THIS PETITION IS NOW CLOSED

SPANISH BANK GUARANTEE (AVAL BANCARIO) - PETITION

To:

Su Majestad el Rey Juan Carlos I de España
His Majesty King Juan Carlos I of Spain

Excelentísimo Señor Don Luis M. Linde de Castro
Governor of the Banco de España
(The Banco de España is the national central bank and supervisor of the Spanish banking system - source: Banco de España website)

Excelentísimo Señor Don Mariano Rajoy Brey
Presidente del Gobierno de España

Excelentísmo Señora Soraya Sáenz de Santamaría Antón
Vicepresidenta Primera del Gobierno de España, Ministra de la Presidencia
y Portavoz del Gobierno de España

Excelentísimo Señora Pilar Martínez López
Directora General de Arquitectura, Vivienda y Suelo del Gobierno de España

Excelentísimo Señora Ana María Pastor Julián
Ministra de Fomento del Gobierno de España

Excelentísimo Señor Alberto Ruiz-Gallardón
Ministro de Justicia del Gobierno de España

Excelentísimo Señor Luis de Guindos Jurado
Ministro de Economía y Competitividad del Gobierno de España

Excelentísmo Señor Cristóbal Montoro Romero
Ministro de Hacienda y Administraciones Públicas del Gobierno de España

Excelentísimo Señor Don José Manuel Campa Fernández
Secretario de Estado de Economía del Gobierno de España

Excelentísmo Señor José Manuel Soria López
Ministro de Industria, Energía y Turismo del Gobierno de España

Excelentísmo Señor Álvaro María Nadal Belda
El Director de la Oficina Económica de Moncloa del Gobierno de España

Excelentísimo Señor Alfredo Pérez Rubalcaba
Secretario General del Partido Socialista Obrero Español

Excelentísmo Señora Elena Valenciano
Vicesecretaria General del Partido Socialista Obrero Español

Excelentísmo Señora Inmaculada Rodríguez-Piñero
Secretaria Ejecutiva de Economia y Empleo del
Partido Socialista Obrero Español

Excelentísmo Señor Juan Moscoso del Prado
Secretario de la Unión Europea del Partido Socialista Obrero Español

Excelentísimo Señor Don Gonzalo Moliner Tamborero
Presidente el Tribunal Supremo y Presidente del Consejo General del Poder Judicial

Excelentísimo Señor Don Carlos Carnicer Díez
Presidente del Consejo General de la Abogacía Española

Excelentísimo Señora María Luisa Cava De Llano y Carrió
la Defensora del Pueblo

Excelentísimo Señora María Ángeles Alcalá Díaz
Directora General de los Registros y Notariado

European Parliament, Committee on Petitions,  The Secretariat,
Rue Wiertz, B-1047, Brussels, Belgium

Excelentísimo Señor José Manuel Barroso
President of the European Commission
("The Commission has been working hard to....bring trust and responsibility back to the financial markets.  We want strong and solid financial
markets in Europe and globally that have the confidence and trust of the public and investors.  That means giving supervisory authorities sufficient
information and the power to act early when a problem arises.   We also need measures to regulate the behaviour of actors in the financial markets.
We have seen both in 2008 and in recent weeks a tendency of not looking enough at the fundamentals, of not looking enough at the long term,
of following the trend in the hope of making some short term gain. This needs to change.  We need to "regain the confidence of consumers and
investors". - source: Speech in Brussels 2 June 2010)
("Responsible and intelligently regulated financial markets are central to the new strategy. We want a thriving banking industry here in Europe.
But we need you to play your role responsibly" - source: Speech to the European Financial Services 4 February 2010)
("One idea that I know is essential to the Spanish president: strengthening economic governance mechanisms in Europe especially in the euro
area - Y una idea que sé que es esencial para la presidencia española: el refuerzo de los mecanismos de gobierno económico en Europa,
especialmente en la zona euro". - source: Joint Press Conference with José Luis Rodríguez Zapatero, Madrid, 23 February 2010)

Excelentísimo Señora Clara Martínez Alberola
European Commission Cabinet Member
(Responsibilities: Justice, Fundamental Rights, Legal Issues & Infringements)

Viviane Reding
European Commission Vice President in Charge of Justice,
Fundamental Rights & Citizenship

Mr Andrea Enria
Chairperson of the European Banking Authority

Mr Adam Farkas
Executive Director of the European Banking Authority

Mr Roberto Barone
President of the Council of the Notariats of the European Union

