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Several from Green Hills are in the process of doing this, on the basis of over a year late, no LFO and one not likely, if ever until 2007/8!! It is a very slow process, but it can be done with a good lawyer who believes and is commited to your case.
Has your contract been declared null & void by a notary?
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Hi, Forgot to say in my reply to your pm, that as I understand it (I’m sure I’ll be corrected if I’m wrong! 😕 ) your lawyer has to take your contract to a Notary to demonstrate that the developers have breached the contract and the Notary will then decide if he can”rubber stamp”and declare your contract null & void and then you can go ahead to present a case to the Court for the return of your monies.
Good luck.
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For those reading this thread and have bought in Green Hills, just to add to Claire’s post that as well as having no LFO, just as importantly – if not more so- we have learnt that the building licence is under suspension until a judicial review in 2007 or later.
This is why the developer cannot claim an LFO through Administrative Silence as he is doing currently.Very good grounds for claiming monies back re. breach of contract (completion date October 2005).
No LFO and no valid building licence.
Can’t get better than that….. 😉n5tew – I know you are involved in Santa Maria Village from your previous posts. The same gentleman (Javier de Luis, the new Planning advisor) at the Marbella Town Planning who has been helpful with this information for us, is also finding out the current status of the building licences for SMV and Los Lagos – will let you, Karen and Laggen know as soon as we hear.
Barbara
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The above cases seem very cut and dried, so how about if the development is 8 months overdue but the developer says the delays were due to the plaster strike, the quarries strike and the rains and therefore out of his control? 🙄
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Patricia, the above cases are far from cut & dried. They are all over a year beyond their contract dates and no end in sight until 2007/8. The legality of the developments is in question in these cases.
As for your situation, your developers excuses for late completion do not seem unfeasable…if true. Is there such a thing as a development being completed on time in Spain? I doubt it. 😕
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n5tew –
I understand you are being pressed to complete (without an LFO) under the threat of losing 100% of your deposit.
Is this correct?If so – do you have this in writing (or alternatively can you obtain it from your lawyer, if this is what he says the developer is saying?).
If it is purely a verbal thing, demand you want it in writing by return.Purchasers on our development experienced the same ‘invitation to complete’ 🙄
…….and after a report we made to the wonderful, no-punches-held lady at OMIC (Sra. Mercedes Bueno) to complain about this illegal pressure, plus more than a bit of ‘verbal slapping’ from her, they not only backed-down but totally withdrew the ‘invitation’ and said they are happy to wait until all paperwork in place.
And guess what – 6 months later they are at it again on our development.And guess what again, they are the same company as yours ! Believe me, they are very ‘special’ ….. and definitely big on the bullying.
It will all give you the time/space you need if you are contemplating the procedure of withdrawing from your contract.
Hope you don’t mind me posting this publicly on the forum instead of a pm, but the above may be of help to others in the same situation as yourself re. reporting this kind of illegal pressure to complete when all the paperwork is not in place.
The rule of thumb (written in stone…) : No LFO, no completion.
And there is not a damn thing a developer can legally do about it.And in the area of Elviria where you are – it is especially risky with all the Green Belt that has been built on illegally.
Investigations by the Junta are going to take some time there, where building licences were handed out illegally by the previous corrupt mayor, Sr. Gil back in 2003.
He doesn’t himself really have to worry about any of it now – he’s long dead!
What a legacy – and what a mess he left.Barbara
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Claire I’m sorry if I sounded as if it was all easy sailing for everyone else – I certainly know that for all of us it is a long, difficult road, and I do think that the postings above sound a lot more horrific than my own. I guess what I was trying to say is that if the development is late but that everything else if ok it might be harder to get the deposit back through the courts.
