Antonio Flores’ Blog

This is the question ex-workers from the company Marsans must be asking themselves after trying to cash, at different BBVA branches, cheques which bounce repeatedly.

This same situation was faced by a client who tried to cash in a cheque for forty thousand euros on an empty account, and is also shared in times of crisis, unfortunately, by many other hundreds who have a euro denomination cheque that is not worth the paper it is written on.

This takes us automatically to the subject of this post, it being the legal implications of giving out worthless cheques or promissory notes as well some notes on how these instruments operate in Spain.

Spanish penal code has eliminated the punishability per se of giving out bad cheques (cheque sin fondos), and has associated it, necessarily, with intent to swindle (estafa) so as to make this a criminal offense. However, swindle with a cheque aggravates the criminal action and carries a higher sentence because it is considered that the “use of certain mercantile instruments to commit swindle irrespective of its authenticity or falsity is in itself graver due to the massive use of these instruments in commerce”.

So what really determines if we go to jail or not is intent. Case law establishes that this intent to defraud has to be precedent, antecedent and causing a material or monetary damage, meaning, in other words, that the perpetrator knows full well from the inception of the contract that he will not comply or be able to comply with his obligation to provide consideration, and will enrich himself by doing this. At the same time, the intent to defraud will have to be parallel to a concealment of the truth, or deceit, and as a judge puts it “not being a clumsy, fantastic or not credible deceit, incapable of moving the will of people constituted intellectually.”

In these type of cases there is very fine and blurred line between a mere civil default and a criminal swindle case potentially able to offer an unappealing 4 year prison sentence, and case law, as usual, offers very interesting situations.

As an example, the courts acquitted 2 businessmen who gave out bad cheques because it was proven, in the first case, that non-payment of them happened in a situation of severe financial difficulty (company loan facilities were not being repaid), and in the second that it was not possible to discern punishable conduct because the accused did not concoct or stage a plan to create an expectation of solvency (inexistent), nor did he omit or conceal elements of reality what would have been enough to dissuade the company delivering Jamones Serranos to do so, particularly when they had been doing business together for many years.

Then there is the interesting figure of the postdated cheque (cheque posdatado) which, although does not change its payment at sight nature (Spanish cheques are ALWAYS payable on demand and within 15 days from them being signed), it does alter the consequence of someone not honouring them, since they are no longer considered to be immediate payment instruments but have morphed into a credit facility, guarantee of payment or deferred payment facility, therefore losing its condition of cheque. This happens, according to the Spanish Supreme Court, when cheques are postdated by at least 1 month or are re-written by the debtor in agreement with the creditor due to the previous ones being at risk of bouncing.

So whenever you are about to stamp your signature on a cheque make sure that it does not bounce and if it does, make sure it does not come back to crush you!

Note: All case law cited here is available upon request.

aflores Corporate Law, Litigation bad cheques, bouncing cheques, dud cheques

Spain’s shocking 20% unemployment rate may not be so shocking after all, if we read a risible court ruling where a judge has to tell 3 grownups that they are not any longer entitled to child maintenance. The ruling decided on appeal a petition from a mother of three to the effect that her children were too old to be eligible for pocket money, since they were old enough to fend off for themselves in life. The first one, 34 years of age, was a doctor in law and now studying economics. The second one, 32 years of age, had passed her exams as a tax inspector in Madrid after 10 years of studying hard to become one, and a third one, still a student, had had a few jobs, but must have found it too much hard work. The appeal judge decided that, even though the obligation to support children did not cease when they became of legal age (18 years), it was not justifiable for 3 fully qualified university graduates over 30 years old to expect being maintained by the father. He added he could not accept their plight and expectations, in this day and age, and in a modern society full with opportunities, to be fed by the male progenitor as the contrary would equate to favouring a passive fight for life that could be end up in “social parasitism”. Needless to say, the Canary Islands, where these boys were once based, have a whopping 27% unemployment that has even merited an article by the Financial Times.

