Antonio Flores’ Blog

Some 12 months ago we were dumped by a client who was buying an off-plan unit in the development known as Bahía de las Rocas. It was no surprise that the newly acting “scavenging” lawyer, was operating from the expat-legal-gossip omnibus portal known as Eye On Spain (www.eyeonspain.com), wherefrom she had lured our client and probably told her how deep was our tie with the introducing agent, how horrible the developer was and how biased we were as a firm.

Our advice had been consistent throughout the transaction, advising the client that we could see no grounds for pulling out. She had tried to convince us in turn that, according to what the agents had told her, the property should have had a certain orientation, with views to a certain place. We spoke to the developer to verify this but could not find indications of any contractual infringement from where to successfully launch a claim.

Some months after we received the standard fax from the above lawyer asking for all the documents, and soon after the developer’s lawyer summoned us to Court to give witness statement. Out of curiosity we picked the phone up and called the developer, to find out that they had been sued not for the property having the wrong views but for, and here we go… delayed completion!!

But something was not right in all of this because, according to some simple calculations made with our desktop Casio calculator, the delay was of…cero days!!! Our curiosity went even further and, when reading the claimant’s petition, we noticed that it looked like a copy and paste piece of work because it made no sense whatsoever. How could any lawyer in his right mind consider NO delay as a fundamental breach of contract? What advice did this lawyer give to the client when offering her legal services? How could this lawyer, when cross examining us, ask us questions which answers directly exposed the entire satisfaction of the client with the property? But the funniest thing of all was that our client admitted in Court that she had been at all times informed and updated by us of the course of the works, without her manifesting any dissent.

The outcome was as predictable as clockwork: The judge ruled in favour of the developer, and sentenced the claimant to pay the legal bill. (An ‘anonymized’ copy of the ruling is available upon request.)

The legal conclusions of this botched attempt to trick the judges can be summarized as follows:

1. Contractual extensions on property transactions are legal.
2. Force majeure and Acts of God grounds for opposition are valid under Spanish law in case of non-performance.
3. Lawyers should do a minimum pre-hearing preparation before entering the Court room if only to avoid, when cross-examining the previous lawyers, look very silly.
4. Lawyers should tell their clients that they can, and sometimes should, lie in Court when being cross-examined, because the other party will most certainly lie too! (there is no such thing as perjury in Spain).
5. Generally, lawyers should make their clients sign a disclaimer when persuading a client to start a Court case with no options whatsoever of winning a case.

From an economic point of view losing this case will mean a legal bill of between €20K, and nothing achieved. Too bad for reckless litigators!

Anyone who watched Piers Morgan Marbella documentary, shown on ITV, will remember him saying that the city’s Golf Valley has more golf courses per head than anywhere else in the world. Anyone who watched the programme and lives or has an apartment at Arenal Golf, in Benalmadena, will wriggle with anger when reminded that they should have been an element of that statistic if Arenal 2000 had fulfilled the promise of building an 18 hole golf course.

From a legal point of view this is textbook contractual misrepresentation and any eager litigator would enjoy a hearing against Arenal 2000 developer lawyers (now Prienesur, or CajaSur) when comparing the undertakings made in the promotional literature with the photos taken by our surveyor:

“ The privileged owners of an apartment in Arenal Golf will benefit from both adult and children swimming pools, a fully-fitted gymnasium, two paddle/ tennis courts and a golf share in the exclusive ‘Arenal Golf’ 18 hole course that Arenal 2000 is building specially for the promotion”.

Also,

“Within the development there will be extensive landscaped garden areas with palm trees, rockeries and tropical plants.”

This is what the developer promissed purchasers: 

Artist's Impression shown on Arenal Golf Promotional Brochures

This is what the ‘golf course’ looks like today:

View of the 'Golf Course' at Arenal Golf on December 2009

It appears that already some action is being taken by local residents, one of which has managed to register the domain name www.arenalgolf.com, and has created an Arenal Golf forum and blog. However, it is not clear if any legal action is being taken against Prienesur/CajaSur and the Spanish Church, the ultimate owners of this mess.