The Right Honourable David Cameron MP
Prime Minister of the United Kingdom

The Right Honourable Nick Clegg MP
Deputy Prime Minister of the United Kingdom

The Right Honourable David Lidington MP
Minister for Europe, Government of the United Kingdom

Jana Mittermaier
Head of Transparency International Liaison Office to the EU

Mr Charles Plant
Chairman of the Solicitors Regulation Authority, Redditch, UK

Mr Des Hudson
Chief Executive of the Law Society, London, UK

Mr Peter Bolton King
Chief Executive of the National Association of Estate Agents, Warwick, UK
________________________________________________________________________________________________


LEY 57/1968 is a short but very important Law which was implemented in the Public Interest on 27 July 1968 specifically to safeguard
purchasers deposits paid in good faith to developers for off-plan properties.  LEY 57/68 Article 7 states that the rights this Law gives to
the purchaser have a 'Caracter de Irrenunciables', which translates to 'Inalienable Character'.  In this context inalienable means:
Unchallengeable, Absolute, Immutable, Not Able to be Forfeited, Unassailable, Incontrovertible, Indisputable, Undeniable.
This article also states that the purchasers rights granted by this Law are so strong that they cannot be waived even at the request of the
Purchaser.

The preamble of the Law explains clearly the reasons for its implementation in 1968.  The preamble states that there was justified public
alarm at the fact that repeated abuses had been taking place with regards to off-plan deposits.  It says the abuses which were obvious
criminal acts had a serious disruption of social life, constituted a serious alteration of the social coexistence and caused irreparable
damage to trust and good faith.  It says LEY 57/68 was being introduced in the Public Interest to create general preventative standards to
ensure the real and effective protection of funds paid in advance by purchasers and to ensure they received a refund in the event that the
construction, completion and delivery of the property did not take place for any reason by the agreed date as per the contract (Sales Agreement).

40 years after LEY 57/68 was implemented we are currently experiencing the same 'repeated abuses' and 'obvious criminal acts'. 
We now have exactly the same situation of a 'serious disruption of social life' which unfortunately for many innocent purchasers has again
caused 'irreparable damage to trust and good faith'.  The irreparable damage to trust and good faith is not only to the Spanish Property Sector
but also to the Spanish justice system which has repeatedly failed to uphold the inalienable rights of the purchaser under LEY 57/68.

LEY 57/68 is clear and provides comprehensive protection for the purchaser.  However, LEY 57/68 needs to be re-drafted to close some
of the loopholes currently being exploited by the developers and banks.  The Banco de España website states: "The Banco de España is
entrusted with seeing that the disciplinary rules applicable to credit institutions are complied with, and that sound banking practice is used.
Also the Banco de España has to verify compliance with the specific banking regulations, including those relating to transparency and
customer protection".  In August 2008 the Banco de España said in El Pais newspaper that "it acknowledges that this is the first time
it has received complaints for this reason" (LEY 57/68 Bank Guarantee execution) and that "we are still resolving cases and our report will
conclude that some banks have not acted with diligence".  The Banco de España stated in its Memoria del Servicio de Reclamaciones
2008 that there are "obligations imposed by LEY 57/1968 on financial institutions".

By its own admission for the last 2 years the Banco de España has been fully aware of the scale of the problems surrounding Bank
Guarantees and non-compliance by Banks and Savings Banks to the obligations imposed on them by LEY 57/68, however the Banco de
España has knowingly allowed the illegalities to continue and has failed to act with the required urgency to stop those illegalities or to protect
the consumer.

Therefore we must conclude that the Banco de España has failed in its duty to verify compliance with banking regulations, especially those
relating to transparency and customer protection and has failed to ensure that the Banks and Savings Banks under its supervision comply with
the "obligations imposed by LEY 57/1968 on financial institutions".

The lack of supervision by the Banco de España has allowed the Banks and Savings Banks to attempt to avoid the obligations imposed on them
by LEY 57/1968.  In many cases where Bank Guarantees were issued and the developer has subsequently defaulted on the contract the Banks &
Savings Banks are refusing to honour the Bank Guarantees for various reasons.  Purchasers are then forced into expensive litigation
which is blocking the court systems and resulting in unacceptable delays.  Again the Banks & Savings Banks together with the developers whom
they have financed are using these court delays to their advantage by lodging appeals to further delay the judicial process.  The number of
Bank Guarantee LEY 57/68 cases reaching the courts has increased in excess of 300% in the last 2 years.

