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

Montse, you never can know what the banks have in their mind, but I agree they should be now more careful

It seems that my colleagues are very comfortable interpreting a New Law which it is not in force yet. We seem to forget that Judges will be the only one who will decide what it will happen with those who have bought properties under Law 57/68 and decide to cancel the contract under the New Law. Glad they are confident about this matter as I can’t see things with such a clarity.

It seems that my colleagues are very comfortable interpreting a New Law which it is not in force yet. We seem to forget that Judges will be the only one who will decide what it will happen with those who have bought properties under Law 57/68 and decide to cancel the contract under the New Law. Glad they are confident about this matter as I can’t see things with such a clarity.

Why would they be cancelling the contract under new law? Wouldn't they be cancelling the contract according to law ley 57/68, the law which was in place to protect them at point of original contract and deposit of monies?

Provision 2.3 of our civil code establishes: Laws will not have retroactive effect unless otherwise states by them

Law 20/2015 clearly sets that it will enter into force on the 1st of January 2016

Law 20/2015 establishes the transitory regime of the rule in regards to new policies issuances: all existing insurance policies must adapt to Law 20/2015 before July 2016 for the amounts which will be paid into account from that date on.

Dear AlonsoDeHaroSolicitors, 

Of course is the Courts the ones interpreting the Law, and you are free to have your personal opinion. And no one is in posession of the right answer until a Court recognizes it.

Even though, from our point of view there are no reasons to alarm people saying that those not placing the lawsuit before 1st january would remain out of the coverage of the Supreme Court ruling, as far as purchase contracts were agreed under Law 57/1968 and the obbligation to give BG came up when the contcat was signed.

Contract cancellation comes not just from Law 57/1968, but also from principle 1124 of our Civil Code.

Cancellation brings up the right of the buyer to be refunded and compensated for the breach of contract, and the consequences, from our point of view, can't be different to the ones under which the contract was agreed.

From 1st january 2016, the only change is the moment in which the developers have to give BG to the buyers, but this can't affect to all those good faith contracts made under Law 57/1968

On top of that, I agree with Maria that there is no retroactive effects intended.

Quiet the opposite, Law is not black and white and there is a full range of colors and interpretations… In our Law Firm makes sure that clients are well informed about all the assumptions so they can decided how much risk they want to take. 

It is a matter of fact that we do not know yet how Judges will interpreted the fact that a client who signed a purchase contract under the 57/68 will cancel a contract under the New Law. As you well say, a contract must be cancelled before proceeding with the released of a bank guaranteed. 

Every Law Firm has their own policy and ours is to make sure that our clients understand absolutely all the chances that they will or  they will not have with their Cases. 

Thank you all.

Surely this is not cancelling a contract under new law, is it? It's cancelling the contract according to inalienable rights afforded under all articles appertaining to the law Ley 57/68, in place at the time of signing the contract and depositing of monies, isn't it?

If you follow AlonsoHaro logic and a protective law in Spain which affords inalienable rights to the offplan purchaser at point of contract with deposited monies protected according to all articles of that law.... if that protective law and the rights therein can then be altered after the event, when purchasers' rights were specifically defined as INALIENABLE from the outset (the inalienable right to cancel the contract with return of monies according to all articles of that law in place at the time of signing the contract, when breach is fully proven), then no purchaser would ever be safe in Spain, would they? 

Inalienable rights are inalienable.... impossible to take away or give up, incapable of being alienated, surrendered, etc. Where would this behaviour and judicial legal interpretation/challenge then comply with moral, good faith exercise? It would strip purchasers of their rights upon which they made a decision to proceed with the contract and deposit monies from the outset.

Perhaps I have misunderstood?

Hi Emilio,

many thanks for that information.  sounds like we are approaching the 'end game' with victory.

can't wait to have the money [my money] back in my bank account.

best regards, 

John

Ads......I agree with what you say.

Article 7 of LEY 57/1968 grants inalienable rights to the purchaser (caracter irrenunciables).  It is under those rights that off-plan deposits are paid prior to 31 December 2015 and under which the off-plan purchase contract is/was signed.

Inalienable rights cannot be waived.

In my view LEY 20/2015 has no retroactive effect and does not cancel the inalienable rights granted by LEY 57/1968 for off-plan purchases up to 31 December 2015.

However, as we all know the final decision in any legal action is down to the Judge or Magistrates who must interpret and apply the Law to each case.

In my opinion, if in 2016 Judges began issuing Sentences, with retroactive effects of LEY 20/2015, in favour of developers/banks for purchase contracts signed prior to 31 December 2015 under LEY 57/1968, then this would be a complete abuse of buyers inalienable rights granted by Article 7 of LEY 57/1968.

Dear colleague, it sounds like you mean that we don't inform our clients about possible risks.

Our policy is of an absolute transparency with the clients. We let the clients know all the possibilities and also all the risks implied.

The only point is that we don't see the risk you see. And believe us we have studied deeply all the relevant laws and  legal precedents. 

From our point of view, as said, if you signed a contract in, say, 2006, and the developer incurred in breach of contract by not delivering the property in time, you are covered in the terms and conditions valid at the time both parties signed the purchase contract, which is the moment in which they set their obligational framework.

Should they have rescinded or not the contract, the breach has made it invalid (more in these cases in which is not just a matter of delivering the property in time, but a complete failure to deliver that won't be able to be repaired), and the rights coming up from that cancellation of the contract are the ones coming up from article 1124 of the Civil Code.