Legally speaking, it may now be somewhat late to cancel the purchase and undo title deeds, etc., but for private purchase contract holders who are being asked to complete by Prienesur they should be able to oppose them quite successfully on the above mentioned grounds, in my opinion. However, I would loath to guarantee that this would be the case with every single judge. And the reason is that Prienesur could argue that this is not a fundamental breach of contract but a breach of an ancillary obligation which in no way impedes the economical objective or legitimate expectations of the buyer, who has received the promised unit (the basis for obtaining a favourable ruling).

What our firm is doing with the clients we represent is asking them to bring as much possible evidence of their craze for the sport, so as to prove that it was this and not the apartment in question that made up their minds to part with the money. This evidence could be in the form of golf membership cards back home, invoices proving they are avid golf equipment and paraphernalia buyers, pictures of them hitting a few balls with Tiger Woods and even divorce legal suits on grounds of desertion or abandonment due to excessive morning golf + evening pub crawling. After all, litigation is about law as much as it is about proving a point!

A few weeks ago I was met with an inheritance tax problem enquiry from an elderly lady who had a flat in a Benidorm tower building which she had purchased back in the seventies.

She told me that she had been approached by a company (did not disclose the name) offering her to put the property into a company so that the inheritance problem went away. As I found the enquiry rather strange I decided to make some research into this new proposal. When “googling” IHT Spain, I came across a company called Wincham Consultants Limited. The opening line was somewhat exciting and the following phrase caught my eye instantly:

“Wincham supply a service that we believe is the only legal way of truly safeguarding your assets against inheritance tax”. 

To my surprise, that service was the only legal service they were providing (other services included selling houses, renting cars and sourcing cheap flights). Well, this one and only service is no other than setting up a UK company and transferring the property to it.

Further on, I clicked on for more information and arrived at a specialized website in inheritance tax, www.winchamiht.com, whose only service in respect of this tax was, again, setting up UK companies. The opening pitch certainly scares the hell out of anyone:

“SPANISH PROPERTY OWNER? When the time comes…Your heirs WILL be hit with a 40%+ Inheritance Tax Bill unless you act now to protect your legacy” 

Which is another way to say:

SPANISH PROPERTY OWNER, when you pop your clogs you better have hired us because otherwise your children are going to be truly f****d!!

You see, the problem with these type of companies offering one single service is that any other alternative you come across is quickly dismissed with, at best, harsh negative criticism and at worst, untrue statements. The word impartiality disappears like sand slipping through your fingers and you never get the true picture.

Inheritance tax planning is a fairly complicated matter because each case is different. In other words, no solution is full-proof and certainly using a UK company is possibly the last best if not the worst. So when reading Wincham’s statements I could not but pick a few out and comment on them:

1. Wincham IHT claims that IHT in Spain is 40% +. The truth is that according to a most recent survey, the average IHT bill paid in Spain in three consecutive years has not been higher than 13% (per inheritor), on the taxable base (which rarely is the value of the property).
2. Winchan IHT claims that “your husband and wife will NOT be exempt from IHT”. The truth is that approximately 300,000 UK citizens residents of Spain may be exempt of IHT in respect of 95% of the value of the property when they inherit from their spouses, just like the rest of Spaniards!
3. Wincham IHT claims (FAQ number 14) that in terms of IHT the recipient of the UK company IS technically liable but subject to BPF (Business Property Relief). They then say that there are a number of rules surrounding this circumstance but that assuming that BPF is applicable then there would be no IHT. Good Christ!! This is like saying that if IHT disappeared altogether there would be no IHT, or if the planet world exploded then you would not have to worry either! The truth is that, for all it matters, BPF is ONLY applicable to relevant business property which is used for the purpose of, you guess, doing business, and this leaves out companies dealing in land or building companies making or holding investments (not to mention holiday homes). I am aware that the UK HMRC is now looking into claims for BPR very closely and in fact these are being sent to a department called Technical Team (Litigation) for detailed consideration. I cannot possibly see how the inheritors of our 82 year old expat living quietly in a 9th floor flat in Benidorm are going to get through the merciless Revenue & Customs officials when these get grab of the file. In summary, I would think that only a few properties could really qualify for BPF and even if they qualify it has to be pointed out that BPR is easy to lose… often at a time when IHT planning is most crucial.
4. Winchan claims that transferring ownership of a property from an Offshore company to a UK company will also completely remove Spanish IHT (FAQ number 17). The reality is that having property in an offshore company is possibly the most inheritance-tax efficient set up one can have so I cannot see why would some want to switch to one of the less inheritance tax-efficient set up.