Surely there is no other issue in Spain that has been the subject of such a huge increase in litigation cases over the past 2 years.  We are now
witnessing more Bank Guarantee LEY 57/68 cases reaching the courts in the past 12 months than the combined total number of such cases in the
previous 11 years.  Off-plan purchasers are the innocent victims in a trail of lies, deception, negligence, lack of due diligence and complete lack
of control within the real estate sector.

The Spanish Government is aware of the scale of the problem but has also failed to ensure that LEY 57/68 is respected and applied in its entirety.

The ultimate responsibility lies with Sr. Rajoy and the Banco de España for their failure to adequately and effectively supervise the
Banks & Savings Banks who are the guardians of LEY 57/68 and without whose participation many of the illegalities would not have been able
to take place.  Mr José Manuel Barroso, president of the European Commission, said at a joint press conference on 23 February 2010 with
Mr José Luis Rodríguez Zapatero "One idea that I know is essential to the Spanish president: strengthening economic governance
mechanisms in Europe especially in the euro area".  Well if this is truly essential then they must begin by strengthening
the economic governance mechanisms of the Spanish Banks & Savings Banks.

We must remember that the Banks & Savings Banks who are supervised by the Banco de España were the 'vehicle' through which the
illegalities were performed'.

The Banks & Savings Banks funding the developers were happy to avoid the obligations imposed on them by LEY 57/68 and use purchasers
'unsecured deposit funds' to lessen the Banks exposure to the various developments.

This is a serious public order matter and we demand that the Banco de España and Spanish Government act immediately to ensure that:

1. Any purchaser not provided with the legally required Bank Guarantee by the Bank or Savings Bank who accepted the off-plan deposit
   into their custody is refunded immediately in accordance with LEY 57/68.
   
    

2. Any purchaser in possession of a Bank Guarantee where the developer has clearly defaulted on the contract is able to execute the Bank
   Guarantee, in accordance with LEY 57/68, without the need for lengthy litigation and court delays.
   
    

3. 'Fast Track' specialised courts and an official Ombudsman be established to deal with cases specifically involving Off-Plan Deposits,
   Bank Guarantees and the implementation of LEY 57/68.  Initially all cases must be referred to the Ombudsman who would, where possible,
   provide a definitive decision.  Any case that still requires litigation proceedings must then be submitted to the 'Fast Track' specialised
   courts.  These courts must have judges experienced in cases involving Bank Guarantees & LEY 57/68.  These 'fast track' courts must
   guarantee that any case is heard within 3 months.
   
    

4. The Spanish Government and Banco de España must immediately set up a fund to underwrite the refunds on all Bank Guarantee cases
   where the Bank or Savings Bank has failed to comply with their obligations imposed on them by LEY 57/1968.  If for any reason the
   Bank or Savings Bank fail to comply with their obligations under LEY 57/68 or a court judgment to issue a refund to the purchaser then
   due to the negligence of the Banco de España and Spanish Government the purchaser must be refunded immediately from the fund.
   
    

5. The Spanish Government and Banco de España must act now to ensure that the abuse being suffered by innocent off-plan purchasers
   in Spain is ended immediately and that it is never allowed to happen again.  In this regard it is vital that strict controls and supervision of
   all aspects of off-plan property purchases are introduced which must include: 

THE BANCO DE ESPAÑA and THE BANKS & SAVINGS BANKS

In order to make certain that Banks & Savings Banks always comply with their obligations imposed by LEY 57/68 the Banco de España
must issue an internal regulation to ensure that funds deposited into a developers account are scrutinized and accounted for and that the
corresponding Bank Guarantee is issued immediately to the Lawyer representing the purchaser.

The Banco de España must immediately create a National Registry of Bank Guarantees.  Immediately a Bank or Savings Bank receives
the off-plan deposits they must register the receipt of the funds together with details of the corresponding Bank Guarantee with the
National Registry.  The registry should include the full details of the Bank Guarantee including details of the issuing entity, details of the
Cuenta Especial where the funds are held, registered number of the Bank Guarantee, value of the Bank Guarantee, purchaser name, passport
and/or NIE number, development name, developer name and company registration number.  If a purchaser is not in receipt of a Bank Guarantee
or believes they have lost the original copy they will apply with their details to the Banco de España who must reply within 14 days confirming
if there was a Bank Guarantee issued in their name.

