Landmark ruling gives hope to victims of Spanish property scams
A landmark ruling in a Spanish court has given hope to thousands of expats hoping to claw back deposits lost in sham property developments.
A typical Spanish village. Many Britons hoping to buy a property in the country have been fallen victim to scams
Photo: Juan Vicente Muñoz de Morales Martinez / Alamy
By Sean O'Hare 1:27PM GMT 23 Dec 2010
A provincial court in Cantabria, northern Spain, ruled this week in favour of a buyer who paid a deposit on a property in Arce that was never built.
He was told that he had the legal right to demand a full refund from the bank, Caja Cantabria, that guaranteed the construction.
The bank was reminded of its responsibility under Spanish property law 57/1968 "to protect the funds paid by the buyer into a special account and ensure they are used solely for the purpose of building the property" and then promptly held to account for failing in its duty.
The judge's words were reminiscent of those spoken by the Spanish Prime Minister Jose Zapatero at the EU parliament earlier this year, on behalf of "those who, maybe, have had the wool pulled over their eyes in the property sector."
In light of the ruling, a spokesman for the Spanish Embassy in Spain said: "This is an encouraging development for those affected in the Cantabria region, but it is too early to say whether it creates any kind of legal precedent for other people in other parts of Spain."
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Charles Svoboda, vice president of the Valencian action group Abusos Urbanisticos - No (AUN), and advisor to distraught British expats, said: "While this is an improvement, and it does make me hopeful, it's important to remember that half of the Spanish banks are in financial trouble and many of the developers have gone out of business or simply disappeared - so where is this money going to come from to pay people back?"
While the ruling offers hope to those expats who are fortunate enough to have bank guarantees for their properties and have been let down by banks and developers, it means little to those without.
One such example is the group of expats who make up Finca Parcs Action Group (FPAG), formed in the summer of 2009 after their developer Cleyton GES SL abandoned their project - Las Higuericas Finca Parcs, near Murcia.
Both the developer and the bank Caja de Ahorros del Mediterraneo (CAM Bank) failed to issue every purchaser with the legally required bank guarantee despite the deposits being paid off in full and repeated requests for the correct legal documentation.
FPAG has since been locked in a drawn out legal battle in an effort to reclaim the misappropriated deposits.
