19 Jul According to an increasing number of court’s judgements, banks must also pay in cases of defective or incomplete bank guarantees being given by real estate developers offered to secure the return of stage payments on failed off-plan property purchases, or even in cases of lack of such guarantees.
Spain’s past booming years of construction and easy to access secondary homes brought a massive increase, never seen before on such a big scale, of off-plan property purchases. The economy crisis followed and many home purchasers found their homes where never finished or offered to be handed over with extreme delays, etc. The situation has put the focus on the bank guarantees, an ever existing old legal mandatory obligation (from year 1968) aimed to protect the safe refund of partial payments to the buyers.
Then again, even if the bank guarantees where mandatory and the developers where legally forced to provide them, there where plenty of cases where non scrupulous ones simply refused to give them, or also cases where these guarantees where trickily worded in order to mitigate their value or effectiveness.
The situation thus has created a big number of frustrated purchasers having no valid bank guarantees or no guarantees at all, a frustration worsened on many cases where the developers have gone bust.
Some Spanish courts, even if they are still not a majority, are presently contemplating the problem from the point of view of those defective or inexistent guarantees being the result of a non-excusable negligent behaviour not just by the developer but also on behalf of the banks financing such real estate developments. The consequence are a number of judgements by several Provincial Courts, such as Audiencia Provincial de Cantabria, or Alicante, condemning the banks to reimburse the buyers even in cases of defective, incomplete or simply non-existing bank guarantees.