If there is a valid Bank Guarantee then the Banco de España will ask the purchaser to sign a form waiving their rights over the original document.
The Banco de España will then send a copy to the purchaser which can be presented for execution to the Bank or Savings Bank who issued
the Bank Guarantee.

If the Banco de España states there was not a valid Bank Guarantee issued in the Purchasers name the Banco de España will then request further
details from the purchaser including a copy of the Bank Transfer document, copy of the Sales Contract.  The Banco de España will then have
the evidence to reprimand/fine the Bank for either failing to issue or failing to verify the existence of the Bank Guarantee.
The Banco de España will then demand the Bank immediately issue the Bank Guarantee.

Whenever a Bank Guarantee is executed and a refund made the Bank will be obliged to report this to the National Registry of Bank Guarantees.
With this system the Banco de España will always know the total value of all Bank Guarantees issued, the total value of all executed Bank
Guarantees and therefore the total value of all 'live' Bank Guarantees in the market.

The value of all un-executed Bank Guarantees in the market is a liability of the developers, but should any
developer go bankrupt then it becomes the liability of the Bank as the Banks are jointly and severally liable
for all off-plan deposit funds they accept into their custody.

LOCAL COUNCILS / TOWN HALL OBLIGATIONS REGARDING PLANNING APPLICATIONS

Part of the planning application made by developers and promotors must provide evidence to show that they have the necessary financial
backing to create a viable and sustainable project.  In addition the application must name the financial entity or entities that will be responsible for
financing the project and must name the guarantor that will be responsible for accepting the off-plan deposit funds and that will issue the
corresponding Bank Guarantees.  It must also give evidence and details of the Cuenta Especial that has been opened to accept the off-plan deposit
funds.  If the developer or promotor cannot demonstrate that they have the required backing from a financial entity and will therefore be unable to
comply with their obligations under LEY 57/68 then the PLANNING APPLICATION MUST BE REFUSED.

DEVELOPERS OBLIGATIONS

The developer must keep the Local Council / Town Hall updated at all times with regards to the progress of the development and must submit
information every three months to the planning officer at the Town Hall regarding:

1. Proof of the existence of Bank Guarantees for all purchasers in accordance with LEY 57/68

2. Justification for delays or changes to the development plan by Lawyers and/or technical engineers

3. Options available to purchasers for compensation or cancellation as a result of delays in the building schedule

This information must be accessible to purchasers within 15 days of being requested.

LAWYERS

Lawyers acting for a purchaser must respect the principle of independence and must demonstrate that they have no 'conflict of interest'
with the particular development, developer, promotor, agent or financial entity funding the project.

BAR ASSOCIATIONS

Bar Associations must comply diligently with their obligations and ban and punish with corresponding fines any known lack of independence
by Lawyers in these matters.

These strict controls must be implemented as a matter of urgency to put an immediate end to the wholesale abuses being suffered by innocent
purchasers of off-plan property in Spain.  Unscrupulous and negligent agents, lawyers, developers and banks must not be allowed to have any
opportunity to abuse the inalienable rights granted by LEY 57/68 to the purchaser whose off-plan deposits MUST be FULLY PROTECTED
at ALL times.

If the Banco de España and Spanish Government fail to act within defined timescales on the above issues then we ask the European
Parliament and European Commission to take firm and effective action demanding that these very serious financial illegalities are addressed
as a matter of great urgency.  The European Commission states that "it is working hard to bring trust and responsibility back to the financial
markets.  That means giving supervisory authorities sufficient information and the power to act early when a problem arises".

WE DEMAND THAT THIS SUPERVISORY POWER IS NOW USED TO RECTIFY THE SERIOUS PROBLEMS WE HAVE IDENTIFIED
REGARDING OFF PLAN PROPERTY PURCHASES, DEPOSITS AND BANK GUARANTEES IN SPAIN.
 

THIS PETITION IS NOW CLOSED

 Bank Guarantees Website is a free voluntary service providing information regarding LEY 57/68
and Bank Guarantee Abuse.  Under no circumstances can the Bank Guarantees In Spain Website provide advice
on an individual basis or give an opinion on specific individual cases.

Before making a decision or taking any action with regards to your personal situation we must strongly advise that
you take independent legal advice.

The Bank Guarantees In Spain Website and Petition does not endorse the services of any Lawyer or Law Firm.

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