Off-plan homes justice for Brits at last


AFTER MANY years of legal issues, thousands of British homebuyers who were caught up in the Spanish property market crash are finally beginning to recover the millions they paid for holiday homes that were never built.

Back in December 2015, a ruling in Spain’s Supreme Court opened the way for an estimated 130,000 Britons to make a claim directly from the banks rather than the property developers, many of whom promptly declared themselves bankrupt overnight.

It has been estimated British buyers are owed £5.3bn in both deposits and stage payments on properties purchased off-plan, most of which were never completed. In total, approximately 500,000 people were affected; but it’s not just the British as it’s estimated around 300,000 Spaniards were part of the group.

Before the ruling, only those with bank guarantees – about 5% of those affected – could claim directly from the banks. The Supreme Court then ruled that regardless of whether they had guarantees, the banks had an obligation to safeguard buyers’ money. The average case takes 12-15 months to complete so it is only now that the banks are starting to pay out.

Luis Cuervo, CEO of Spanish Legal Reclaims, the company that has taken on hundreds of cases said: “Many people are so fed up they can’t face the idea of going to court again. What they need to understand is that they now have a good chance of recovering the money. It’s not property developers we’re up against now, it’s banks – and they have the money to pay.

“People who took developers to court were badly advised because they all just went bankrupt. They spent more money, won the case but got nothing. Only a minority who had bank guarantees went to court and won.”

Cases must be filed within 15 years of the expected completion date of the property, and claimants must provide evidence of a contract with the developer, payments made into the developer’s account and the fact that the property was never delivered.

Claimants must beware the high cost of fees charged by Spanish legal firms. Cases are generally fought on a no-win, no-fee basis, and in the case of Spanish Legal Reclaims, the fee is 30%-35% of the claim. However, any compensation award is likely to include a large amount of accrued interest, so claimants may not end up out of pocket.

Banks usually appeal against the first decision so it’s important to ensure the no-win, no-fee contract covers the entire process. Some judges will award legal costs, typically 10% of the claim plus a further 5% if the case goes to appeal.

If you think you are eligible you should first seek independent and impartial legal advice, and you will need the following:

• A signed contract between the client and the developer.
• Proof of payment into the property developer’s bank account. In many cases, the client will have transferred money to their lawyer rather than directly to the property developer’s bank. In such cases, your lawyer has to locate the developer’s lawyer to get proof it received the funds.
• Judgments – if you have previously tried to take the developer to court, it is important to let your lawyer know.
• Other supporting documents for the property, such as paperwork or email exchanges, should be shared with your legal adviser to give them the best chance of reclaiming your cash.

The deadline for claims is 7 October 2020.