[Anonymous]

Can someone tell me if any recourse is possible in following situation.

A friend of mine owned a flat near Marbella and fell behind on his mortgage (UCI Bank). Had not made a payment in a year – so obviously bank putting pressure on him. He was trying to sell but having no luck, so bank Rep started presenting to local estate agents as a distressed sale with a 3% commission.

An agency the bank works with (GARU – San Pedro) found a buyer. After negotiations, the estate agency informs the bank Rep who informs my friend that the clients will pay only 130k. By the time he pays the 3% commission and the 18% late fees UCI charges, it wouldn’t even cover all of his expenses – so he obviously tries to negotiate even a little higher price, but agency says clients not going for it. He is stressed out and feels the pressure from the Bank so he accepts. He even has to take out another small loan from the bank to cover flights and hotels and car rental, for which UCI lawyer takes a power of attorney to take a portion of the 3% retention when it comes back.

Two days after closing he discovers from the buyers that they paid 134k (not the 130k he thought he was selling for). Buyers said that the agency told them they would have to pay part of the commission.

So sale went through at 130k – but agency collected another 4k separately in commissions from buyers.

Shouldn’t the agency have to reveal that to the seller??

I am sure they must have covered their a**es somehow – but just thought I’d throw it out there for some of you more experienced people to comment on.

4k may be a small amount in the grand scheme of things – but when you’ve lost almost everything you have, it is a lot of money.

Is there anything he can do??

(Oh yes – they also suggested that he could save a bit of money by not using a lawyer, and as he was trying to cut costs wherever he could, he took their advice).

[Fuengi (Andrew)]

Unfortunately, if the buyer has agreed to some sort of ‘finders fee’ there is little your friend can do.

I do not think there are any legal recourses to recoup the extra.

That does not mean he can inform everyone on every forum about what has happened to him/her.

[Anonymous]

Thanks for the reply. That is pretty much what I figured.

But just doesn’t seem right that agency could be able to charge anything they want on the sale of a property without the sellers knowledge. Agency tells him the buyers will not pay more than 130k – when in reality they are paying 134k. Then seller has to actually borrow money to sell his property.

Not sure how you can ever avoid that issue if you have no contact with the buyers. So for whatever it is worth – beware of Garu in San Pedro de Alcantara west of Marbella.

Oh well – I suppose in the long list of things wrong with the spanish property maket, this is down the list a ways. My sympathy goes out to those with bigger problems, like those who have bought illegal properties and can’t get their money back. Now that is criminal.

[katy]

Garu is a spanish agent and this is a well known spanish practice copied by british agents. When we have sold we insist on seeing the sales contract BEFORE going to the notary and we are the one who pays the agent.

[Anonymous]

your friend should be grateful; it’s a miracle that GARU sold…. as katy mentions this is a general practice with local agents especially at bottom of market where vendors are naive……….. also, don’t forget the bank employee wants his 3% for the introduction……….

[Anonymous]

You make a good point Katy – but in this case the actual sales contract said 130k. There was no mention of the extra 4k as it was paid in cash by the buyers. So seller never would have known except he just happened to have a short conversation with the spanish buyers and it came out.

Another relevant point you make UBEDA. The bank reps role in all of this. All the time he is acting as the middleman between the banks client (seller) and the agency. But in the end he probably knows that the spanish agent is taking an xtra 4k that the seller doesn’t know about and now has to borrow from the bank.

The key I suppose is education. Sites like this go a long way. My friend is not the most computer literate person in the world, but he is now looking for as many spanish speaking forums like this in order to spread the word and educate the spanish people about such practices.

He may have been suckered for 4k – but he has made it his mission to educate as many spanish people as possible – and in the process hopefully Garu loses many times that in business because of it.

[katy]

Just a thought and probably not appropriate in this case, would it be possible to report this kind of underhand dealing to the Notary who undertook the sale?

[Anonymous]

Also this highlights the need to be in control of your own affairs and act before things go from bad to worse.

Your friend could have sold his apartment a year ago (or before) when he knew his situation. All properties will sell and when people talk about not selling, what they really mean is not selling at the price they want.

Going back a year your friend could have probably sold privately for a price which is higher than he has received today, but at the time may have been considered a bargain.

Too many people follow the market down until finally the end of the road is reached and repossession is the last resort.

I know this doesn’t help your friend, but to others in this situation there is probably another 2 years of Spanish house price falls and then a long period of stagnation. There are simply too many properties. So if you can’t hold on for at least 3 or 4 years you need to act now.

[Anonymous]

The deal the agency did with the buyers is their private contract, weather they pay the agent 3%, 10% or whatever has no effect on the value of the sale in the deeds being 130k.