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Claire
I think that’s why it is so difficult knowing what to do when things go wrong with the long-awaited for home in the sun. You can never seem to get an honest answer as everyone (ie developers, estate agents, lawyers etc) has something to gain from you and they will tell you anything as long as it serves THEIR purpose. -
You know what Patricia? I can confirm that the same applies in the UK. I know this as we are currently trying to exchange contracts to sell and buy another property here. The EA’s tell you what they think you need to hear just to keep all the balls in the air. It’s made worse by the fact that the agents are selling both our houses!!! Unfortunate 👿
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I caught the tail end of a local radio interview yesterday on the car radio. A woman who is a member of the interim council in marbella was saying that nearly all the buildings now in question eg. Banana Beach etc. would not be demolished as people were living in them, the developers would probably just be fined. 🙄 Did anyone hear the whole interview? it was 0n REM:FM
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New to the experience of writing on the forum but have found the information invaluable so thank you to everyone.
Not sure if I have understood this correctly. My Lawyer states that my porperty completion is when the Architect signs it off as finished regardless of the fact that there are a number of issues with the build and there is no LFO. Can this be right ?
There is no Bank Guarantee as I have just found out that it was written in contract that puchasers should pay to put this in place themsleves even thought the REA said they had the legal checks done and all was o.k. to sign!It would appear that we are dealing with one of the less worthy developers who have been in the news so much lately and I could be on the verge of losing the money already paid if I don’t complete.
It is not Green Hills but another development not too far along the coast .Sorry if going over old ground. Any help appreciated.
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Hi Isabella
Your lawyer is incorrect in saying your property completion is when the Architect signs it off as finished (whether there are ‘issues’ with the build or not).
The purpose of a Licence of First Occupation is that it is given after an ‘official’ inspection to ensure that not only the build is in accordance with the building licence, but that everything including standard of structure, electrical wiring, drainage etc etc. has been done correctly.
Re. your Bank Guarantee – your lawyer should have obtained one for you if he genuinely had your (and not your developer’s) interest as priority.
It is your legal right to have one. By law the developer has to provide you with one, and it is a criminal offence when he doesn’t – punishable by a large fine or imprisionment.
It is also a legal requirement for the developer to give you this Bank Guarantee free of charge – despite the clause in your contract. Contracts are not above the law, so this clause is an ‘illegal’ clause.Like Dorothy, am wondering if your lawyer was recommended by your developer. He certainly is not giving you correct legal advice.
You say: “I could be on the verge of losing the money already paid if I don’t complete”.
If there is no LFO, the developer cannot make you complete, nor legally keep your money. Suggest you report this threat to OMIC.You say: the REA said they had the legal checks done and all was o.k. to sign!
Dare I say it…??
…..Here goes…..deep breathe….Don’t believe a word of it !!
(Oh dear, I can feel some flak coming on…..)As Dorothy says, you are only legally obliged to complete once this LFO has been issued, despite what the developer and your lawyer is stating.
I personally would strongly recommend you seeking some independent legal advice.
Barbara
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Isabella,
Does your contract also have other abusive clauses, such as……….
Developer chooses the notary
Buyer pays the Plus Valia
Buyer pays for cancellation of builders mortgage?There are also insinuations on another forum that the developer is charging £500 for temporary utility connections. ❓
Take Barbaras advice and seek independent legal advice, and Good Luck
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Isabella
From your post I can say with confidence that you are in a situation similar to ours and hundreds of others writing on the forum. Problems like yours have been discussed extensively here.
I suggest you do a search using ‘LFO’ or ‘BG’ or ‘Bank Guarantee’ and reading all the threads that come up to get all the answers you need.
However, the most important thing is: do you have a lawyer? And if yes, do you trust him/her?
Katerina
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Hello everyone – thanks for your replies. Congratulatipons to Claire, Barbara and Katerina on their recent success. Your continued postings are extremely helpful and may just achieve the same success for us eventually. Would it be possible to have the name of your Lawyer by pm if necessary or will he now be inundated with requests?
Claire – I just caught up with your friend Paul who started the “Awful Estates” catch phrase and he has given me some very sound advice.
