How is Case Law evolving for actions against off-plan developer’s Banks?

Quite brilliantly!  More and more for the protection of buyers and the fair equilibrium of risks and guarantees in that field.  A very human centered approach.  Good for the Spanish Judges.

The last relevant Sentences by Provincial Appeal Courts are those which negate the banks argument which was to say that if the breach of contract occurred several years ago, buyers are now producing “claims in bad faith” due to the delay in taking legal action.

So far, just one court room at the Malaga Provincial Appeal Court and one at the Madrid Provincial Appeal Court, where many cases of this sort will be decided within the following months & years, are adopting the Banks argument as valid and for this reason reducing the length of time for which interest is awarded.  However, a good number of other Provincial Appeal Courts such as Murcia, Granada, Madrid, Alicante, Zaragoza, Valladolid and Burgos agree that any claim made within the time-barring limit of 15 years is valid and that no element of bad faith can be considered in those cases.

On many occasions claimants were often immersed in lengthy proceedings against developers and registering in the developer’s bankruptcy proceedings prior to taking action against the developer’s Bank.  These procedures always take a long time, however the good news is that all creditors registered in bankruptcy lists can now begin legal action against the Banks that guaranteed the refund of deposits or the developer’s Bank that received the off-plan deposit and failed to open a special bank account or verify the existence of the corresponding Guarantee.

Under a very basic principle of Law, the golden guideline is that “every case is different” and judges will be deciding depending on existing facts such as:

(1) Financial history of the development and the participation of the claimant in the insolvency procedure of the developer

(2) Possibilities of the claimant having information regarding the existence of guarantees

There is still no Case Law from the Supreme Court regarding these aspects; however there will certainly be a Supreme Court Sentence relating to this soon.

In addition to all of the above, there are also great Court Sentences stating liabilities of conveyancing lawyers who did not perform a proper job when checking on the legalities of  developers and banks during the time the off plan project was progressing.  But we will talk about this in more detail in a future post.

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