In a press release, Martinsa-Fadesa vowed to finish and deliver all the properties it has not yet completed. Expressing “profound regret” at the situation, Fadesa says it will do everything possible to “finish the projects and works in progress, and deliver the homes that have been promised.”
In a separate press release sent to clients in the UK, Fadesa says “It is important to note that the measures we are adopting in this process will allow us to solve the problems of liquidity and clear our debts in the shortest time possible.”
It goes on to say that, under the supervision of the administrators, Martinsa-Fadesa “will focus all its efforts, from now, on activities such as generating income through selling assets, land management and those which will allow the company to re-structure and adapt to current market needs, which will enable the company to re-launch its projects as soon as this process is over.”
Fine words, but there is no guarantee that Fadesa will live up to them. The fact remains that Fadesa is desperately short of cash, which it needs to finish its projects.
With that in mind, here are answers to some of the questions that buyers caught up in Martinsa-Fadesa’s financial problems might be asking.
What are the chances that your property will get built?
Buyers of nearly finished properties are in the best position. Martinsa-Fadesa’s urgent need is to raise cash to pay off its creditors, so finishing and delivering properties that are near to completion will be one of the companies top priorities, and is likely to be supported by the administrators. Properties at an early stage of building need time and money to complete, so may have to be sold to another company, or handed over to creditors. In this case, the new owners should be interested in keeping existing buyers on board, but it could delay delivery of those properties by years.
Can you pull out and get your money back?
If Martinsa-Fadesa has overrun on delivery it may be in breach of contract, which gives you grounds to pull out and demand your money back. However, with Martinsa-Fadesa now in administration, you might then become just an ordinary creditor, and have to line up with all the rest of the company’s creditors, probably somewhere near the back of the queue.
What if you have a bank guarantee?
If you have a valid bank guarantee for all you stage payments, which, by law, you should, then you can exercise this to get your money back if Martinsa-Fadesa is in breach of contract. In this case you claim your money back, with interest, from the financial institution providing the guarantee.
And what if you don’t have a valid bank guarantee?
If you do not have a valid bank guarantee (aval bancario) or insurance policy (póliza de seguro) covering all your payments and in your own name, you need to request one immediately from Martinsa-Fadesa by burofax. Your money is not safe without one.
What if you have only paid a reserve deposit?
If you have only paid an initial deposit, and have not yet signed a private sales contract, then you might be better off writing this off rather than going ahead with a complicated and risky purchase of a property that might fall in value.
What if you become just an ordinary creditor?
Creditors have to get in line with their claims once the start of the process is published in the official state bulletin (Boletín Oficial del Estado). You only have 30 days from this moment to register you claim against Martinsa-Fadesa by burofax, so it is important to keep on top of events.
Should you carry on making stage payments, and should you complete?
Spanish consumer organisations are advising buyers who have the option of completing to do so as soon as possible, as it may be better to own a property than an IOU from Martinsa-Fadesa. They are also advising clients not to miss any stage payments, as doing so may put clients in a weaker position vis-à-vis other creditors. In any event, you should seek legal advice from a qualified Spanish lawyer at once.