To summarize, proposing only ONE system to minimize or mitigate Spanish IHT is in my opinion not sound advice. Inheritance tax can be reduced, avoided, evaded or even paid, as the case may be, and tools to achieve these may involve offshore companies, onshore companies, taking out mortgages, keeping quiet for 4 years and 6 months from the date of death of the testator (option chosen by some clients so as to have the tax obligation “timed out” under statute of limitations) and sometimes even incorporating UK companies, and only if a UK qualified accountant (ACCA or equivalent) signs a letter saying that no IHT is applicable in the UK.

The verdict I gave to our test-case Benidorm distressed lady, who wants to leave the property to 4 inheritors, was to draw-up her Spanish will and relax. And in respect of IHT? Well, do absolutely nothing because her €300K property would be transferred to her 4 children for a mere €5,800 per inheritor, or €23K in total, in application of the Spanish Inheritance Tax Act. Fees for setting up a UK company plus costs, taxes and miscellaneous were quoted at around €7,000 to which one would need to add transfer tax (€20,000), which means that this proposed scheme was rather more pointless and even counter-productive than essential.

So Wincham, don’t you think it’s all Much Ado About Nothing…?

State in which our client's apartment was left by a defaulting tenant

Great expectation has been raised now that the new law on rental eviction procedure and a few other bits and pieces has been approved. Because what this new law intends to do is to help boot a defaulting tenant in a matter of days, or so it seems when you read it (it now talks about “days” as opposed to “months”). The reality however is that for all its good intents and purposes it is quite possible that landlords will still have to resort to switching off water and electricity supplies, calling in a couple of Liverpool heavies or hiring a failed guitarist to make nights unbearable by playing “Stairway to Heaven” outside the apartment for hours on end. The reason is that, even if the new law is clearly envisaged to speed up kicking out tenants, the stark reality is that Courts in Spain are so slow that it is difficult to see how switching procedures (to a quicker one) and reducing significantly the time to comply with an eviction notice (fifteen days) can succeed.

According to a report released by a Law Firm in Barcelona (Alboreca Abogados de Vivienda), after reading more than 2,000 Court rulings and interviewing a fraction of those poor landlords, the time to finally get a sentence to “launch” (as Spanish law calls it) your hated tenant averages six months and fourteen days. The problem is that you then need to execute this ruling so that eventually the police can effective throw the bastard out and this will take another three months and sixteen days so you are looking at an average of ten months in all…but then again it takes another eight months and five days to make up you mind to go to Court (getting in touch with lawyers, arranging meetings, paying them extortionate fees…) so after you add up it will almost take two years from when the monthly rental fails to show up on your bank account to when you can visit your “investment” property again. Not to mention of course that you should not expect a bottle of champagne with a with thanks note in the living room but quite the contrary: stolen fixture and fittings, destroyed furniture, missing kitchen utensils, dog crap all over the place and to get even more scatological (and not joking here), walls and curtains smothered in human fecal matter. So who the hell would want to rent with this prospect??

