Cancel or mortgage?

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This topic contains 12 replies, has 5 voices, and was last updated by Profile photo of Anonymous Anonymous 11 years, 2 months ago.

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  • #51196
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    Anonymous
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    We’ve bought a property in Spain back in 2002, it was an apartment in a develeopment based on the Costa Del Sol. We made 50% of the payments and the remainder to be paid upon completion. Completion date was last August, it looks now it will be this end of Aug or even end of Sep.

    Our initial plan was like many others, to sell upon completion. We are now faced with a major decision to make and do not know simply what the best route is for us at this point in time. Our developer had a very iron clad purchase contract, so no compensation if there was a delay in the construction of the complex. Our solicitor issued us with a cancellation contract from the developer stating that moneys paid by us to date will returned (should we decide to cancel) – only when they will find a buyer, meaning that we don’t have to complete and until they find a buyer we will not be refunded and have no further rights to the property.

    If we decide to buy, we will end up with a huge mortgage, a difficult rental market and from reading posts on the internet, there are even further surprises with tenants, management companies, furniture etc. At this point in time we would not be able to sustain the repayments of the mortgage should we decided to take one on.

    This is the situation we are now facing, I would like to hear from anyone with good or bad experiences of buying in Spain and what would you do if faced in the same situation.

    Thank you.

  • #58625
    Profile photo of Anonymous
    Anonymous
    Participant

    Sorry to hear about your situation, but as you can imagine you are not alone in that boat.

    However I have to say that it sounds like you are better off than others, in that at least the developer is prepared to return your money once a new buyer is found. However is there any time limit on this contract? Do they have to find a new buyer before a certain date, after which you don’t get your money back, or is the agreement open-ended?

    In these sorts of situations it’s always difficult to give advice as so much depends upon the details of the individuals involved. However based on what you wrote it looks like it can be summed up thus.

    You can’t afford a mortgage unless the rental income is very good.

    The rental market is in bad shape right now, so I guess that means you can’t afford the mortgage, which means you can’t afford to go through with the purchase. That would only leave you one option – to accept the developer’s cancellation contract.

    I hope that by now anyone else thinking of buying off-plan in the hope of selling on before completion has realised that it means you are very likely to end up with a property you don’t want, can’t sell and can’t rent. It’s amazing, but there are still people falling for the off-plan investor sales pitch and believing the rubbish they are told by estate agents selling them.

    Regards

    Mark

  • #58626
    Profile photo of Anonymous
    Anonymous
    Participant

    Totally agree with Mark on this one and would steer clear of a mortgage which probably would not be covered by any rent, so you may be better to go for the option of monies back when a buyer is found but make sure as Mark says that this is open-ended and secure.

  • #58632
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks Mark & Paul for the posts. To give you further info: the cancellation contract however has no dates to which it says when monies will be paid, only when a buyer is found, so I guess this means that it is open ended. What they have agreed to pay me when they do find a buyer is all of my deposit and IVA paid to date I guess the only drawback here is that this could either be 6 months or 6 years. I read from another website that if you have experienced delays from the original completion date which in my case was Aug 31, 2004 that you have a good chance with the Spanish law courts to cancel the right to purchase and have all monies plus interest refunded. Only 2 weeks ago we were issued with the Certificate of Habitation which was sent to our solicitor. However no completion date as yet has been offered. So I am wondering if I should send a fax in to the developers to say I no longer want the property due to the ongoing delays and I wish to cancel the right to purchase & want my money refunded?

  • #58634
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    Anonymous
    Participant

    EVERY SINGLE BRITISH PERSON SHOULD BE MADE AWARE OF THE HORRENDOUS PRACTICES IN THE SPANISH PROPERTY MARKET. Then, MAYBE, Spain will clean up it’s act. With sooooooooooooo many appartments to rent, we will never buy in Spain. We will rent for as long as we want to stay .ie 1, -6 months. It will be a much less fraught option…I hope 😀

  • #58635
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    Anonymous
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    I live in an area in UK where “investors” have been taking advantage of low property prices (encouraged by letting agents!) to buy to let. The buy to let market is now almost at saturation point. This is a similar scenario to the one in Spain – but on a smaller scale.

