We took some chances and it worked out. A claim filed against the guarantor of the Herrada del Tollo S.L., developer for Santa Ana del Monte (and who we jumped over since they’d filed for voluntary insolvency), has been resolved favourable for the claimant. From a procedural point of view, it is an interesting case for it was not heard given that, legally speaking, the issues at stake were purely juridical and therefore, no evidence was to be proposed for admittance. In other words, there was no evidence of probative value in dispute and consequently, the pre-trial was enough to fix the object of the case and conclude that there was no possible settlement.
The defendant, “Sociedad de Garantía Recíproca de la Comunidad Valenciana (SGR)”, an insurance company of uncertain purpose, had given a guarantee to cover deposits worth €6,500,000, on behalf of Herrada del Tollo S.L. They did not, however, offer individual policies or guarantee documents to each individual and so, tried to negate the validity of the document under this pretext. The Court contended that not having an individual policy was not tantamount to losing the cover and falling by the wayside, given that the inalienable rights dispensed under Law 57/1968 are of a consumer-protection nature, but furthermore the ruling establishes that it was the intention of the insurer, when entering into a contract with the developer, to guarantee the down payments.Secondly, they opposed that the sums were not paid into the special account the law envisages and also, that the policy was capped to a certain sum. According to the judge, private agreements between the developer and the insurer cannot affect the privileged immunity the consumer has, in relation to Law 57/1968. The judge ruled that the defendant must pay back €60,000 plus interest, calculated as from the time the developer took the deposit.
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Hello. I read with interest your blog about the Santa Ana/SGR ruling. My husband and I are in the same position, having purchased 2 properties on Santa Ana and having no bank guarantee. Via our current lawyer (based in the UK) we have gone down the route of trying to get our deposits back only to be offered a 65% return over 5 years. The only addition is that he is also trying to get us recognised as extra-ordinary creditors. However when I went through my paperwork I found copies of generic bank guarantees (in part) that my agent had sent me for SGR and Banco Pastor. My question is has SGR now paid your client or are they taking the case going to appeal? Given the success of your case I would be very interested to find out the costs/timescales involved in taking similar action. Many thanks.
Dear John,
Thank you for your email.
In principle, you did go down the route that every other claimant has, which is to join the insolvency proceedings and wait for the outcome of the voting by the creditors. Unfortunately though, generally speaking there is little one can do given that the majority of voting power lies with the bank, the biggest creditor, and perhaps a few suppliers, and so buyers have little power.
In addition to the above, there is a great deal of uncertainty when going into insolvency proceedings because they take long, one does not know when they finish and one does not know how much will be returned. In your case, you have some expectation to recover a significant part of the deposit but over a protracted length of time as you have reached an agreement.
My client is also in the same situation as you: she joined the proceedings you are currently in and is awaiting to get a response. When she approached us we said we could not help her as there was little advice we could give her to improve her position. In other words, we would have charged her for advice that had no perceptible added value.
With the insurance policy things change now, as she is entitled to claim directly from this company. 3 notes on this:
1- We don’t know how profitable this insurer is, and if they have funds available.
2- We are waiting confirmation on whether they will appeal the ruling.
3- Irrespective of point 2, we will enforce the ruling, which under Spanish law we are entitled to.