Tag Archives: New Developments

LAW 57/68 IN PLAIN ENGLISH

  • 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.

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COMPOSITION OF THE LAW

It is composed of very few articles, seven in all, but has the moral superiority of legal precedent behind it.

It established certain responsibilities for developers and builders who sold off plan, one of these responsibilities was the opening of separate bank accounts to receive customer deposits only, keeping this well apart from day to day transactions. Disposal of funds only had one aim, the progressive funding of construction.

Another interesting disposition, specially, for the time, was the necessity for (the developer) client’s funds held at the developer’s bank, to be fully protected by an insurance policy and/or a bank guarantee. It, therefore, created a responsibility upon the bank or insurance company who were now responsible for reimbursing the deposits to the buyer should there have been a breach of contract on the part of the developer.

This new burden for the bank or the insurance company made it harder for the developer to obtain finance as conditions were hardened. It meant that only the most reliable / reputable developers managed to obtain funding as the bank would in turn ask for guarantees or collateral.

This naturally and accidently lead to the bank or insurance company to be extra zealous when it came to be supervising the application of funds by their developer clients.

As things settled into place and the house market consolidated, this supervision was somewhat relaxed and there was a time during the various boom years that nobody gave this law any thought at all, although banks and insurance companies were still required by law to issue guarantees to individual buyers.

To be continued

INTRODUCTION

The law is a pioneer, at least in Spain, before it, there was nothing to protect buyers off-plan, not that there were so many of them at them, but the signs of the times created a kind of gold rush por property.

The spirit of the legislation is to stop abuses committed by developers against, sometimes, vulnerable people who paid them deposits bona fide, and to stop “the justified social alarm in public opinion provoked by repeated misuses even with misdemeanour that are present” or so said the legislator of the day. The legal measure pretended to arm buyers with guarantees when paying considerable funds, sometimes their lives savings, to developers for an off-plan sales contract. These builders and promotors frequently delivered the product late, sometimes years, or not finishing it at all. It looks that things have not changed much.

 

 

PREFACE BY Sr. Fernando Salmerón, Bufete Salmerón, Sevilla (Spain):

Law 57/68: Permits buyers of off-plan property to directly make a claim to all those banks (not developers) who take in buyers deposits as long as the property is not finished or in all those cases where the property is finished but the contract is resolved before a final occupation licence is issued by the local authorities and/or that the buyers have been required to complete (and the property is not of the contracted standard).

Interpretation of this law has been perfected by the Supreme Court and it’s systematically applied in cases where there is a bank guarantee (general or individual) in favour of the buyer or where there is no such document.

It’s a technical legal procedure that requires the participation of a specialised legal firm with a wide knowledge and experience of civil and banking procedures.

Fernando Salmerón, August 2019.

LAW 57/68 NEW DEVELOPMENTS

LAW 57/68 NEW DEVELOPMENTS

A little over a year ago I wrote about a peculiar old law in Spain that could come very handy for those Moroccan Real Estate developers who channelled their money through the Spanish Banking System, whether it was to the developers themselves or the client’s lawyers.

There have been considerable developments since then and in the next few weeks I will be posting here with full fully and will try to guide the reader through the details and offer all the legal angles available.

Suffice to say for now that we are concerned here only with those Spanish developers who built in Morocco through a Moroccan subsidiary and only in those cases where client deposit was transferred to Spanish accounts

As I will be gradually deciphering this law in plain English, I think that the best thing would be to follow the blog for the next few weeks and you will be ongoingly notified automatically.

Many Thanks

Jorge