Spanish Law 57/68 Bank Guarantees and Recovery of Deposits Paid in Relation to Spanish Property Investments
Frequently Asked Questions (“FAQ”)
Please also see our related articles (Making and Litigating a Spanish Law 57/68 Claim) and (Spanish Law 57/68 Bank Guarantees) for more information about Spanish Law 57/68 and the process for building a legal claim and filing a Spanish Law 57/68 Bank Guarantee lawsuit in the Spanish courts.
Q. What is Spanish Law 57/68?
A. Spanish Law 57/68 was enacted in 1968. It requires Spanish banks that accept deposit payments for real estate investments in Spain to guarantee those deposits if the developer of the property becomes insolvent or otherwise fails to timely complete the property development.
Q. How do I know if I am eligible to make a claim pursuant to Spanish Law 57/68?
A. The basic requirements for eligibility are:
- you paid a deposit(s) to a Spanish bank in connection with an investment or purchase of off-plan or preconstruction real property in a condominium or housing development in Spain;
- you did not complete the purchase of the contracted for unit; and
- the developer of the property become insolvent or otherwise failed to complete your unit or the development in a timely manner. Before making any claim on your behalf, our team will thoroughly screen your claim for eligibility at no cost to you whatsoever. If you received a letter from us, then our preliminary prescreening process indicates that you are a candidate for a Spanish Law 57/68 claim. For more details, please see our related article (Making and Litigating a Spanish Law 57/68 Claim).
Q. If I am eligible, how much can I recover?
A. If you are eligible, the Urban Thier & Federer, P.A. (“UTFPA”) team will seek to recover your entire deposit plus interest from the time you paid your deposit to the Spanish bank through to the time that our team wins your case plus an award for attorney fees. Under Spanish law, the annual interest rate fluctuates and averages approximately 4 percent per year. Accordingly, as an illustrative example, if you made a deposit with the Spanish bank of 100,000 Euros for the purchase of property in 2009 and your case is won and a final Spanish court judgment is issued in 2018, then you should be entitled to your full 100,000 Euro deposit plus 9 years of interest totaling approximately 36%. Thus, your total judgment would be approximately 136,000 Euros plus an additional 10%-15% attorney fee award, for a total recovery of at least 149,600 Euros.
Q. Why am I hearing about this opportunity for recovery now – so many years after I paid my deposit to the Spanish bank?
A. Although Spanish Law 57/68 has been the law since 1968, in the past, the Spanish courts routinely ruled against the deposit-paying investors and in favor of the Spanish banks. It was not until the 2011-2014 timeframe that the Spanish Supreme Court made a number of rulings in favor of deposit-paying investors that now make a legal claim a strong and winnable case, provided it is made under the proper grounds and advanced by competent Spanish legal counsel. After carefully observing cases successfully work their way through the Spanish courts, conferring with UTFPA clients with successful claims, and doing other due diligence, including vetting of claims companies and Spanish law firms, UTFPA is now confident that the Spanish Law 57/68 claim is a solid avenue for recovery for eligible UTFPA clients and others who paid deposits to Spanish banks.
Q. How much time do I have to decide whether I want to make a Spanish Law 57/68 claim?
A. The time bars and statutes of limitations for making a Spanish Law 57/68 claim are not clear and may depend on a case by case “when the client knew or should have known” fact analysis. Although many bank guarantee documents provide for a limited guarantee period, the Spanish Law 57/68 provisions provide for much longer guarantee periods. For you, this means that those guarantee periods take priority over any limitations contained in the bank guarantee documents. However, much time has passed and time bars are approaching for most investors. Accordingly, it is critical that you take prompt action. UTFPA encourages all investors who have been contacted by UTFPA or who otherwise believe that they may be eligible to make a Spanish Law 57/68 claim to promptly contact UTFPA (via the “Contact Us” form on this page) and work with the UTFPA team to start the screening process to determine eligibility.
Q. What if my claim is lost or denied by the Spanish court?
A. If your claim is lost or denied by the Spanish courts, you owe the UTFPA team nothing. Any payment whatsoever to any member of the UTFPA team is based upon not only winning your case but also collecting funds and is limited to a single, one-time fee of 35% (29% plus VAT – the mandatory Spanish Value Added Tax) of any actual recovery of funds. Also, your claim will be fully reviewed by the UTFPA team and will not be forwarded to the Spanish lawyers until it is determined that you are eligible. At that point, the Spanish lawyers will also review your case to confirm eligibility before being appointed and filing your lawsuit in the Spanish courts. Accordingly, we thoroughly screen all investors’ potential claims and only submit those claims to the Spanish court which are properly prepared and supported. This thorough screening process has resulted in our team achieving a 100% success rate for every case that it has brought to conclusion in the Spanish courts.
