for justice within the judicial system. Don’t all good lawyers have a moral responsibility to bring all relevant facts associated with their prolonged clients’ struggle to the attention of the judiciary? Are they currently being denied this opportunity because they are not taking into account previous developer litigation (or are they not allowed to take this into account)? How can a judge possibly make a moral judgement and/or decide upon awarding interest/costs if he/she is only allowed to view the facts in isolation and is denied the overall picture?

Hi, john123,

As you can imagine, this is very positive for your claim.

We've explained before that the force of judgments in our legal system is not as strong as in UK's, but in this case, as said, we are before a landmark ruling, issued by the Plenary of the Supreme Court, that is compulsory for cases under same facts (buyers of Santa Ana del Monte, mainly) and should not be ignored by minor Courts. And, in the worst scenario (imagine a nonsense ruling against the Supreme Court ruling), you can go before Supreme Court, whose criteria you know.

In any case, keep on apealing is a decission of BBVA, in your case. I see not much sense in doing it, as they are paying (we've enforced provisionally the first instance ruling and they have paid deposits plus interests into the bank account, that will be sent to us within the next days), the Supreme Court has stated the relevant reasonings, and they'll have to pay legal costs for the appeal. But is their money and, in fact, they've passed the "point of no return" (we mean, if they quit from appeal, they have nothing to gain, because they'll have to pay legal costs).

Perhaps, in the future, they'll come to an agreement. But for now, they are still fighting.

Kind regards

Dear ads, 

As far as this ruling is issued by the Plenary of the Supreme Court to set clear their position about this matter, a second ruling will not be needed.

Even though, as explained to john123, it's not directly compulsory. Minor Courts should not ignore it, but if they do, we can always go before the Supreme Court, whose opinion we know.

On the other hand, of course banks do now know the position of our Supreme Court, and any litigation (mainly on Santa Ana del Monte's development) is not made now under good faith and they'll have to pay legal costs.

In the actual appeals, I think they will keep their positions, as far as they passed the "point of no return", and there is no advantage on quiting. But perhaps they'll be more careful from now.

Kind regards

Dear ads,

We don't think thay there's a deadline on 1st january 2016 to claim. In this matter, we agree María de Castro and Keith, and disagree AlonsoDeHaro.

All those having their purchases made before 1st january 2016 are under Law 57/1968, and anything concerning those contracts will be under its provisions.

The legal changes will affect just to those purchases made from the 1st january, and in fact is not that buyers won't have protection. It's just a matter of the moment in which the developers have the legal obbligation to guarantee payments (and, so on, when this protection comes effective, in case of a lack os issuing individual certificate of guarantee).

But, as explained before by us, and also by María de Castro, this should not be a problem, as the solution is as simple as not paying any amount without getting a bank guarantee. The legal obbligation to give a BG comes since the building licence is issued. But, if you pay any amount before, you can deny the payment unless they give you a BG. Any good independent lawyer will not let you pay any amount without getting a BG, and once you have it, no problems will come out.