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I know that there are a lot of very qualified and experienced people who contribute to this forum and so I’m asking for some advice.
In 2007, I paid a deposit for an off-plan property on a development that offered a lot of facilities and a guaranteed rental scheme of 5% return on the original investment.
Unfortunately what wasn’t made clear was the fact that there were a number of different businesses involved in providing all of this such as different developers responsible for marketing the property and actually building it, a different developer responsible for the resort facilities and a separate business responsible for the rental scheme (let alone the insurance company that should underwrite it!).
In the present economic climate, I am nervous that at least one of these businesses will be in financial difficulties. However to check out each of their financial positions would be extremely costly and at the moment I’m not sure whether they would provide me with the latest accounts.
So I’ve basically got 3 questions (I could ask more but the list would be too long!)-
1 Is their a Spanish equivalent of a companies house where the latest reports may be purchased at a reasonable price?
2 Is their any way that I may monitor a Spanish businesses’ finances so that I am able to act as soon as possible?
3 Any ideas where I stand legally if the guaranteed rental scheme is no longer offered?
Thanks – Russ -
” Unfortunately what wasn’t made clear was the fact that there were a number of different businesses involved in providing all of this such as different developers responsible for marketing the property and actually building it, a different developer responsible for the resort facilities and a separate business responsible for the rental scheme (let alone the insurance company that should underwrite it!).”
This is a normal practise through out the world as no one company is big or versatile enough to offer an inclusive.
“In the present economic climate, I am nervous that at least one of these businesses will be in financial difficulties. “
In such a situation the company will be replaced with another. It will not be straight forward as there would be legal wrangles.
“However to check out each of their financial positions would be extremely costly and at the moment I’m not sure whether they would provide me with the latest accounts. “
Apart from cost as you said the information will be historic and not all documents may not have been filed, besides if they did file them, their accounting period end will not be the same.
1 Is their a Spanish equivalent of a companies house where the latest reports may be purchased at a reasonable price?
Yes, there is, the address was on one of the forum subjects.
2 Is their any way that I may monitor a Spanish businesses’ finances so that I am able to act as soon as possible?
Experian report. This would not be a real time information.
3 Any ideas where
Google Experian
Finally, your 5% guarantee. A guarantee is as good as the person/body providing it. If they don’t have the capacity to pay. The guarantee can be used as a loo paper. The properties that come with rental guarantee has the amount of guanratee front loaded on the price so you are basically getting your own money back. This money than also attracts Tax etc.,
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Thanks for your reply Shakeel – it seems to me that I’m stuck between a rock and a hardplace.
I’m led to believe that in the UK if a business is made bankrupt, then the contract cannot be transferred to a third party to be enforced without the purchaser’s agreement. In the present economic climate I’m not convinced that there will be many other busineses that are willing to take on the commitments of developers in financial difficulties. As a result I assume that bank guarantees were introduced to protect the consumer in these circumstances (well at least in theory!).
Whilst I appreciate that guaranteed rental schemes are often built in to the price, I assumed that I would be able to offset this income against the mortgage repayments. This hopefully would help against tax. In any case if they are unable to provide such as scheme then surely the strict Andalucian (again in theory!) consumer laws would have been breached.
Once again thanks for your comments Shakeel – do you remember the name of the thread where the Spanish equivalent of companies house was mentioned. -
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Unfortunatley I suspect that you are right Katy. My background research suggests that this is exactly what will happen.
It feels like I’m just about to be involved in a road crash where I can see exactly what will happen but I can’t get out of the car!
This scheme claims to be underwritten by insurers although I have heard that the business seems reluctant to show the precise details / documentation.
What can I do?😥
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RussW:
“I’m led to believe that in the UK if a business is made bankrupt, then the contract cannot be transferred to a third party to be enforced without the purchaser’s agreement.”Correct, in practise they will not honour such contracts.
“In the present economic climate I’m not convinced that there will be many other businesses that are willing to take on the commitments of developers in financial difficulties. “
There are businesses, who do this at a price i.e. the price they pay for the purchase of such a business. They also see what the commitments were contractuly & how these terms were worded. This will be picnic for the Vultures
“As a result I assume that bank guarantees were introduced to protect the consumer in these circumstances (well at least in theory!).”
In theory is the operative word & the absence of good faith.
“Whilst I appreciate that guaranteed rental schemes are often built in to the price, I assumed that I would be able to offset this income against the mortgage repayments.”
As, a non Spanish resident you will not be able to offset any cost. Spain & other Med countries have a very short term view about inward investment to their respective Countries & they feel that who ever can afford to have money left over capital or revenue after paying for the roof over their head are rich & are fair game. Normal assumptions are dangerous in Spain.
“In any case if they are unable to provide such as scheme then surely the strict Andalucian (again in theory!) consumer laws would have been breached.”
Yes, & so what ??? speak to the Priors & they tell you about consumer laws !!!
“do you remember the name of the thread where the Spanish equivalent of companies house was mentioned “
Sadly, no, I have asked Mark in the past to advise me how it is done. A kind of google search for the forum. As there so many subjects that gets repeated & forum users feel that they don’t need to go down that route time after time.
The only company where the Guarantee works in the French Lease back system, they don’t guarantee more than 3%, French being French it comes with many string attached for years & in an ever changing world this does not make it attractive,
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“They knew that at the time. The Developers set up a subsidiary co. with tiny assets and go out of business asap.”
This is what I mean by GOOD FAITH. Even if they don’t place the company in winding up. The Developer will place conditions, 5% return if a certain net profit is made. The net profit can me manipulated e.g providing his new born child with a bonus and this will reduce the net profit to a level before the 5% guarantee kicks in.
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