According to this report, 50,5% of defaulters are males and 35,7% females, the rest being companies. By nationalities, 74 out of 100 are Spaniards and the rest Brits, Germans and Romanians, by this order.

This same law firm has privately compiled a database with 6,000 Court rulings where “non-complying” tenants are named (unfortunately not publicly shamed) and so for a modest amount of money (7.50 Euros) one can know if we are dealing with the right guy. Obviously not all bad payers are registered, but if they happened to be registered and to avoid 7.50 Euros we incurred in thousands in losses, one would not be happy at all. This database should be also by checked by a lanlord who has a defaulting tenant, for a tenant which has had two court cases for the same reason can be prosecuted for criminal swindle, as opposed to a regular eviction case.

Fortunately enough, the law of averages says that finding a defaulting tenant is not always going to happen, and so it is quite possible that you will be able to have a beer or two with your tenant at some point during your commercial relationship with him/her because he/she has decided to do what all landlords are praying for, i.e., just pay the rent.

With the new law hopefully the almost twelve months from filing to firing will be reduced to, say, three or four months, we can only hope!

A recent report by the Association of Tax Inspectors in respect of rental income highlighted what we all knew: that very few landlords do actually declare any rental income. According to the inspectors, the biggest tax evaders are in Andalucía, where it is believed that only 26% of property owners declare this income to the Spanish Inland Revenue (of which, ostensibly, foreigners amount to…0 percent!). In total, €2,450 million of lost tax revenue.

It is not clear however how have they reached these conclusions but one thing is clear to me: I don’t know of anyone on the Costa del Sol (mostly foreigners) who has ever asked where should they pay their taxes.

The reasons, below:

1. Unwillingness to pay taxes (obvious).
2. Untraceability of the transaction as most of the deals are done in cash or are paid into non-resident bank accounts, of little interest to the Spanish Inland Revenue. Also, the sums are small and periodical so banks are not obliged to report back to the Central Bank of Spain.
3. Tenants are not obliged to withhold the tax and lodge with the Spanish Inland Revenue if the tenancy agreement is not of a commercial nature (Conversely, where a real estate agency is involved in the payments they will have to deduct the 24%).
4. Ignorance as to how to about paying the tax in the case of a non-resident.
5. In the event of willingness to pay, many non-resident owners are put off by the tax (24%), with no possibility to deduct costs (maintenance, etc.)
6. Lack of fear of the Spanish Inland Revenue.

But this blissful scenario is likely to change because the Spanish Inland Revenue is on a mission to trap tax dues with a clever and original proposal. They will force utility companies (water, electricity, gas) to supply details of consumption to identify the properties which are apparently empty but house a tenant in them.

This seems once again a futile attempt to convince owners that they need to pay taxes and judging by how it is released it looks more of a newsletter or circular carrying a declaration of intention, no more.

Living in Spain as a resident has become a rarity among Spanish elite sports professionals. This includes Fernando Alonso, Sergio Garcia and Jorge Lorenzo, among others, who have their residence in tax havens such as Switzerland. Rafa Nadal and Alberto Contador (2-time Tour the France winner) on the contrary feel that paying taxes in Spain is a moral obligation.

The Spanish Inland Revenue and a couple of smaller political parties want to stop them from representing Spain internationally.They had already tried to implement this law some month ago but was it thrown out.

“Social scourge”, “tax cheaters”, “lacking in solidarity”, “miserable compatriots” are just some of the adjectives used to define these sports stars who could, if a law proposal succeeds, stop performing for Spain in future. But when is a person considered to be a resident in Spain for tax purpose and how can the tax office invoke residency of a certain individual in Spain so that he is forced to pay taxes on world-wide income? As with many other countries, any person staying in Spain for more than 183 days in a fiscal year (ending 31st Dec.) will be deemed a resident for tax purposes and is obliged to submit a tax return on world wide income. Unlike the UK, the 90-day rule does not apply in Spain but on the contrary other points of connection with the latter country do apply. To make it simple, the criteria used is one the following:

1. Spending more than 183 days per tax year.
2. Having the main center of its activities or economical interests, directly or indirectly, in Spain.
3. For companies, having most of the assets, directly or indirectly, in Spain or when the primary activity is carried out, as well as having the management centers, in Spain.

