# The developer misappropriation of funds



## felix (Mar 24, 2008)

Although criminal law is complex and behavior that you think ought to be criminal could turn out not to be, we have in our Criminal Code and in many sentences quite a lot of examples about how Spanish law deals with developers refusing to pay funds back to buyers, when they don' t hand over houses in time. 

Section 252 of the Spanish Criminal Code provides that _a person who to the detriment of another misappropriates or embezzles money or all other property real or personal received in deposit, custody or administration or by another obligation of return will be punished by imprisonment of up to six years. _This section affects all developers selling off-plan and receiving monies before completion because they all are under an obligation to retain and deal with this funds in the way stated in section 1.2 of 57/1968 Act. 

_Section 1.2 
All developers who sell off-plan and receive any payment from buyers must deposit the funds into an special account separately of any other funds belonging to them. Such funds may be used only for payments linked to building costs. _
By law the developer is not free to administer the funds received in relation to a development, he is a depositary and if he wishes to draw from the guarantee account must be aware of the compulsory use that is stated in Law. 

Even if the developer were acquitted by a criminal court it doesn't mean he is not obligated to refund the monies since subsequently a civil court could declare the civil liability. 
Our courts don't agree about if it is sufficient in order to qualify the offence to use the funds in unrelated development costs or if it is necessary animus lucrandi or intention of profiting. 
We can distinguish between misappropriation strictu sensu which implies adding the funds to the defendant personal assets and dealing with the funds detrimenting the interests of depositors 

Some judgements of our Superior Court to illustrate this issue 


SSTS 17 22 Oct 1998 'It is not required the benefit of the criminal but the economical detriment to the plaintiff' 

SS. 30.11.89, 7.2 and 30.3.91, 10.2, 11.6 and 2.8.92, 16.4 and 2.11.93, 14.3 and 5.11.94, 1123/95 of 11.10, 715/96 of 18.10, 896/97 of 20.6, 955/97 of 1.7, and of 19.1.98 
SS. 3-4-98, 17-10-98 and 840/2000 12-05) (STS 2-11-01 . SS. T.S. 3-04 and 17-10-1998, 12-05 and 21-07-00 
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