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I purchased a property 3 years ago at Mijas Costa (Jockey Villas), there is a clause in my private purchase contract which says should I choose not to complete I would receive 25% of my investment back.
The property was finished late & I discounted some advice to go to court to have all my investment returned as I wanted to avoid lengthy & costly court proceedings.
My lawyer (who is independent from the developer / agent) indicated to the developer that I would not be completing on the property & wished to have 25% of my investment returned. The developer agreed a figure with my lawyer and promised to resolve the matter by the end of March 08.
I have now received a communication from my lawyer which says that the developer is no longer willing to honour the clause in the PPC which would return 25% of my investment to me. He has however indicated that he is willing to offer me alternative property (which I don’t want).
This is not a surprise as Mark posted details of the developer’s financial struggle on this site earlier this week (I won’t mention the developers name but feel free to PM me for details).
My questions are:
1. Can the developer to do this to me?
2. If I take the developer to court should I engage a litigation specialist, or should use my current lawyer who essentially specialises in conveyencing?
3. If I’m going to the hassle of court should I pursue the developer for the return of my entire investment on the grounds of delayed completion (should have been finished 6 months ago)?
4. If the developer goes bust what are the chances of me receiving anything (I have a bank guarantee at the moment but I’m not sure how long this is valid for).Sorry it’s a long post folks, any advice much appreciated.
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My questions are:
1. Can the developer to do this to me?
Developers have no rules. They do what they like and seem to get away with it
2 If I take the developer to court should I engage a litigation specialist, or should use my current lawyer who essentially specialises in conveyencing?
You will need to engage a litigation lawyer as they are familiar with Court procedures.
3. If I’m going to the hassle of court should I pursue the developer for the return of my entire investment on the grounds of delayed completion (should have been finished 6 months ago)?
6 Months is not a long time to be overdue in Spain. Definately sue for the full amount if you go the route of suing the developer. IMO not the best way to go.
4. If the developer goes bust what are the chances of me receiving anything (I have a bank guarantee at the moment but I’m not sure how long this is valid for).
You should sue the Bank under the terms of your BG not the developer. Your BG is there for precisely this reason, that you are protected if the developer goes into liquidation or does not deliver the goods. ( I’m not sure you would have a strong case at this juncture in the eyes of a Judge, whatever the law may say, if you are suing because of a 6 month delay, but you need to be guided by a really expert lawyer) Even if the developer does not go under, still go for the Bank using your BG. They have the money. Your BG is valid until completion, ie. when the property is ready for occupation.
I am not an expert but this is just knowledge that I have picked up from going through a similar procedure and from other people that I have been in contact with.. -
The property has been classified as complete by the college of Architects. I understand that the property has only just received a habitation license & I guess this is why the developer is applying pressure to complete (they have asked me to do this on April the 9th).
My fear is that by the time I pursue the developer through court the Bank Guarantee would be no longer valid. This is worrying as it is known publicly that the developer is suffering financial problems.
In a worst case scenario I could take the developer to court & win, however the developer could go bust & my bank guarantee could have lapsed during the process!!!!
Nightmare.
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I understand that the property has only just received a habitation license & I guess this is why the developer is applying pressure to complete (they have asked me to do this on April the 9th).
😯
DGR, Are you absolutely sure about this?
The certificate of end of works from the Architect is not enough to make you complete. You must have the Licence of First Occupation.
Has your lawyer got a copy of the LFO? If he has then you must see it for yourself. If the property is complete and it has the LFO then as far as I am aware, your BG is no longer valid and you must go to completion. Your developer could sue you for non completion!
Is your lawyer saying you have a case?
PLEASE don’t be under any illusion that you can win this case. I know many people who have much bigger problems than yours and have lost their case and are going to appeal. Our property was not built, we had a BG and still we had to go through two court cases. The bank appealed against the first judgement which was in our favour. -
Claire,
My lawyer says the terms of the PPC are clear, should I decide not to complete 25% of my investment will be returned.