The obbligation the developer had to deliver a BG when receiving payments, and the obbligation of the entities subscribing a guarantee policy with the developer to issue that BG came up in the moment the payments were done (say 2006 and 2007, for instance).

So, a new law will not change that matters, unless an express legal provision containing that piece of legislation. 

And that's why we don't see any risk in the way you do.

This is our opinion.

Anyway, the sooner buyers claim, the better. We are sure the SC ruling will bring more claims before Courts that could jam them, and the earlier you claim, the faster you'll be refunded your deposits. 

Lucas Asociados

You are right to identify "jams" within the court system.

It's the jamming of courts that also concerns existing claimants, as in certain regions there are already sadly MAJOR compromising delays that negatively impact the eventual refund of principals and any awarded interest and costs, not to mention the negative impact this has on the speed at which continuing development of case law/SC rulings necessary to clarify and assist judicial interpretations is achieved.

It is important that all claimants remain aware of the realities associated with court and judicial delays in the various regions, and comprehend the impact that no time constraints on courts and the judiciary have upon the actual return of monies.

That's exactly why I have been stressing for years now that good independent lawyers need to consistently highlight this fact and strive for realistic time constraints and adequate resources be put in place, to those responsible for ensuring the rule of law is adhered to in Spain, to the benefit of good lawyers and claimants alike.

Also this gives yet further credence to Keith’s call for a specialised fast track court, all those years ago!

Dear ads, 

You are right. And let me tell you that last friday we assisted, appointed by the Popular Party (the actual in the Spanish government), to the Andalusian Justice Forum in Sevilla.

In the Forum we met, appart from many professionals from all over Andalusia, and some relevant polititians, the General Secretary in Andalusia of the Popular Party, several high charges of the Ministry of Justice and the spokesman of the Popular Party on Justice in the Parliament and one of the heads of the Legislation Commission of the Spanish Parliament.

The general feeling was that the actual situation of the Justice Administration is really poor, and the charges from the Government and the Parliament admited Justice was too slow. In this point, they said that one of the reasons was the high litigiousness, the great number of claims the Courts have to resolve, and said that this was the reason of the litigation fees they imposed.

We alleged that, from our point of view, it's not so easy to assure if "the hen was before the egg" or vice versa. And that perhaps there are many claims that could be avoided with an effcient and fast Justice Administration.

After that, we asked them to work hardly on the improvement of the Justice Administration in two directions: 1) Provide more and more appropriate resources (both human and material); and 2) A much more strict management of the actual ones, as sometimes the question is not the resources but how the resources are handled, quite uneffciently most of the times.

We specially emphasised on how useful it would be to incorporate to our legal system the "adhesion to an existing ruling", as it would avoid many and many equal claims. Say, for example, the Supreme Court states, in the case of the latest ruling about BGs, that any buyer under a certain set of facts (amoounts paid thriugh a bank account, subscription of a general policy by the developer, properties not delivered, etc) can adhere to the ruling. This would avoid hundreds of claims that, at last, come into a heavy workload for Courts.

The idea was welcomed by the spokesman on Justice of the PP in the Spanish Parliament, who said they would explore this possibility.

We have been appointed as permanent members of this Forum, and there will be another session for mid-november, with the attendance of the actual Minister of Justice.

We must admit that, when we were appointed, we were not very optimistic on the practical utility of the Forum, but after the meeting, considering how participative it has been, the attendance of on-site professionals and the continuity it's going to have, we are really hopeful about how influential it could be.  

Great you are participating in those efforts Lucas!

Dear Emilio we are clients of yours with our First Instance Court Ruling  due January 2016.   

We notice anew law

Dear Emilio we are clients of yours with our First Instance Court Ruling  due 21 January 2016 in Almeria.

We notice a new law comes into force 1 January 2016 replacing Law 57/68, will this have any affect on our case or will it be OK as we have cancelled our Contract and had the Prelinary Hearing before 1 January 2016.  

Margaret and Charlie

Hi, Margaret and Charlie,

As explained before, the legal change will not affecto to those purchases made under Law 57/1968 and nor to the actual claims.

You bought under Law 57/1968 and you keep the rights acquired under that Law. After 1st january 2016 Law 57/1968 won't cover new contracts or new payments, but won't affect to previously acquired rights or obbligations. Banks and promoters had the obbligation to cover you, and this doesn't change with the new Law.

Hi All

this is great news and well done to all the lawyers involved.

can someone please tell me what the situation is regarding legal interest been paid by the banks

is it now compulsory that clients receive interest on their deposits or is it at the discretion of each court and judge?

thanks and good luck to everyone in the future. Patty

Dear PattySmyth,

Unfortunately there are different interpretations when it comes to interest due to clients, as some Courts award full interest since amounts were paid into the banks, some others only award interest since the case was filed in Court, and others since the bank was asked to pay (before taking it to Court).

We will probably be taking this specific point to the Supreme Court soon, trying to obatin a general ruling for everyone, as we think that clearly Law 57/1968 includes rewarding full interest since amounts were paid by clients, as this is the way to "compensate" not having had that money for so many years.

As an example, we have more than 40 identical cases in the Courts of Alicante where we claim back deposits paid by our clients into different banks. In some of these cases, the Judge awards full interest from day one, and some others only since the case was filed.

Best,

Abolex,

Thanks for sharing this. At least some judges are awarding interest from the beginning, but some people have been out of pocket for over 10 years. That's a lot of interest. No wonder the banks have been reluctant to return deposits - they've got nothing to lose!