Barbara – Yes we have been naive. At the beginning when the Agent (Ocean…..sounds like something you would step in) presented the contracts for us to sign as we trusted them to have made the relevant legal checks when they asked us to sign the contract. How would we have known about a Bank Guarantee at this stage? The Lawyer recommended for completion has now said he was not involved at the outset and therefore cannot help with any BG. Is this right? Very aware of our rights not to complete without the LFO but he has mentioned that it is up to us whether we decide to complete or not.
We have another very strange situation which I would rather not post here but explain on pm for your advice if you have time.Dorothy – I have looked at the contract regarding further abusive clauses but to be quite frank it’s a b….. shambles and the whole situation is an abusive of decent hardworking people who just wanted a small place in the sun for their retirement. It does mention a Notary chosen by the Developer but I think it also suggest that it is possible to choose an alternative if we advise differently within the time frame.
It also states that the conclusion of the construction is initially anticipated for approx 20 months after the signing of readress – whatever that means. Obviously not a lot as we are now 4.5 years since the deposit was paid and still no completion. How much over the time limit does this need to be before we can call a breach or null and void contract? There is no specific month/year written in the contract.
The REA put together a completions package – all of those offered to assist us have done nothing more than take money up front and earned interest for themselves. How they sleep at night, I do not know.All ongoing responses much appreciated to try and bring this nightmare to an end. Mark – hope there is nothing in the above that you will need to block out.
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Hi Isabella
You say:-
“The Lawyer recommended for completion has now said he was not involved at the outset and therefore cannot help with any BG. Is this right?”
Am not sure if I understand. Did you have one lawyer at the time of signing your contract, and now another re. completion? If so, are they with the same law firm?
Barbara
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Barbara,
I am almost embarassed to say this, but I did not have any personal legal representation on signing of contract as I was led to believe that everything had been checked out by the Agents and I only required legal assistance on completion. I guess I only have myself to blame for the mess I now find myself in. My only defence is that I was too trusting of people who I believed were as honest as me. How wrong I was.
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@Isabella wrote:
My Lawyer states that my porperty completion is when the Architect signs it off as finished regardless of the fact that there are a number of issues with the build and there is no LFO. Can this be right ?
There is no Bank Guarantee as I have just found out that it was written in contract that puchasers should pay to put this in place themsleves even thought the REA said they had the legal checks done and all was o.k. to sign!Isabella –
First, read again my comments above re. your legal right to a free Bank Guarantee. That is your position in this purchase.
Secondly, as this lawyer you now have has given you ‘incorrect legal advice’ (I would like to describe this differently…..), and seems to have no interest in obtaining a Bank Guarantee for you – get a new one.
He is obviously rubbish.Just what is his problem?? He is either working for you or not.
You don’t have a Bank Guarantee? Tell him to act for you as your lawyer, get off his backside and advise the developer that by law they must issue you one – now.
He may not be responsible for you not having one in the first place, but for goodness sake, it is part of his job now.Just based on his c**p so-called legal advice of telling you the property is ready to complete on once the architect has signed it off, get yourself a new lawyer who knows what the heck he is talking about.
Get your file from him, and tell him you refuse to pay him anything due to the wrong legal advice he has told you – if he gives you a hard time over this, tell him if he refuses to give it to you, you will put in a report to the Colegio of Abogados listing all his misguided legal advice. -
I had a Bank Guarantee that expired just when I could make claim. Lawyer did not ensure that I have correct BG and is now not even mentioning that I can reclaim my deposits via BG as clearly they know that is has expired and they can’t be bothered to get it renewed as they are working with the developers.
After reading posts about BG from this forum, I asked my lawyer about BG – following conversation took place:-
Me: Why did you not ensure that I have correct BG and why is it not being renewed even though it has been 9 months after I was suppose to get the keys?
Lawyer: It is because you did not buy the property through us.
Me: Ummm!!. But you are lawyers – how can I buy a property through you. I bought it via estate agent as any normal person will buy property.
Lawyer: But you paid all the deposits and then hired us.