He is surprised that the developer is refusing to honour the deal & suggests that we threaten or indeed go to court.
My concern is that we win & the developer has no money, on top of that by the time I go through court I will have no BG.
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Claire,
I realise many people including yourself are in a worse position than myself & I do feel for them all.
I’m also under no illusion that I should expect justice, however the PCC is clear & the developer should honour it. It’s hard for me to see how the developer can argue against honouring the clause in the PPC which guarantee’s the return of 25% of my investment.
After all the developer did initially agree that this was the case, agreed a figure for return of investment & agreed a date by which the investment would be returned to me. -
Hi DGR,
We won our case over a year ago, so our situation is irrelevant. I was just using our case as an example of what we all may see as a cut and dry case is in reality very different to the way the Spanish Judicial system sees it and acts upon.
If you are going to sue for just 25% of your deposit, it could cost you a lot in lawyers/court fees. You need to do the sums. I don’t see how you can sue for anymore than the agreed 25% when as of now the developer has completed the building and the LFO has been issued. The most important thing you need to ascertain is “Has the LFO been issued?” The only sure way to find out is go to the Local Town Hall. It will be a different situation if there is no LFO.
You should take the advice of a litigation lawyer. I would be very interested to see what Maria de Castro or Drakan would say to you in this case.
In a worst case scenario I could take the developer to court & win, however the developer could go bust & my bank guarantee could have lapsed during the process!!!!
That is why it is better to sue the Bank and not the developer..if you have a BG.
I’m also under no illusion that I should expect justice, however the PCC is clear & the developer should honour it.
That’s what many people think and hope for. It doesn’t happen!
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Claire,
I’m pleased that you won your case & thanks for the ongoing advice.
I had communicated with Maria on this matter a number of months ago & she indicated that I had a case. However I was reluctant to go to court & felt that as the developer had indicated that he was willing to return 25% of my investment all was fair (everybody seemed to be operating to the letter of the law).
However the latest development (developer refusing to honour PCC contract) is another matter all together.I have not seen the habitation license but I’m assured it exists (I have requested a copy).
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If the LFO exists and has been granted since your earlier communication with Maria then that may alter her advice. If the LFO had been granted after you had started proceedings against the developer then that would again be a different matter.
I hope you come to a satisfactory conclusion to your problem. Please let the forum know what happens. All experiences are greatly welcomed….good and bad! 😉 -
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As promised in this thread previously here’s the latest & the final update on my Spanish property adventure.
The property developer in question entered administration which meant my lawyer had to renegotiate with them. We filed papers at the court in Fuengirola & soon afterwards the administrator contacted us to try to achieve a negotiated settlement.
This was done & the full amount listed in the original private purchase contract was returned to me yesterday, however I had to stand the loss of interest & the legal fees. All in all I very much regard this as a result as if I’m honest I expected to get nothing.I’d like to thank all the posters who offered advice & shared their experiences with me in this forum. Your help was very much appreciated.
To those still in the thick of legal wrangling, my thoughts are very much with you. -
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Forgot to add that a member of this forum predicted on another thread that I would be offered “other” properties should I choose not complete.
This was indeed the case & if I’m honest it got to the point where I had to think long & hard about it. The developer / administrator needed to convert property to cash in quick time. As this was the case much more substantial properties were offered to me at the original price.
The fact that I’d lost faith in the Spanish property system (buying a property not as per original PPC via an adminstrator rather than developer detailed on the PPC) struck me as a legal minefield. That & having to explain my actions to the wife if all didn’t run smoothly made me decide to bail out. -
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DGR
that’s great news. So pleased to hear some getting justice.
It looks like the Spanish system is the final nail in the coffin for us. Even though we have a court embargo in our favour, because our case is long reaching court, it’s meant the developer could well go bust before our trial, so although the case will still go ahead to get us on a creditor list if we win,(behind banks , employees etc, so is as good as useless) the embargo means nothing!
Claire
fingers crossed for you. As you say, being right and getting justice in Spain, is not remotely something to take for granted!!!
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