Court decision opens door to right to buy for tenants of bank of repossessions


A recent court sentence sets innovative precedence for tenants in properties owned by Spanish banks. Under the ruling, tenants may exercise their first right to buy the property even if the bank has transferred ownership of it to another company. Legal experts believe that the sentence reinforces the rights of tenants renting bank-owned properties.

Background to First Right to Buy Claim

The tenant in question first rented the property on the island of Fuerteventura in the Canaries in 2015. Under the terms of her contract, she had first right to buy should the property go on the market.

The recent court sentence specifically cites this clause in the contract (article 25 in Spanish law), underlining that if a rental property is to be sold, the tenant has first right to buy it. Furthermore, the owner of the property must inform the tenant of their intention to sell and the tenant in turn has 30 days in which to make an offer.

Transfer of Property From Bank to Company

The rental property in Fuerteventura belonged to the Spanish bank, BBVA. The bank created a new company called Divarian Propiedad to hold its repossessed properties in Spain. This company incorporated the said rental home in 2018 without informing the tenant.

The tenant made repeated offers to buy the property, none of which received a reply from the owner, Divarian Propiedad. “The new company owner refused to sell despite offers from my client,” said the tenant’s lawyer, “and did not even deign to reply.”

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Court Sentence

The tenant took the case to court, which made a ruling at the end of last year. The sentence states that the transfer of the property from BBVA to Divarian Propiedad was a transaction “for financial gain”.

The ruling argues that the transfer is not an incorporation, but a sale. Under usual practice, Spanish banks base their actions on law and notary doctrine that do not consider the transfer to be a financial transaction. This interpretation exonerates banks from informing tenants, therefore prohibiting them from exercising their right to first offer to buy.

Consequences of the Ruling

The new interpretation of the transfer as a transaction for financial gain opens the door to the consolidation of rights for tenants. If the sentence is confirmed by a higher court, banks will have to observe the first right to buy awarded to tenants of repossessed properties. Or “look for alternative ways of eluding tenants’ rights,” said the case lawyer.

At Costaluz Lawyers, we believe this latest sentence represents a victory for tenants who should always enjoy full respect of their contract regardless of who the property belongs to. It also confirms that Spanish law is siding more and more with consumers who are gradually seeing their rights confirmed by court rulings.

Over the last few months, we have seen a succession of court sentences favouring the consumer over the bank. For example, a ruling recently forced a bank to pay huge compensation for a renewed contract.

And another sentence ruled that banks must pay for the paperwork involved in mortgage loans.

Problems with Spanish Banks?

At Costaluz Lawyers, we are pioneers on the Spanish legal scene in fighting for consumer rights against malpractice by banks. Over the years, we have helped dozens of clients successfully sue banks and gain access to rightful compensation and/or refunds. If you have a legal problem with a Spanish bank, contact us now – we’re only to happy to help.

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