Me: Ummm!!. No – I went to estate agent and paid nominal reservation fee to them in the morning and straight after that I came to you and even gave you POA to act on my behalf for the property. Two months later I paid remaining 30% deposits.
Lawyer: Look – the bottom line is that we are working very very hard to get your money back and you are not helping situation by asking us questions every other day.
Me: Ummm!!. I don’t think I am asking too much to get answers to these important issues regarding BG.
Lawyer: Do you want us to continue acting as your solicitor? It looks like you don’t trust us – other 10 clients are all very happy at the hard work we are doing for them. We are very close to getting your deposits back and will probably get it by January.
Me: Ok – that sounds good.
I am still shocked that at the end I did not get any answer to my original question. Clearly they are showing me a big carrot and when January comes – they will have other execuses for not getting my deposits back from the developers.
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Forgot to ask our legal experts some questions:-
It is law in Spain that a Bank Guarantee has to be provided by the developer of off-plan (and probably should be checked by any decent lawyer) but is it in the law that the guarantee must not have clauses such as expiry date (which in my case is before I can make claim) which make the whole Bank Guarantee worth less.
From your experiances, what happens if the developer are taken to court – does the judge see through this type of scam or do the developer get away with it?
Also, the deposits paid for off-plan properties go into special account – when does developer get their dirty hands on this cash? Is it when the contract is signed with all the building regulation ok?
If the developer goes bust then what happens to the cash in this special account? Can the purchaser get it back?
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@katy wrote:
Sorry, I don’t know the answers to your questions but I really think you should change lawyers as the one you have sounds ****.
Totally second that, Katy.
bp – your questions were discussed in a thread back in September, so am posting part below:
Posted: Wed Sep 27, 2006 6:14 pm
If a Bank Guarantee has expired, you can not claim against it.
It is useless, may as well throw it in the bin.If you are not in a position to complete yet and your Bank Guarantee has expired, it is your lawyer’s job to apply to the developer to issue a new one.
A developer is legally obliged to issue a purchaser of an off-plan with a Bank Guarantee that gives coverage until the day you complete.
If you have no ‘current’ Bank Guarantee in place, and your development is not ready to complete on (for various reasons, such as no LFO yet, or building licence under investigation etc. etc.) you are in a totally vulnerable position regarding your deposit monies.
And if by any chance your developer goes bust, or renegades on his loan payments to the lending bank, it is the bank who has first grabs (priority) on your property, not you. Until you complete and then register the property in your name, it belongs more to the lending bank than it does to you. It is an asset of the developer that will be called in by the Bank.
You will be left nowhere except out of pocket re. your deposit.
That is the difference between having a valid Bank Guarantee and not having one.The intention of the law concerning the issue of Bank Gurantees is that it is only cancelled on completion day.
This law cannot simply be altered according to the whims of any developer, by putting an expiry date.
Therefore you should always insist on a BG without an expiry date.
(By the way, Completion Day is not to be confused with when the architect’s ‘Certificate of End of Works’ is issued, a common ploy by some lawyers/developers).
A COEW has diddly-squat to do with the ‘legal’ completion of a building, only a LFO can do that.With regards to when does the developer get their hands on your money –
the way it should work is your money is paid into an escrow account (‘established to hold moneys pledged and to be used solely for a designated purpose…’).
Based on this deposit/’security’, the bank issues the BG.
However, what sometimes happens (as in our case) is the developer doesn’t pay your (and others) money in to one of these accounts, uses the money for their own cash flow purposes 😯 – and only when purchasers push-like-mad for a BG does the Bank issue one based on developer’s directors ‘personal guarantees’ as security.Not the way it is supposed to work, but there you go – this is Spain.
Have you made sure that your development’s building licence is not one of those currently under investigation?
Sometimes a reason for a lawyer unable/’unwilling-because-in-cahoots-with-the-developer’ to get a Bank Guarantee.Which development are you with?
Barbara
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If you want to read the thread/discussion:
http://www.spanishpropertyinsight.com/forums/viewtopic.php?t=1556&start=0
Second poster Laggen begins re. BG’s.