Nowadays it is extremely complex for the Spanish Inland Revenue (and presumably for other Tax Offices in the EU) to determine when is a person resident in Spain for the simple reason that passports don’t get stamped any longer. But if someone gets a letter from the Inland Revenue saying that they have detected that he/she is a resident for tax purposes and request payment of taxes on worldwide income the onus of proof falls on the tax subject. Showing water and electricity bills of a property in a third country is no longer a valid excuse for the Spanish Inland Revenue which has now increased the proof of residency by demanding a Certificate of Residency issued by the tax authorities of the third country, provided this country is not classed as a tax haven and that it has some form of tax information exchange agreement.

Where this third country is a tax haven the Spanish Inland Revenue will only let the tax suspect off the hook if he/she can prove that they are effectively spending more than 183 days per year in this country. The reason is that foreign taxpayers are being issued with what they consider as a “passive residents card” which does not oblige them to declare any income nor, ultimately, pay any taxes (normally only a small investment easy to comply with, such as lodging a few tens of thousands of Euros in a bank account or buying an apartment).

If the Spanish Inland Revenue and the Catalan Party CIU (Convergencia I Unio) can convince the Spanish parliament that fellow compatriots dodging taxes is immoral and that consequently they are to be stripped of the Spanish flag on their endorsements we may soon see Fernando Alonso and Sergio Garcia racing and hitting balls, respectively, for Switzerland, Lorenzo riding for Andorra or Pedrosa also riding but for England, leaving the poor(er) Nadal and Contador the burden of…building roads and council tennis courts for their beloved fellow compatriots.

The development known as El Patio de Doña Julia, built by developer Evemarina is poised to become a real mess if our fears are confirmed. The chronology of events leading to Evemarina´s insolvency is known to those involved, except for the fact that the developer may have sold the whole development on the 21st of August 2009 to a company associated with Caja Rural, the savings bank financing the development.

We are naturally very worried, as we represent a large number of clients in El Patio de Doña Julia, most of whom already expressed their desire to pull out of the transaction due to a number of reasons, namely late delivery, faulty construction and presumably a lesser value than that reflected in the contract. So after we sent notice of cancellation (requesting full refund), and we received a letter back from the developer rejecting our demands and intimating that they would pursue our clients, it may soon transpire that the whole development has been handed back to the bank through a sale to a company called “Gestion de Inmuebles Virgen de los Peligros” (which in Spanish means nothing less than Virgin Danger Property Managers), without notifying legitimate purchasers with a valid contract.

Unfortunately Evemarina’s insurer ACC Zurich Insurance also rejected our attempts to cash the insurance policies on grounds that completion –with habitation license- had taken place in a timely manner, that is, before the final date to deliver the units agreed to in the contract. This date has attracted much controversy as it established an discretionary extension that has allowed Evemarina to finalize the works, in our opinion, without breaking the contract (thus preventing our clients to invoke this getaway clause so as to abandon a project for which they no longer had their hearts on).

If the above is confirmed, we can be faced with a scandal of significant proportions as not only Evemarina’s directors, but also the savings bank property management company, could be deemed to have engaged in a fraudulent scheme by selling the same properties twice without refunding the advance payments to the first buyers (in the case of Evemarina), and buying the units knowing that these had already been previously sold on a private purchase contract (in the case of Gestion de Inmuebles Virgen de los Peligros, AKA Caja Rural). This, may I add, will in most countries be construed as a criminal offense punishable with prison terms.

We will post regular updates on this blog post as we obtain fresh information.

