It is unlikely that many of our clients are familiar with Spanish Law, but, just in case there are one or two out there that have read about how legal cases can have a “sell by date” here, I’d better explain all this business about expiry dates that in Spanish law is called prescripción and in Common Law as “Statute of Limitations”
Under the Spanish Civil Code, a case can “prescribe” within a certain period if it’s not mentioned specifically by the law used.
Law 57/68 doesn’t mention time limits
So, something called “plazogeneral”, plazo in this case means deadline, is used.
The “Plazo General” has a shelf life of 15 years.
That’s all right then, still got a couple of years, I bought the “property” in 2006.
But hey, I’ve read that in 2015 (7th October) the Spanish Civil Code Article 1964 was changed and that for these types of cases, the “expiry period” was now only going to be for five years.
So, If I paid my money through the Spanish Banking System in 2006, with this new scenario my case was null and void back in 2011.
OH NO, NO… The change in the article carries something that it’s called a régimen transitorio (that more or less translates itself…). This means to give all five years starting 7th October 2015to to have another bite at the cherry if they haven’t done anything yet. So, your sell by date is now 7th October 2020.
Another bite at the cherry indeed… Nobody knew anything about this law until a few years ago. That’s why I like to call it the “great unknown”
So, there you have it, Ladies and Gentlemen, just under 13 months… And I still have four more Spanish/Moroccan developers to do.
There a lot a technical stuff here and I had my doubts if I really wanted to publish it and bore people to death. But I’d rather have that than someone coming to me because they had been given wrong and alarming information.
Talking of information… If you’d like to receive more, don’t hesitate:
The law is there to protect off-plan property buyers and their deposits.
It’s very short and precise, in black and white
If a developer wanted to sell off-plan they had to obey certain rules
It’s applicable to Morocco when there is a Spanish developer involved.
Developers should have asked their clients to transfer the money to Morocco and NOT to Spain.
They breached the law.
How can we prove it? – Didn’t I sign my contract with developer x?
We must prove to the court that the Maroc side was the Spanish one masquerading as a “Moroccan” developer.
How?
“A verdict for all verdicts” – What’s this? – We call it a “Matrix” – A sentence confirming all the “masquerading” that’s all.
How can you do this? – We’ve got the documents… Took long enough!
What happens if we win? – We create a precedent and THEN we’ll put your individual case through.
Who pays you at the end of the day? – The “unfortunate” bank – What happened in reality is that developers unconsciously passed the “buck” to their bankers, pity for them, under the law they (the bank) should have blown the whistle and insisted the money went to Morocco. Did the money go to Morocco? – We don’t know but it doesn’t look like it, otherwise…
Can I join that “matrix” case that you’re talking about? – If your money went to Spain and not to Morocco, it’s up to you. You don’t have to.
Don’t forget… There are TWO cases, one that will give us very good guarantees if we win and there is your individual case.
Why don’t I just wait until you win that case and then jump in? – Because it will be more expensive then.
And the Moroccan case we are all embarked on?
This goes on, business as usual. You will still get regular updates as up to now. This is SEPARATE AND PARALLEL.
Again… You don’t have to.
Melilla, 30st August 2019
My thanks to Bufete Salmerón in Seville who have made me aware of this possibility and provided the information and methodology. Bufete Salmerón specialise in Real Estate Banking. You will find there are few who will offer such solid knowledge and experience in this field.
Second – Receiving the sums advanced by purchasers through a Bank or Savings Bank, which must be deposited in a Special Account, with separation from any other funds belonging to the promoter, which may only contain funds deposited for the construction of dwellings. For the opening of these accounts or deposits the Banking institution or Savings bank, under its responsibility, will demand the guarantee to which the previous condition refers.
(For the law to be applicable)
Monies for off-plan house purchased MUST be credited to a Bank account (or Savings Bank). In Spain these are/were called “Cajas de Ahorros”
This account MUST be separate from that used for the day to day of the developer.
The funds deposited in the special account MUST be used to finance construction.