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@bpNOTinSpain wrote:
Forgot to ask our legal experts some questions:-
It is law in Spain that a Bank Guarantee has to be provided by the developer of off-plan (and probably should be checked by any decent lawyer) but is it in the law that the guarantee must not have clauses such as expiry date (which in my case is before I can make claim) which make the whole Bank Guarantee worth less.
From your experiances, what happens if the developer are taken to court – does the judge see through this type of scam or do the developer get away with it?
Also, the deposits paid for off-plan properties go into special account – when does developer get their dirty hands on this cash? Is it when the contract is signed with all the building regulation ok?
If the developer goes bust then what happens to the cash in this special account? Can the purchaser get it back?
It is quite common that BG expire before completion. That’s why lawyers have to renew them.
Take to court a developer on a BG that has expired ? You would probably lose. The responsibility is your lawyer’s to renew it. The developer already provided a BG. It’s the banks who set the expiry dates on the BGs, not the developer AFAIK.
The special deposits is very very very rare. It’s the bank who guarantees your money, normally there is no escrow account or anything. It is highly uncommon despite the wording of the law.
“Should” there be such a special account, your money is guaranteed. And even if they go bust and there is no special account your money is also guranteed by the bank providing your BG is valid and has not expired. That special account is not needed really. The whole purpose of BGs are to guarantee stage payments should developers go bust.
As I always recommend, insist on your lawyers faxing you (or emailing a scan) a copy of the Bank Guarantees or Insurance Policy so you can check expiry dates it is much too important: IT’S YOUR MONEY ! Accept no excuses because there are none, it is a lawyers duty purchasing off-plan. And it’s free, the developer can not ask for extra money for the BGs and if he does he can be sued and you would win.
Valid BG—stage payments secured and guaranteed no matter what. No need of “special account”.
Expired BG—you lose all your stage money (plus deposit) if something wrong happens (i.e. developer going bust)Btw, BGs cover also-or should- the reservation deposit. BGs should be provided 30 days after a stage payment is done. Although this should be worded in the exchanges contract this is extremely rare and must be addressed by your lawyer. And that’s where a good lawyer steps in and includes it fighting the developer, one of many things a gestor wouldn’t do for you, Jude.
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Charlie: Thx for that link – very interesting indeed.
Katie: I will be changing my lawyer – wish I had been more careful in the first place. Must say that I am learning the hard way and it is not good at all.
Draken: What I don’t understand is that why should expiry date be allowed in the BG if it used to betray purchaser – afterall BG are there to protact there interests.
Hope you can answer following questions:-
1: How long does it or should it take for BG to be renewed? 1 week or several weeks?
2: Who renews BG – bank who issued it or the developer?
3: Does anyone know how to check developers past records and thier balance sheet?
Thanks
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Company checks, ………………..look at the post on…………….
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Bhav,
1. If the developer overruns to the extent that your BG expires, then the company should arrange a new BG to take over immediately, so you are never exposed. That’s the theory, at least. But there are a lot of rubbish developers out there, who don’t take their obligations to clients seriously.
Renewing can happen quickly, if the right people pull their fingers out. Good developers I know get these things done in a week to 10 days, maybe even less. Others take 3 months. Others still never provide BGs, regardless of what the law says.
I’m putting together a guide to the best developments in Spain. All the developers I include provide BGs promptly, as standard. That’s the way it should be. But like I’ve said, there are lots of useless ‘developers’ out there cashing in big time on Spain’s property boom.
2. It’s actually the bank who issues the BG, or if it’s an insurance policy, then an insurance company. But the developer has to request it, and of course pay for it.
3. Checking a developer’s accounts is often a waste of time. Many developers set up a company with minimum capital to do a project, then close it down at the end. Not always, of course, and maybe not in your case.
