The Supreme Court rejects that an insurer has to return to a retiree the 52,619.70 euros that he advanced to a cooperative to buy a home under construction. According to the ruling, the insurance company refused to return the money, arguing that the buyer did not want the house to live in, but as an investment. For this reason, the High Court determines that, since there is no purpose for living, the buyer loses the “protective shield” that forces insurers to return the money when a work fails.
According to the ruling STS 408/2025 (You can consult it at this link) In 2007, the 67-year-old retiree joined a cooperative to acquire a “housing unit” in a residential complex that would be located in Carmona (Seville). Following the payment schedule, the man gave the developer the amount of 52,619.70 euros on account of the price, but the construction of the homes did not take place, since the cooperative entered bankruptcy.
Seeing that he would lose the money invested, he decided to sue the development insurance company under Law 57/1968, which (now repealed) was expressly created to guarantee that citizens could recover the money advances they would have made if the houses were not built. Although the Court of First Instance agreed, later and after an appeal, the Provincial Court of Madrid revoked the ruling in favor of the insurer. The Court considered that there was no real need for housing because the buyer acquired the property “solely as an investment.”
This part is important, since the Supreme Court chooses to ratify this interpretation. The magistrates explain that the application of Law 57/1968 strictly requires that the purchase not have a speculative purpose. With this, for Justice, the signs were evident, since when the contract was signed, the buyer was 67 years old, was in good health and already owned three homes in Seville. One of them, which was his usual residence, was a huge chalet of almost 400 square meters located in a wealthy residential area.
No justification for moving to a nursing home
The Supreme Court explains in its ruling that it was incoherent to abandon that standard of living to move to a small 41 square meter apartment 20 kilometers from the city without a compelling reason. The sentence criticizes that the man limited himself to saying that he wanted to live there, but “did not allege the slightest health problem, or the need to require care or assistance, whether present or future; not even the simple desire of wanting to spend the rest of his life in a nursing home.” Therefore, since there was no coherent vital need, their intention was purely to do business.
Finally, the Supreme Court dismisses the buyer’s appeals and confirms that, since the application of Law 57/1968 is excluded due to “absence of residential purpose”, the insurer has no legal obligation to respond for that money under the strict doctrine of collective guarantees.