(The interpretation we are pushing forward which is backed by the law): The Bank MUST insist that these funds are spent on construction and only construction)
NOTES TO BACK UP OUR CASE:
Did the developer’s Spanish bankers supervise the above?
Was, the developer’s Spanish bankers aware that these funds were destined for Morocco where the only way you can register an investment from abroad is by channelling funds through their banking system.
Why did the developer in, some cases instructed, Moroccan Real Estate investors to remit funds to a bank outside the country?
Was the developer properly advised in Morocco about the nature of their investment laws?
Why did Spanish lawyers (who should have known better) transfer their clients funds to the developer’s bank in… Spain.
Did the developer know that in order that their buyers could repatriate funds in future the only way to do so is by individually declaring the investment in Morocco?
Were any funds transferred by the developer done so in bulk or under individual names? If the former took place, the developer and the client’s lawyers were jeopardising any future prospect to repatriate funds.
TECHNICAL POINT
The case is against individual banks and NOT against the Spanish arm of the operation of the different developers involved. Under the clauses of the law, banks are obliged to reimburse ALL funds channelled through its books plus interest at 6% per annuum.
Article One – The legal and natural persons who promote the construction of homes, that are not of official protection, designed as a home for domicile or family residence with a permanent character or a seasonal residence, accidental or incidental and which seek to obtain deliveries of purchasers money before starting or during construction, must meet the following conditions: First – To ensure the return of the payments made plus six percent annual interest, by means of Contract of Insurance granted with an Insurance Entity inscribed and authorized in the Record of the General Sub-department of Insurers or by means of a Bank Guarantee issued by an Entity inscribed in the Record of Banks and Bankers or Savings Banks, if the construction does not commence or complete for any reason by the agreed deadline. Second – Receiving the sums advanced by purchasers through a Bank or Savings Bank, which must be deposited in a Special Account, with separation from any other funds belonging to the promoter, which may only contain funds deposited for the construction of dwellings. For the opening of these accounts or deposits the Banking institution or Savings bank, under its responsibility, will demand the guarantee to which the previous condition refers.
Article Two – Contracts for the sale of the homes, referred to in the first article of this Law, which involve the payment of deposit funds to the Promoter must be expressly state: a) The transferor is obliged to refund to the assignee of the sums received on account plus the six percent annual interest if construction is not commenced or completed within the agreed timeframe to be determined in the contract or if the Certificate of Habitability (Licence of First Occupation) is not granted. b) Reference to the guarantee or insurance contract specified in the first condition of the previous article, with indication of the name of the guarantor or insurer. c) Name of the Banking Institution or Savings Bank and details of the account where the deposit funds will be held as a result of the celebrated contract.
At the time of issuing the contract the grantor will issue to the grantee the above mentioned Guarantee Document which must cover all amounts paid towards the total price.
Article Three – Upon expiration of the period allowed if the construction and delivery of the dwelling has not taken place, the assignee may choose between the dissolution of the contract with repayment of the amounts paid in advance, plus the six percent annual interest, or give the assignor extended time and this period must be stated in an annex to the contract awarded, specifying the new period with the date of completion of construction and delivery of housing. In insurance contract or an endorsement attached to the authentic evidence which did not credit the initiation of construction or delivery of housing will be enforceable for the purposes provided in Title XV of Book II of the Civil Procedure Act to require the insurer or guarantor delivery quantities to the assignee’s right, in accordance with the provisions of this Act
Article Four – Once the Certificate of Occupancy is issued by the Provincial Delegation of the Ministry of Housing and given by the promoter of the housing to the buyer the rights guaranteed by the insurer or guarantor will be cancelled. Article Five – It is a prerequisite that any propaganda and publicity material issued by the promoter for the sale of housing containing information on the levying of amounts on account prior to the initiation of construction or during construction must meet the requirements of this Act, and make explicit reference to the guarantor, as well as the Bank or Savings Bank Special Account in which they will deposit the amounts advanced. The above mentioned must be specified in the text of the advertising that takes place.
