Bank forced to pay British buyer back for deposit placed on illegal property

  • A Madrid court has also ordered the bank, which had appealed an original sentence, to pay costs

The provincial administrative court in Madrid has sentenced Banco Popular to return the deposit a British buyer paid a developer for an illegal property in Marbella.

The court rejected the appeal lodged by the bank against the original sentence handed down by a Madrid ‘first instance’ court, which found in favour of the buyer, although awarded him a smaller amount. The appeal has added costs to the sum payable by the bank, which means the buyer is now due some 139,000 euros.

The case dates back to March 2003, when a British citizen signed a contract to buy a property that was under construction in Los Lagos, Santamaría Golf, and due to be handed over three months later.

By then, however, the property was not finished and had no first occupancy licence. The construction had been carried out with planning permission that did not comply with the urban development plan (PGOU) of 1986 that was in force at the time.

The buyer, represented by the firm Ley 57, claimed the money he had already paid which had been deposited by the developers in their account at Banco Popular. When a sentence was handed down in his favour, the developers had declared insolvency and had gone into administration.

The claimant then took legal action against the bank, as the guarantor reponsible for the sums paid, and the court found in his favour.

The bank appealed, claiming that the property was not intended to be the principal home or family residence of the claimant, a situation that the appeal stated was necessary for the bank to return the amounts.

The buyer responded by claiming a further 6,200 euros which the bank said it had no record of being paid in.

The Madrid court hearing the appeals found in favour of the buyer.