Reply To: Los Lagos What to do?


@katy wrote:

Someone mentioned that the developer could go bust. What would happen if he did? During the last recession some friends bought a house on phase one of a development, after some months the banks foreclosed on the developer and because he had mortgaged the whole of the development my friends lost their home. does this not happen now? It was about ten years ago.

Yeop, this can still happen if you haven’t completed. That’s why the BGs or the IP is so important so as to cover your stage payments in the event of default payment by the developer.

If in a development the mains companies are reaching private agreements and are hooking up properties to the regular water and electricity company then even if there is no LFO I wouldn’t mind as much that a client completed in such a case. In cases such as with SOFIA where no construction has been done for over years, or they offer me to change to a flat in some other crappy/shoddy development, or they offer me a smaller flat for the same price then I would sue them without a blink for breach of contract.

I believe it is not the lawyers job to take decisions, that should be left to the client. The client at all times should clearly instruct us, we follow his wishes/commands.

What a lawyer should do IMHO is to clearly lay out all the options available to the client weighing the pros and cons but actually leaving the client to take the final decision. Every client is different even for the same development, some can afford to wait and some cannot.

In a development where the mains companies are reaching private agreements and there is no LFO, almost no bank, and specially in Marbella area, will grant you a loan against such a property. You would only have the developer’s bank to take on his mortgage, which in fact is recommendable at times because it cuts costs, but that decision should always be left to the purchaser so he/she shops around for a suitable/competitive mortgage.

If there is no LFO you are most likely stuck with the developer’s bank. I believe that Halifax studies every case (development) and it’s not a general policy of them to grant loans in Marbella carefree without a LFO.

As I’ve posted many times within developments that have no LFO there are some which are low-risk and some have a high-risk associated to them (even being pulled down).

In any case as I’ve always posted once the municipal elections are over and the P.G.O.U. is approved these cases will be legalised. I’m convinced many developments have already been approved but are now on hold until after the municipal elections for political reasons.

The spanish Authorities know fully well that both tourism and construction are the heart that drives our economy. Believe me that no one is going to pull down all these properties. It will take a couple of years but they will all be legalised eventually. Probably a few (uninhabited I presume) will actually be pulled down for the media, just to show that corruption is being fighted, the vast majority will be legalised and: aquí no ha pasado nada.

Marbella will remain the crown’s jewel on the CDS on the log run despite this very bad political situation.