Mark
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It does seem that there are more incompetent lawyers that good ones and the developers have been doing more or less what they wanted with the buyers without interference. I have also seen a recurring phrase in many posts that when the going gets tough the lawyers are telling them to find another lawyer 🙄
There are many problems in Almeria and Murcia too according to other forums. Was reading about one development the other day where people have been waiting 3 years and not a brick laid, some have even furniture packages in storage 😯
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Pleased to see that I am not the only one who thinks that the suggestion that only 1% of Spanish lawyers are incompetent (to put it tactfully) is wide off the mark.
There are huge problems in both Murcia and Almeria with off-plan developments. I have written to the OMIC, to the Ilustre Colegio de Abagodos de Murcia and to Senor Ramón Luís Valcárcel, Presidente de la Comunidad Autónoma de Murcia. None have bothered to reply.
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Tilly
why doesn’t that suprise me? The whole system in Spain seems geared to ripping us off at just about every level! Even when a cut and dry case of breach of contract reaches court, they are not often doing the right thing, by awarding a decent sum to the buyer or coming down hard enough on the developer. It is just wrong, which ever way you look at it.
The dodgy U.K agents are as much to blame, but like the dodgy Spanish developers and lawyers, they will carry on very happily thankyou, if they are allowed to get away with it!
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Patricia:
Those reasons for delay are considered by the Supreme COurt as part of the commun events that a good developer needs to take into account whe he is setting a date for completion. Ofr course ther are no excuses fopr neverending buildings and… ( also Supreme Court doctrine) you need to be notified of those happenings and give express consent to the extension. If they don´t request your consent that unilateral extension is null and void as against the principle of bilaterality of contracts. Of course that all is against COnsumers regulations in Spain.
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maria
four and a half years after putting one third deposit down, (should have been build in 18 months!) still no LFO, appartment 22% smaller than contract, and no bank guarantee ever issued by developer. We are obviously cancelling contract. Can there be any possible reason for a court not to make sure we get our money back with considerable compensation?, we don’t think there is, but we read of so many horror stories regarding justice in spain, we cant sleep well!
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bp
that’s a risk we have had to take. If we had had honest agents/ developers/decent lawyers from the start, we would not be in this mess!
Assuming that a large developer, english agents and their recommended lawyer would be honest or trustworthy, because we were paying them to be, was our huge mistake!
With regard to breach of contract, we are in the right, so we are confident we are doing the right thing.
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Katy
for four years we assumed a BG was in place, it was only when i started reading horror stories, that we checked it out. It was only then, that our lawyer at the time, bothered to inform us that there never had been a BG issued and also that the appartment was 22% smaller than contract. Had we not enquired, the said lawyer would have let us complete with all the breaches of contract and no LFO. At one stage, they and the agents, even advised us to complete and sue afterwards if we wanted. The lawyer later denied advising that, after i said we would be crazy to complete.
Who is the most to blame for no BG ? the lawyer, the agents, the developers? Should we be taking action against all three?
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Charlie
yes, this is now obviously a case of the lawyer not working in our best interest. We always suspected that, but whenever we queried things with the lawyer, he said ” why do you doubt my word, i am your lawyer, why do you think we are not doing our best for you” He then said our first lawyer should have sorted the BG out, so we got in touch with first lawyer (both agent recommended) and they said ” well your agents knew, A…s didn’t issue any BG’S on that development. We then went back to the agents, who said ” it’s o.k we are insured, so your money’s safe” We realise now that means the agents money was safe, not ours!
Stiched up like a kipper, i think is the old phrase to use. Lies lies and more lies. I’m just glad now that we found sites such as this, and would like to say a big thankyou to those who have helped us so far, with honest and down to earth advice and pointed us in the direction of a good lawyer. We still have a long way to go to get justice, but at least i now feel that we are on the right track.
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It’s amazing how dodgy lawyers find a way to convince most of the people when confronted with stupid execuses – they must go to same school.
I second you in saying that this site is very good for helping people in understanding some of the complex issues involved in property purchase – thanks to some of the good regular contributors. Keep it up.
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