British overseas property investors who lost money on property deposits for off-plan properties in Spain in the financial crash now have a good chance to claim their money back.
It is estimated that around 130,000 British property buyers lost their property deposits in Spain when properties they were purchasing were never completed due to the developers going bust.
Developers had borrowed huge sums against the value of their buildings, and when the global downturn came and developers went bust, those would-be purchasers who had put money down on off-plan developments thought their property deposits had gone forever.
However, most who paid property deposits had their money held in a bank account by developers. Although these accounts were seized by the banks when the developer closed, a group of property buyers took the banks to court, contending that the money should have been guaranteed according to a law from 1968 stating that buyers should have guarantees on property deposits.
The buyers argued that the banks should be jointly liable with the developers, and in a landmark case in 2015 the Spanish Supreme Court agreed, making the banks liable to refund the property deposits with interest if the developer went bust.
The case now means that an estimated 130,000 British overseas property investors could be entitled to refunds of between £10,000 and £500,000 each.
Legal firm Spanish Legal Reclaims are in the forefront of helping buyers reclaim their lost property deposits.
CEO of Spanish Legal Reclaims, Luis Cuervo, said: ‘Thousands of British buyers who had big dreams of owning a place in the sun were left high and dry when builders and developers went bust. For years, buyers fought to get their money back unsuccessfully, but changes in the law mean they will finally get what they are owed. The bill facing Spanish banks is expected to be around £5.3 billion, but only if buyers take action.’
There has already been success by property investors reclaiming their lost property deposits as a result of the 2015 ruling.
Malcolm Young from Northumbria lost the €130,000 he put down in 2004 for two apartments in Marbella, when he learnt that the entire development had been built without the appropriate planning permission, meaning his investment completely worthless.
He took the developer to court, winning four cases against them, but the developer went bust, seemingly taking Malcolm’s deposit with them.
After the Supreme Court ruling however, he then employed a Spanish lawyer and through the courts secured a refund of the full deposit plus interest, making a total refund of around £200,000.
All cases are dealt with individually. So if you feel you are due a refund and have the paperwork to back it up (including documents from the developer and proof of payment), then the best thing to do is contact a reputable Spanish lawyer to take your case.
If the case is not successful, you may have to pay costs. Alternatively a lawyer may take the case on a no-win-no-fee basis, but in the event of a win is likely to take around a third of the settlement.
It could be a long process, but some investors have already received refunds with interest.