Sunken Apartment at los Lagos de Santa Maria

This is an interesting ruling involving Los Lagos de Santa María S.L. and a client of our office who had been allegedly misrepresented in the sale of a property in respect of its position and views but, nonetheless, was granted the rights to a full refund, on appeal, on completely different grounds.

When we met our client he was about to take delivery of a ground floor apartment at Los Lagos de Santa María which he had specifically requested to have views over the pool for he has children and grandchildren. He was sold, this unit back in 2004 for just under €400K. The model of the development showed that apartment being right next to the pool and slightly elevated over it, and if you kneeled sideways (which I did) the views to the see were almost uninterrupted. In all fairness the apartments were well finished and in fact the project appeared to have won several awards, according to some websites.

What they did not say is which awards did the architect and/or the model designer win as the apartment which had intended to have unbeatable views to the pool was actually three meters below it and so what the gloomy terrace had were perfectly unrestricted views to a Great China wall only separated from the apartment by a passage way connecting the units below with the upper part of the development. The pool was there, yes, albeit three meters above and so my client would have needed a U-Boote collapsible periscope to keep his children from drowning the granny, or vice versa.

Jokes aside, we had a preliminary meeting with our client back in 2006 where he vented his anger and frustration and took it out on his previous lawyer (who really did nothing wrong, in my opinion, apart from not securing the bank guarantee), the developer Los Lagos and pretty much the whole of the Costa del Sol real estate agents. We analyzed the situation and offered him legal help, which he was initially reluctant to accept given what had happened. However, after a more lengthy discussion, he agreed that we initially wrote to the developer and further served a claim to obtain a refund.

In my eagerness to obtain critical evidence for our case I visited the sales office and found the model which clearly showed his unit having straight views over the pool. The developer must have suspected the true aim of my visit (possibly because I forgot to take my tie off) so on my next visit, with a digital camera this time, the model had gone, for good. This preventive maneuver by Los Lagos impeded me from proving that the client had actually bought on the basis of the aforementioned views but it has turned out, it was the luckiest thing that could have happened to my dear client for we dropped the case for misrepresentation and filed instead for a refund on the basis that the license of habitation had not been granted.

As we were expecting (as they had done before with others in the same situation), a Court of First Instance of Marbella ruled against our client and against all logic went on to say that the license of habitation or occupancy was not a fundamental obligation of the contract and that, in any case, the lack of it was only attributable to the Town Hall, all the while classing the developer as “innocent” of any wrong doing. As one can imagine my clients dismay was now of biblical proportions and so our only choice was to win on appeal, at whatever cost (harassing and intimidating the appeal magistrate was not included). The judge´s ruling meant in short that our client had to complete on a property which was not only sunk three meters below the waterline and had a front tennis wall two meter high erected besides it, but it was also, hmm…illegal!!!

Happily for my client, the more clever judges of the Malaga superior High Court ruled that it was the developer’s obligation to deliver a fully finished property with the required authorizations and licenses for its intended use, in other words, a “street legal” property. Period. And so, the refund is on its way as well as legal costs!

As always, if you wish to have a copy of the ruling (clients´ names are erased for confidentially reasons) you can write to us. On the other hand, if you want to see the property don’t bother, it is so deeply situated you will not be able to see it!!

Anyone who has dealt with Manilva Costa S.A. (developer of Manilva Gardens) will know what I am writing about. The elusiveness of this company in respect to their accountability for contracts Ocean View Properties signed, supposedly on Manilva Costa’s behalf, with mostly British buyers, has forced lawyers to be more creative and find ways to pursue the refund of their deposits for contractual default.

