Court orders banks to refund British client for off-plan payments to notorious developer Aifos

Aifos Hipódromo new development under construction in Mijas 2006. Photo credit Eye On Spain
Aifos Hipódromo new development under construction in Mijas 2006. Photo credit Eye On Spain user Andy123

A judge has ordered two Spanish banks to refund a large chunk of the off-plan stage payments a British buyer made to the notorious Spanish developer Aifos with no property to show for it. This has many implications, one of which is how careful banks now have to be about the developers they lend to.

The British buyer purchased off-plan in the Aifos Hipódromo new development in Mijas, on the Costa del Sol, in August 2003. He paid €70,251.50 in stage payments to Aifos as the development was under construction. But the apartment part paid for was not delivered on time in breach of contract, and Aifos went out of business before the development was completed. Successive court cases confirmed the buyer’s right to be refunded as required by law, but Aifos was bankrupt and had failed to arrange the necessary bank guarantees to protect the client in the event of bankruptcy.

16 years later a judge in Malaga has ruled that Banco Popular and Santander are on the hook for returning €50,000 of the stage payments made to Aifos accounts with them (€29,100 with Banco Popular and €20,576 with Santander) on the basis that the banks failed to check that appropriate consumer protection laws were observed by the developer when the stage payments were made. There were no guarantees in place to return the payments in case of breach of contract.

Thanks to recent rulings in Spanish courts, banks are now liable for returning payments made to accounts held with them if consumer protection guarantees are not in place. This means that banks are now extremely careful about the developers they deal with, which keeps cowboy developers from getting financing. Back in the bad old boom years, any old cowboy developer could get bank financing, no questions asked, which helps explain why so many bad things happened back then.


Better late than never, as they say, but don’t they also say that justice delayed is justice denied? Outside of constitutional matters the Spanish justice system basically works quite well in my experience (though it lacks an efficient small claims process), but it is underfunded so moves at a snail’s pace. The politicians who run this country don’t win elections promising more resources for the justice system, and that reflects poorly on everyone, the electorate included.

Credit for this judgement, and the partial relief it means for the buyer, not to mention the positive legal implications for others in the same situation, must go to Carlos Cómitre of Ley57 abogados in Marbella, who has a well-deserved reputation for being a Rottweiler when it comes to defending clients who have been let down by Spanish real estate companies.

Aifos was one of the most notorious developers in the boom years on the Costa del Sol. They had a reputation for cutting corners on planning, quality control and consumer service, amongst many other failings. In 2005 I had the honour of receiving a menacing legal letter from their lawyers after The Sunday Times exposed the problems many British buyers were having with them, which I mentioned in my my Spanish Property Doctor column Take the pain out of buying in Spain.

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