60,000 may get Spanish property refunds

More than 60,000 Irish investors who lost millions in deposits paid on unbuilt Spanish property may get all or most of their money back, following rulings by Spain’s supreme court and the European Court of Justice.

60,000 may get Spanish property refunds

The Madrid ruling compels Spanish banks to pay back deposits lodged with them, plus interest, while the ECJ has declared unlawful the practice by some banks of enforcing a “floor clause” on variable rate mortgages, resulting in customers paying a minimum, higher rate.

Spanish banks have begun to settle cases with Irish clients, according to Pauline McDonagh, a retired detective garda who is chasing deposits on behalf of investors.

She and her husband, Pat Forde, lost a substantial deposit on Spanish property they sought to buy off-plan in 2005. They engaged Spanish solicitors who, if successful, will charge a fee amounting to the interest they would have earned on the deposit.

The only other payment a client will have to make is an average fee of €50 to give a Spanish lawyer legal power to work on their behalf.

Ms McDonagh is optimistic that they, and thousands of other Irish and British investors, will succeed.

“I am well on my way to getting my refund,” she said. “I met a woman outside Sligo who got €60,000 back.”

She said she “couldn’t let it go” when she and her husband lost their deposit. Her tenacity paid off when she learnt that, at the end of December 2015, the Spanish supreme court found that investors who paid deposits on unfinished developments were entitled to have their deposits protected by the country’s bank guarantee.

“Developers opened bank accounts and they lodged client’s money to those accounts,” said Ms McDonagh.

“They went on to build or half-build the properties. Judges ruled that developers and banks were jointly liable for these lost investments.”

The court said the banks had a duty of care and should have issued guarantees and protected clients’ money.

“Obviously the Spanish banks are not going to contact people to tell them that they can reclaim their deposits,” said Ms McDonagh.

“The onus in on those affected to make the claim before the 15-year statute of limitations expires. The estimated time for the refund of deposits in successful cases is between 12 and 15 months.”

Spanish mortgages taken out on investment properties were the subject of am ECJ judgment in December. It found that banks that forced customers to pay a minimum floor rate even when their mortgages were linked to low variable interest rates were acting unlawfully.

“People who have one of these mortgages can now claim for the wrongly charged interest going back to 2008 or even earlier,” said Ms McDonagh.

More in this section

War of Independence Podcast

A special four-part series hosted by Mick Clifford

Available on

Commemorating 100 years since the War of Independence

Home Delivery


Have the Irish Examiner delivered to your door. No delivery charge. Just pay the cover price.