Article Six – Failure by the promoter to comply with the provisions of this Act will result in being fined per violation, which will be imposed under the rules laid down in LEY 49, 30th July 1959, subject to the jurisdiction of the Courts of Justice. Failure of the developer to return to the purchaser all sums advanced, will result in violation of the provisions of Article I of this Act and shall consist of misconduct or crime punishable under articles 587, number three, and 535 of the current Penal Code, respectively, and will result in the imposition of the penalties of section 528 in its maximum degree.
Article Seven – The rights that the present Law grants to the grantees will be of an indisputable nature. FINAL PROVISIONS First – The Government is authorized to make a proposal to the Minister of Housing, and by decree, to identify the bodies of official character that are able provide sufficient guarantees and are exempt from the application of these rules. Second – It authorizes the Ministers of Justice and Housing to dictate the supplementary provisions as they deem necessary for the development of this Law, which took effect the day following its publication in the Boletin Oficial del Estado. ADDITIONAL PROVISION The Government is authorized to make by decree, and within six months against the entry into force of this Act, adapt the same principles that may be of application to the communities and housing associations.
Law 57/68 was enacted to protect off plan buyers of property in Spain against the risk of the developer failing to deliver the property according to the contract.
The law is very short and very precise. It distributes responsibility not only to the developer themselves but to their bank.
Any developer wishing to sell off plan, required their client’s deposits to be safeguarded by a bank guarantee or specialised insurance company issued in the buyer’s name.
A significant number of Spanish Property Developers expanded their business to Morocco in the late nineties under the umbrella of that country’s second property market push that was sponsored by their government.
The marketing of off plan properties in Morocco was directed from Spain itself and conducted by the mainframe Spanish arm of the group. This opens a possible application of 57/68 as a viability.
We have obtained all the legal documentation to prove that there is a link between the two companies. Something of an exclusive.
Other legal firms have had terrible difficult difficulties in obtaining these documents and had to forego the possibility of applying this law.
The proposed procedure has two gradients:
A general precedent ruling proving the existence of the link between the Spanish and Moroccan Operations (Matrix Case)
Use that precedent to submit individual cases in a second stage.
All buyers are invited to participate in contributing towards the cost of this master case whether they are NHI clients or not.
Upon a successful ruling (will take around a year) the cost of the individual personalised cases will be reduced considerably.
We feel that the final hearing will be in under two years.
IMPORTANT: This is a totally separate case to the one you may be involved in the Kingdom of Morocco.
As stated beforehand, we are operating as in common law countries, we have explained that the law permits precedent, in other words, a favourable ruling in the matrix case, will be the guide for winning the subsequent individual cases.
(One Example – Of Many) – Developer X
In the last two years we have established links between S.A.R.L’s (Morocco) and S.L’s (Spain). The extract of the documents we hold, that is the Moroccan Subsidiary’s full legal documentation for Morocco that will eventually be presented to a judge in Spain and hopefully establish the matrix ruling that will create precedent.
We also know that, at least in my experience, that considerable amounts of money invested in Moroccan Property, were indeed, channelled through Spanish Banks.
Quite a number of law firms have tried to apply law 57/68 in respect of properties in Morocco. With some developers, specially, those who did not furnish their clients with bank guarantees, it has been specially difficult to obtain and prove the link between the Spanish and Moroccan arms of the operation, not because these links do not exist, but because to obtain any detailed official documents is practically impossible to those who are not on the ground. With one developer in particular, it has taken us over three years to obtain that proof, all with considerable expense. Obviously, these documents are worth their weight in gold and will be presented to the court for the matrix case in Spain. A favourable resolution here will lead to all hope for the subsequent presentation of individual cases, this time with an extremely high percentage of success.
A potential favourable ruling on the link between the S.A.R.L and the S.L (A general matrix ruling)
Individual case by case (Each client individually).
