The Spanish property experts at CostaLuz Lawyers have reached out to owners of ‘illegal’ properties in Spain to reassure them that all is not lost. The team has highlighted the potential for owners of these properties to make a claim against their developer’s bank for a refund of their off-plan deposit. Not only that, but if the buyer subrogated the developer’s mortgage, they can also claim for all mortgage repayments.

Action can be taken against liable banks under Law 57/1968, with no deadline in place for making such claims, yet few of those impacted are aware of the full extent of their right to a refund.

An illegal Spanish property is one that did not have the proper planning permission, building licences or other paperwork in place at the time the client paid their off-plan deposit. Many buyers moved into such properties following the building boom of the early to mid-2000s, either paying for them in full or taking on large mortgages. These buyers now have recourse to legal action to reclaim the deposits that they paid – along with interest and legal fees.

Owners can claim against the developer’s bank or insurer for a refund of any deposit that they paid prior to the legally required paperwork being in place. This applies even when no contract exists, as the Spanish Supreme Court has deemed that lack of consent means no time-barring can be applied.

Despite many of those who are eligible to claim having purchased their properties 15+ years ago, it was 2013 before the Supreme Court stated that ‘finishing’ a property means not just building it but also having all of the legal paperwork in place. And it wasn’t until 2016 that the court clarified that planning illegalities were a matter that fell under the purview of Law 57/68.