Q. Do I need to use UTFPA or a claims company to make a claim?
A. No, you could try to make your own demand upon the Spanish bank(s) for the return of your deposit and/or attempt to navigate your own way through the Spanish legal system. However, for a number of reasons, we strongly caution anyone from doing so because:
- The Spanish banks have their own lawyers and many banks will outright refuse to honor any bank guarantee or Spanish Law 57/68 demand made by an investor hoping that the investor will simply go away. Further, the bank will stall for more time hoping that a time bar will eventually prevent any claim from moving forward or the bank will try to pay far less than the amount to which the investor is legally entitled.
- Many investors who have made demands upon the bank and pursued legal action with other Spanish law firms have lost in the Spanish courts due to incompetent or uninformed legal representation (to date, our team has won every case that it has brought to conclusion in the Spanish courts) – so it is best to work with an experienced team that can assist you in making a strong claim from the start.
- Experience counts – working with the UTFPA team ensures that your claim includes the elements required by the Spanish Supreme Court rulings and otherwise includes the elements that experience shows, make for a successful claim.
- UTFPA knows firsthand from its over 1,000 existing deposit return clients that it is very helpful and reassuring to work with an experienced team that can assist in answering any questions, identifying relevant (and disregarding irrelevant) documents needed to support the claim, filing a lawsuit in Spain as needed, and collecting the entire deposit plus interest – all on a “No Win No Fee” basis.
Q. Why should I use the UTFPA team and not search for my own Spanish lawyers?
A. The UTFPA team’s Spanish lawyers have won every Spanish Law 57/68 case that they have filed and litigated to conclusion in the Spanish courts. Most Spanish lawyers refuse to work on a “No Win No Fee” basis and will only take a case on an hourly basis (charging 300-500 Euros per hour) with a significant upfront retainer deposit (which can start at over 10,000 Euros just to retain the attorney) with no proven track record or assurance of success. The UTFPA team is so confident that it will recover money on your behalf that it is willing to work for free until it wins your case and recovers money on your behalf. Plus, you can rest assured that the UTFPA team will work hard to recover as much money as quickly as possible on your behalf because – just like you – we are not paid unless and until funds are recovered on your behalf. Additionally, UTFPA is not aware of any other team that ensures that you have access to attorneys in both the United States and in Spain should you have any questions or concerns.
Q. Exactly how much does it cost me in fees, costs, etc. to work with the UTFPA team to screen my case, prepare my legal claim, file my lawsuit, and collect any amounts to which I am entitled under Spanish Law 57/68?
A. The entire UTFPA team (UTFPA, the claims company and the Spanish lawyers) are paid a single “No Win No Fee” (contingency fee) of 35% (29% plus VAT), which includes all fees whatsoever. (Note – “VAT” is the Spanish Value Added Tax applicable to all legal services.) If our screening process confirms that you are eligible to make a claim, the Spanish lawyers will be appointed via a standard limited power of attorney to act on your behalf in the Spanish courts (you will need to pay a notary of your choice to notarize the limited power of attorney) and there is a 500 Euro Spanish court lawsuit filing fee that you can pay directly to the Spanish court when your case is ready to be filed. If necessary, UTFPA may be able to advance these costs on your behalf and deduct them from your share of any recovery. Unless the UTFPA team recovers funds on your behalf, you pay absolutely nothing. It is also important to note that the Spanish lawyers charge the same 35% fee regardless of whether you work through UTFPA or go directly to them. Accordingly, for the same fee, UTFPA provides another level of accountability in that we can be reached at our United States offices at any time, should you have questions or concerns regarding your case.
Q. Must I travel to Spain during any part of the Spanish lawsuit or legal proceedings?
A. No, the UTFPA team will work with you via telephone, email and other means, if needed, to ensure that all paperwork and forms related to your case are accurate and in proper form to submit to the Spanish courts. Given the technical nature of the Spanish Law 57/68 lawsuit, most of the legal proceedings will be handled by the Spanish attorneys without the need for your in-person appearance or testimony before the Spanish court. (Only in one very complex case involving multiple properties and bank transfers have we ever required a client have to travel to Spain to testify.)
Q. What if I no longer have or never received a “Bank Guarantee” document – can I still make a claim?
A. Yes, the Bank Guarantee is automatic under Spanish Law 57/68 by virtue of the fact that you paid a deposit to a Spanish bank in connection with a property purchase. Many clients never received an actual “Bank Guarantee” document from the Spanish bank or the developer.
If you wish to pursue a Spanish Law 57/68 claim, PLEASE LET US KNOW AS SOON AS POSSIBLE by completing the “Contact Us” form on this page. For those who do, we will immediately have the UTFPA team screen your case and, if determined eligible, move your claim forward. Your agreement will be with the claims company, which will further review all documentation to determine your eligibility. If determined eligible, the Spanish lawyers will be tasked via your limited power of attorney to proceed in enforcing your legal rights in Spain via the Spanish courts.
Please include your email address and your full name in the subject line of your communications with UTFPA. Please feel free to share this information with others who may be eligible for recovery. We encourage you to become informed of your rights and options. You should also ensure that any law firm or claims company you consult or retain to represent you has the experience, resources and ability to take your case through trial and appellate courts, if necessary.
by John L. Urban shareholder