MATRIX RULING:
What is a Matrix Ruling: (In this particular case) It is a case won by the accusers at the first instance court that will create a precedent, Law 57/68 is one of those pieces of Spanish legislation that admits precedent. Spain is a civil law country and not Common Law, as for example the UK. However, in some instances the civil code admits precedent which in Spanish is called “jurisdicción” (jurisdiction has a different meaning under, say, English Law). What are we trying to achieve with this? – Very simply… We are trying to prove that the S.A.R.L (Morocco) and the S.L (Spain) companies are one and the same. If that ruling comes through, it will be taken into consideration by a judge when the time comes to take to court each individual case. According to my legal sources, if this is established there is an 80 to 90 percent chance that the defendant will win each individual case. The Matrix case will take less than a year to come through.
INDIVIDUAL CASES:
Armed with precedent, each individual client will take “their” bank to court in order to claim the deposits originally transferred and to win a compensation package. This is the second stage.
DOCUMENARY REQUIREMENTS:
For the Matrix Case there is no need to send any personal documents, we will only require a signed mandate form and a Power of Attorney. Both documents we will prepare.
For each individual case: If you are an existing NHI client, we will have all the information on how you paid the developer. Eventually, you will need to notarise and apostille the following documents:
Sales Contract (French Version Only)
Proof of Payment (Very Important)
Power of Attorney (Spanish Version Only)
Copies of Passports (No need to Notarise nor Apostille this)
You can see that Law 57/68 was an attempt to stop the unscrupulous developers of the day from doing what they wished with other people’s money and the “hound” who were supposed to ensure this did not happen, were the banks themselves. So, a duty of care was established, banks had to ensure that constructors issued their clients with insurance policies or bank guarantees and supervise that (bank) finance was applied correctly. There is yet another angle that this firm has discovered and that’s not widely known. The law can be applied even if you haven’t got a bank guarantee. We need to prove that funds stayed in Spain, whether that is, funds went from client/lawyer to the developer’s Spanish account. This coupled with a positive ruling in the matrix case (link between the Spanish/Moroccan companies) will compose an excellent case.
Remember that the law requires the developer to open a separate account for day to day transactions. I simply cannot see a bank supervising the comings and goings of funds from an account prior to 2008. The bank was, simply caught when necessity came during the crisis.
For many years developers based in Spain, both homegrown and foreign, invested heavily in the Kingdom of Morocco as a result of this country’s drive to promote a second home market, all under the umbrella of Plan Azur 2010, an ambitious government sponsored infrastructures programme to facilitate this.
At first, some of these developers financed themselves in the traditional way, that with construction and project finance from a bank back in Spain, even if the collateral for the loans were in a different country.
The major developers had, in those boom years, no difficulties in obtaining funding, basically because they had other assets in Spain to back it up.
However, the problem arose with the smaller and foreign developers operating from Spain. These had little or, no assets making the granting of loans difficult, especially for construction in a different land.
To build in Morocco, these developers had to do it through a Moroccan subsidiary, an S.A.R.L, but in many cases, these companies were merely a vehicle for their day to day with the bulk of the activities were in Spain, and as we shall see later, most of their banking, which has become key in this Moroccan angle.
The mechanics to receive client’s deposits for off plan property in Morocco was simple, most simply came to Spain. This, despite that Morocco’s exchange control regulations quite clearly says that all funds to invest in property in their country had to be channelled through it. If these procedures are not followed, in the eventual case of a future sale of the property, the vendor would find it impossible to repatriate funds to their countries of origin.
Unfortunately, there is NO proof in most cases, and with most developers of this type, that funds were received in Morocco. In fact, in my opinion, the little funds that managed to get there was just enough to pay salaries, taxes and suppliers, and not necessarily to officially declare client’s investments.
Another curious angle is how foreign buyers used their Spanish based lawyers to channel payments to the developer. This would have been fine if the lawyer had sent the transfer to Morocco, but somehow, these transfer almost all ended up in the developer’s account in… Spain. Here we have a doubled edged scenario of a well-intentioned lawyer following the developer’s disposal instructions of funds when they should have known that this was not the right procedure.
saidiarecov 