- October 23, 2006 at 9:31 am #52385
Hi , I am hoping that someone from the legal team can advise on our situation as we are not convinced we are being given the correct information from our agent and their approved lawyer firm.
We bought into an off plan project almost 2 years ago. Although the villa should be ready about know , it is going to be at least another 12 months through delays.
This is not the problem as we would have been ok to wait. The problem is that due to family circumstances , we are not going to be financially able to complete.
We have paid 50% already and intended to take the balance on the builders mortgage.
The properties have gone up by at least 10% since we purchased.
I have discussed our situation with the agent and the lawyers they introduced us to and requested information on my options especially “ selling the contract pre-completion” as this was advised to me by a friend as our best “financial” course of action.
We have been advised by both parties that this is not possible as the developer does not allow it and will not “assign” to a third party.
I questioned this as I have heard of people , especially investors doing it all the time.
I was told that this is because they have special contracts or they are on developments that allow it.
I was told that I have two options:
1) Claim on the Bank Guarantee when it expires (shortly) as the property will not have been delivered on the time stated in the contract. But I will loose the deposit amount and not get any interest.
2) Wait for completeion , take the mortgage and then hope to sell quickly and pay the CGT on the profit.
I can understand developers not wanting it done if they have further houses to sell , however in this case , they are almost sold out and they are going to be at least a year late – surely they cant stop us OR can they?
Many thanks in anticipation of your help.
- October 23, 2006 at 10:16 am #66975
I would like to point out, to avoid any misunderstandings, that none of the Spanish lawyers who give advise in this forum are paid by Mark. We are not his “legal team”. We are independent.
Back to your query, you are right.
Only if in the contract there is a clause in which the developer agrees for you to assign the property to a third party prior to completion (normally at a given fee) can this be done.
As for enforcing the Bank Guarantee on the grounds of late delivery (one year) I doubt you will be able to do this because that is not it’s purpose.
I’m afraid you will have to complete like it or not or else litigate and try to pull out of the contract alleging that the property is being delivered substantially late, and the latter will be expensive as well. In any case it is hard to give an opinion without having read the wording of your contract.
- October 23, 2006 at 12:55 pm #66976
Many Thanks Drakan for your prompt input and apologies on my part for the wrong choice of phrase.
I realise that you guys are not connected to Mark.
I guess it may be worthwhile me approaching the developer directly and offering a fee to get the contract ammended to allow it to be sold – worth a go I suppose?.
- October 23, 2006 at 1:21 pm #66977
The fee to assign the property should be less than 1.400€. That’s the standard fee. But it is going to be very hard for you to do it because the developers are now worried about the real estate crisis and are really desperate to complete and sell off the units.
- October 23, 2006 at 1:55 pm #66978
If you get over the hurdle of assignment there is still the problem of actually managing to sell on 🙁
- October 23, 2006 at 2:42 pm #66979
Thanks , thats interesting Drakan that a “fee” would be appropriate – I was thinking it would be a % of “profit” , which I would not have minded.
As I said before , , the development is almost sold out , so they should not be too worried about their ability to sell other units.
It was cut back quite a bit through planning problems which caused the delay and I do know that there has been a lot of interest in the model that we signed up for where only a few were released and they planned to release more in the phase that has now been scrapped.
- October 23, 2006 at 3:05 pm #66980
A lesson to be learned here.
Firstly, good luck and hope you can get things sorted.
Now the lesson.
Say Purchase price 100.000
For 3 years, loss of earned interest could be 7.800 @ 5%
Let’s assume a 10% increase in sale price, if you are lucky, especially today, the way the market is.
Profit on sale 10.000
Legal fees on purchase and sale, plus taxes, etc.
Result, if all went well and able to find a purchaser at the new price…. a loss, just for a developer to be allowed to play with your money.
Certainly the current times are not to buy with making a profit in mind, just buy to enjoy it.
- October 23, 2006 at 4:57 pm #66983
I would try to cancel the contract ( you have got enough reasons due to the big delay of 12 month, unless you have formally consented) and get money+interests+damages back.
- October 23, 2006 at 5:49 pm #66984
Thanks everyone for their input.
mg – I accept your point “if ” I was an investor looking for a profit and had no intention of taking the property – as you indicate , in this case it would be a “no brainer”. Had I been an investor , I would have looked for a development with a much lower deposit and in an area that had greater “potential” capital growth.
As I said earlier , this is down to unforeseen family / financial circumstances that , without going in to detail , in my wildest dreams , I would never have envisaged and the property was intended to be a family holiday home and was chosen on its location , nothing more.
Just really trying to get to the facts of my options for “damage limitation”.
Maria – I dont believe that I have consented to the delay other than accepting a BG extension – does that constitute acceptance?
Thanks again everyone.
- October 24, 2006 at 12:01 pm #66992
I would have to see the contract and the bank guarantee.
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