Mates, the developer’s lawyer, has been well instructed on how to deal with private purchase contract signatories to avoid being held responsible for non-delivery of the units on time. The story can be summarized in the following points:

1. Property buyers looking for investment opportunities on the Costa del Sol were approached by Ocean View Properties, or viceversa, with an offer or few developments owned by Manilva Costa S.A.
2. Once the buyers were convinced that the investments was sound they went on to transfer a fat deposit to OVP which would in turn send them two copies of the contracts, unsigned, for them to sign and send back. OVP rarely signed the contract although they did acknowledge the receipt of the deposit.
3. According to Manilva Costa the deposits where never sent to them and according to OVP they were sent (?). OVP, after gathering millions of pounds in deposits for property and a number of vicissitudes, including unconfirmed claims that the owner had died on an airplane crash in Brazil, went on to file bankruptcy.
4. Buyers stuck with private purchase contracts signed with Ocean View Properties looked to pursue Manilva Costa for the deposits but found an unsurpassable legal impediment: there were no contracts signed by Manilva Costa and neither acknowledgement of having received the deposits from OVP.
5. In one occasion we sent a legal notice to Manilva Costa S.A. with a request to confirmed having received the deposit of a client they wrote back positively, thus paving the way for a legal claim in Spain.
6. Manilva Costa Directors quickly realized that they had to stop this and instructed lawyers to deny having received any such deposits. Strangely enough Mates had the details of all buyers and offered them to complete on their properties for the initially agreed prices minus the deposits, even though the denied having received them. To this date Mates is eager to convince clients to close at the original price minus 30% of the purchase price (approximately the value of the deposits).

After meeting with several buyers stuck with this situation we proposed them to file a claim at the Bristol County Court against both Ocean View Properties and Manilva Costa and needless to say, neither of them appeared in Court to contest them. The case was heard and District Judge Britton acceded to the claimants petitions in full. With this Court ruling, which we legalized and translated to use in Spain, we filed for execution thereof in the Court in Seville and requested that a legal charge was taken out against Manilva Costa to ensure that enough funds were available in the likely event the Seville judge ruled in our favour.

We now expect other claimants to follow suit and not allow Manilva Costa to get away with using carefully planned obfuscation to deter their own bona fide clients from demanding justice to be served. After all, as said before, Europe is now a large country where nobody should be able to find legal shelter after deceiving consumers.

Promaga/Vista Hermosa, Hercesa Dona Julia, Altos de Alcaucin and Arrohabitatge/Don Juan are some of the developers/developments which, having read a recent article published on the Daily Telegraph titled Buy-to-let investors backing out of off-plan deals face court action, are now avidly typing their lawsuits. The article goes on to say:

UK Buy-to-let investors reneging on off-plan property purchase contracts need to be aware that they risk losing more than just their deposits, warns City law firm Wedlake Bell. It said “hundreds of buy-to-let investors have already been pursued through the courts for trying to wriggle out of off-plan contracts’”.

Developers have 2 options if they want to cause concern to their (still) clients:

1. Option 1: they can file a suit in their countries of origin through the local Courts as the address on the contract is normally their home address.
2. Option 2: they can file a suit in Spain in accordance to the jurisdiction clause (which invariably says Spanish Courts are competent) and request that the suit in notified in the Uk, or if the address for notification is their lawyers’ address, have defendants summoned through the former. A favourable Court sentence can then be enforced in the UK.

It may sound as if I wanted to take sides and encourage these horrible developers, as some want to put them, to take away the sleep from Spanish off-plan property buyers, but far from this it is a warning that these things happen here as they are already happening in Britain and presumably an various other countries. It is therefore not something exclusive to Spain as in fact Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters is applicable to all the UE and is now being used with success by claimants all over Europe.

On my next post I will explain how we are using this EU regulation in an interesting (and reverse) case against OceanView Properties and Manilva Costa S.A.. Our client sued these 2 companies for contractual default in the purchase of a property in a development known as Gardens of Manilva and won the case. We are now enforcing the sentence in Seville, where the developer is based, and are not expecting any disruptions in the process of having it accepted and upheld as, after all, Europe is now a one big country!