Stories

New hope for Irish investors who lost property deposits in Spain

Thousands of Irish and British investors lost substantial sums of money as a result of the collapse of the Spanish Property Market. These are investors who paid over deposits to developers on foot of contracts to build new properties. Many of the developers ended up in administration and their purchase clients were at the bottom of the list of creditors with little or no hope of recovering their deposits. A law which has been in existence in Spain since 1968 sought to protect such investors by requiring that a bank guarantee be provided in all cases to cover the possibilty of the development not being completed. In practice many developers did not provide such guarantees, even though they were generally provided for in the Purchase Contract.

Now the Supreme Court in Spain has ruled that the bank which received the funds is liable to the purchaser in respect of all funds paid into that bank, along with the relevant interest depending on the period of time involved. This offers the first glimmer of hope to these investors that there may eventually be a solution in sight. However it may be a long and arduous process to actually recover the funds, as the banks are likely to challenge all efforts to have the ruling applied.

A number of specialist Spanish legal firms are now offering to take cases on behalf of overseas clients on a no win, no fee basis. It will be very interesting to keep an eye on how this all unfolds over the coming months, but at least affected investors have been given some hope that all is not lost.