A new wave of massive trials against Spanish banks is coming because of the investors’ lost money by property developers during the Spanish housing bubble.
Spanish banks are facing a new case of multiple trials because of the lost money that investors paid to the bankrupted housing developers in the bubble’s years of 2004-2006.
Developers bankruptcy and a number of unfinished housing projects during the Spanish housing market crisis meant big losses for buyers. Most of the times, developers and construction firms were owned or invested by former savings banks.
Banks such as BBVA, Banco Popular, Bankia, Caixabank or Banco Sabadell are facing massive trials, like those cases held against floor clauses or preferred shares.
Law firms are conducting this legal procedure based on the right of individuals to get refunds for their put down cash deposits to the developers on off-plan properties and dwellings that were never completed or provided.
For this reason, last December 2015 Banco Sabadell (former owner of Caja de Ahorros del Mediterráneo CAM) was sentenced by the Spanish Supreme Court to refund a petitioner his money paid as deposit plus legal interests at the legal rate from the date the lawsuit was filed.
The High Court’s sentence was based on Law 57/1968 of 27th July on receiving deposits for selling and housing constructions, stating that the advanced money from a buyer to a developer should be placed in a separate bank account, covered by an insurance and detached from any other fund owned by the developer; and being only used for the housing construction.
The number of sufferers is unknown, neither how much of them will end up claiming. However, the Barcelona-located business Spanish Legal Reclaims calculates that they could be up to 600.000, pointing out that 180.000 of them could be foreigners (mostly British and German citizens). Despite noticing that this is a conservative figure, the estimated petitioned amount might reach around €17bn.
Measures like this, among others like those ones recently held regarding mortgage floor clauses or preferred shares, are necessary when many citizens have been massively harmed in their paramount right to access a property.
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Del Canto Chambers’ Editorial Board