When your friend failed to pay his/her mortgage they then started the process of not being able to say what happens with the property. In the end the bank via the mortgage owned the property from day 1. They wanted to recover costs from non payment of 1 year, which they are entitled to.

You don’t invest in something if you don’t have enough money. yes the crisis has effected us all, but some win and some loose. Your friend has lost this time. It was just a bad investment. I’m not asking Hargreaves Lansdown for my money back when I invested in technology shares which are worth 5% of the initial investment. You take the good with the bad, nobody put a gun to their head, we did of our own free will.

[Fuengi (Andrew)]

@katy wrote:

Just a thought and probably not appropriate in this case, would it be possible to report this kind of underhand dealing to the Notary who undertook the sale?

unfortunely, officially, nothing underhanded has been done. What ever agreement the buyer and agency have has nothing to do with the vendor.

I personally do find this to be a questionable practice. It should be clearly stated in the sales agreementt who pays the commission.

From spanish clients, it seems like this can be quite a common practice in parts of Spain. We’ve even had buyers from Cordoba, etc… ask us how much we charge them! They tend to be suprised when we tell them there is no additional commission to pay us.

[Anonymous]

I agree with both jp1 and ian in that we all have to take responsibility for our decisions. Ian you are absolutely correct in that he could have sold a year ago but held out for more money – he blames no one for his choices but himself.

jp you are correct in that the bank is entitled to recover their costs. None of that is in dispute. But I do disagree with you when you say that because he was late in payments, he doesn’t have a say in what happens to his property. The property was not repossessed – was still in his name – no court papers had been filed. It was his property and he could still accept or refuse any offers put to him, and suffer the consequences.

The only issue I was inquiring about was whether in a property transaction involving an agency, is the agency legally required to disclose to the seller all relevant facts involving commissions and sale price. And are they legally allowed to mislead the seller by telling him that buyers will not go over 130k purchase price, when in fact they are willing to go to 134k.

And I agree with you Fuengi – I do not see collecting commissions from both parties a questionable practice either, as long as it is disclosed. In this case it was not disclosed.

It puts the seller at a huge disadvantage in negotiating a final selling price. If he knows there is considerably more money going to the agency, he is in a stronger position to negotiate a better price. So there is where I have to respectfully disagree with you Fuengi – I see it as very underhanded.

I have always said that the biggest problem with entire system in Spain is the total lack of transparency. It seems like an essential common-sense “check” to have in place – to make it mandatory that all commissions and actual selling price be disclosed. Without it, abuse is almost guaranteed.

[Fuengi (Andrew)]

@dannyk wrote:

And I agree with you Fuengi – I do not see collecting commissions from both parties a questionable practice either, as long as it is disclosed. In this case it was not disclosed.

It puts the seller at a huge disadvantage in negotiating a final selling price. If he knows there is considerably more money going to the agency, he is in a stronger position to negotiate a better price. So there is where I have to respectfully disagree with you Fuengi – I see it as very underhanded.

think you misread me.
I said:
@fuengi wrote:

I personally do find this to be a questionable practice. It should be clearly stated in the sales agreementt who pays the commission.

[Anonymous]

@dannyk wrote:

I do not see collecting commissions from both parties a questionable practice either, as long as it is disclosed. In this case it was not disclosed.

If it is not law, why should it be. There are many things in all Countries where things are only disclosed when it is law.
I just feel that as you say your friend “Had not made a payment in a year”, how can he/she expect to be allowed to have control over something which they have not paid for, they do not own and they are obviously in default of the agreement to finance. Don’t think you can have the penny and the bun.
Just be thankful that the property was not trepossed and sold at a huge loss and your friend still being liable for the full sum borrowed plus costs.

[Anonymous]

Fuengi – Yes I did in fact mis-read your post. My apologies.

Timmy – I think I have already stated why I feel it should be law, if in fact there are no laws governing commission disclosures. And again – the fact that he was behind on payments – at least at that point – did not effect his authority to accept or refuse offers on his property. So it is really irrelevant to the issue of disclosure. I probably should have left it out of the origonal post to avoid confusion.

Thanks to all who offered opinions. Would any lawyers care to put this thread to bed and confirm that there are in fact no laws in Spain which govern the disclosure of commissions earned, to either party to a property transaction.

thanks

[Anonymous]

I’m sure without very much difficulty you could get a solicitor’ to argue your cause / your friends cause and in the end the solicitor will earn a great deal of money and you will end up even more out of pocket.

When things go bad, just leave it and learn for the next time.

My advise and the advise from the forum comes free. Drop it and move on….

Ian

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