    I have difficulty in accepting that all the blame should be laid at the door of the Spanish Govt. I had bad experiences when trying to buy in Spain in France and in Cyprus. I used those experiences to do lots of research before going on to buy in Spain.

    There are a number of good publications available in UK ( and some very revealing TV programmes) providing sound and sensible advice on buying abroad. Without doing research thoroughly or – choosing to set aside such advice in search of a relatively “quick buck” – things can go “pearshaped” quite quickly.”.

    Having owned a couple of properties abroad now – I suspect that time spent on assessing the risks involved and a good measure of “risk management” is time well spent by buyers in the buy to let market.

    Hope those having difficulties are successful in solving their problems.

  • #58639
    Profile photo of Anonymous
    Anonymous
    Participant

    John, did you get a Bank Guarantee when you made your payment/s because that normally pays interest at something like 6% on your payments in the event that you can exercise your right to pull out?. It might be worth checking with your lawyer providing he is working for ‘you’ and not the Agent and Developer as is often the case if the Agent recommended him.

  • #58640
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi John,

    When developers fall badly behind on delivery this can present an opportunity for buyers to pull out with a full refund and interest. However you did say, “Our developer had a very iron clad purchase contract, so no compensation if there was a delay in the construction of the complex.” In each case it depends to a certain extent on the contracts signed.

    I wouldn’t send that fax without checking your situation and how to word such a fax with a lawyer. Regards your request for a recommendation on the Costa del Sol see: http://www.spanishpropertyinsight.com/spanish_property_solutions_legal.htm

    Bear in mind that most of the lawyers I can recommend are on holiday in August.

    Mark

  • #58653
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi there seems to be mant pitfalls to buying, we did our home work too. Got independent lawyer. Who read the contract and confirmed it was fine. We dont intend to rent or sell on in the near future, which is just as well as the market is dead. We still await our bank guarantee from the builder compleation dates etc. Our lawyer has promised all these but has not delivered any info at all. We found out last week that the agent had not passed our and others money over to the builder{we received this info from the builder} Luckly we have solved this problem and the agent has passed money over though we are still waiting for a break down of payments. Ours is due to compleate in Sept/Oct. There are clauses for compensation for both parties, but from what i have heard they are not worth the paper they are written on, and would have little chance of getting funds back. But on a positive note we have booked our flights for xmas, and hope things are ready.

  • #58655
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    Anonymous
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    Hi Smurf

    Which lawyer are you using because if he was recommended by the agent, the chances are he’s got their interests and the developer’s more at heart.

    You can now register and add comments naming and shaming on http://www.blagger.com which someone on another site sent me. I think this is a good additional site to Mark’s and gives an alternative place to rant and warn others.

  • #58656
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Paul

    Her name is Beatriz Alvarez Martinez and i was given her name by a friend, but as i have said she confuses us by not getting any info, she has not provided me with anything. and as said that she knows the builder and the agent and said both were very good and honest, i find it very strange for her office to close for a whole month but that seems the way. According to what i know the agentor builder will phone me a month before we are due to compleate, and they will do it in two phases as there are 105 appartments.If i ask my lawyer her answer is erm i will ask and when i put all my points down in writing to her, replies never answer my questions. Being so close i think i have to wait and see rather than change i have also given her full power of attourny. So as she is not back till sept 03. i will just have to wait and see

    Thanks for your intrest

    Smurf

  • #58657
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Smurf

    Sorry I don’t know of her, I thought it might have been the shoddy DLM who mis-handled our business. Wish you luck though.

    Paul

  • #58847
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    Anonymous
    Participant

    The details of the contract mentioned by John reak of an contract to me? I could be mistaken though. I am in the business and would NEVER take a client of mine to one of their “devlopments”. Many people have unfortunately given them business due to their very easy terms through construction. This is a very false economy though trust me on that. They are dreadfull to deal with and their product is very,very poor. There are heaps of litigation pending against them.You have been warned.

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