From a private contract to a strengthened system of protection During the property boom, thousands of buyers signed off-plan purchase contracts and paid deposits in the expectation that their homes would be built. When many developments failed, the initial response was to pursue claims exclusively against the developer, which was often insolvent. The decisive change The evolution of case law broadened the focus to include the financial institutions that had received the advan

The protective framework of Law 57/1968 and current Law 20/2015 Law 57/1968 established a special regime for advance payments made in connection with the construction and sale of homes. Its purpose was unequivocal: to prevent the buyer from bearing the consequences of a failed development after paying funds before delivery of the property. Special account, guarantee and bank oversight The system was built around three elements: payment of the sums into a special account, allo

A doctrine with consequences beyond the individual dispute Bank liability arising from failed property developments has become a well-established area of civil and banking litigation. Its significance extends beyond the individual case because it affects risk management, regulatory compliance and market confidence. The financial institution within the guarantee system The legislation protecting advance payments assigned financial institutions an active role. When a bank accep