So now on to the more practical side of this post, it being the obligation of the non-custodian progenitor (non-resident parent in English legal terminology) to maintain the children after a divorce in Spain (or separation for that matter) is under way, and for a good few 10 years after they become legal adults (18), I thought that publishing the amounts due by him/her (in 95% of the cases it’s the father) would help have an idea of what should be expected to be paid, since knowing this information, and consequentially what a judge would be ruling on, will reduce the litigiousness of the marriage break up.

The tables below show what should be expected to be paid by the non-resident parent depending on 2 variables, the number of children and the employment situation of the resident parent. Additionally, the courts may introduce other variables that will reflect personal and family circumstances, socio-economic environment issues, location, etc., that will singularize the final amount to be paid in each separation and/or divorce case.

The table below is applicable in the event that both parents have an income:

* NOTE: The amounts in this table have to be multiplied by 1.45 if there are 2 children, 1.65 in the case of 3 children, and 1.93 for four children. The amounts in the vertical axis correspond to the monthly income of the custodian progenitor (resident parent), and the amounts in the horizontal axis correspond to the non-custodian progenitor, both in in Euros.

The amount specified for child maintenance is subject to modification in the event of loss of job by the paying parent or increase of his/her living costs, or because the children receive an income as a result of getting a regular job or reach an age where it is no longer reasonable or ethical to maintain the payments (as per the case study of the Canary family).

Finally, Spanish legislators have introduced new legal reinforcement to deal with non-paying parents, inclusive of jail sentences, so if you are in this situation make sure that you don’t miss 2 consecutive payments or 4 non-consecutive payments, because prison terms are then readily available!

admin Family Law, Litigation child maintenance in Spain, child support in Spain, spanish alimony

I have, for some unknown reason, always been suspicious of professionals wearing a short sleeve shirt and tie combination, unless, of course, they were cheesy used car salesmen or fast food managers. I have to say in my defense, however, that I have tried to leave behind my prejudices and move on, trying to intimate with the suspect (generally some other lawyer) in spite of his attire when work circumstances demand it, and also because I am told that looks are not everything.

The same happens with exclusive real estate commission agreements. They look one thing but may mean something, nothing, or something different from what they say or mean. And this baffling scenario is what we encounter if we research court rulings issued all over Spain when the principal, who is the property owner, decides to sell the property himself or through another agent, in spite of having signed an apparently impregnable contract with his chosen agent and shaken hands subsequently, with or without a beer.

By analyzing no less than 20 court rulings, we find out that most, if not all, agree that if the property owner sells directly, then no damages are applicable to the agent as exclusive contracts cannot impede the owner from disposing of his own property privately, unless specifically agreed (already departing from what we think “exclusive” means).

This clarified, we now look are the solutions arrived at by courts when an agent different from the initially commissioned to sell, exclusively, does the deal.

• Solution Pro-Owner: This is a restrictive opinion (also shared by French law), whereby the exclusive agent is not entitled to a commission because the essence of the mediation contract is to find a buyer, and where this has not been achieved, then no right to a commission arises. At the most, the exclusive agent will be entitled to damages, but only where these can be proved to have existed, such as meetings, sales or promotional literature,trips, staff hiring etc.In line with this view, courts have pronounced that giving the exclusive agent the right to his commission would produce “unjust enrichment”, since the main obligation of the agent is to sell, and this has not occurred as a result of his activity (it omits an important detail which is that not selling the unit may have happened due to it being sold by someone else!).The Supreme Court has added that the agent’s right to his commission (“loss of earnings” theory) when the seller breaks the exclusive contract can only be applied where there is sufficient verisimilitude to repute the earning of the commission as very probable, in its maximum approximation to an effective certainty so that the result is neither a loss nor an unjust enrichment. It also adds that the loss of earnings have to be proved, not being dubious, unfounded or founded on hope or hypothesis.Again, the courts here redefine what “exclusivity” means, and almost gives cheeky property owners carte blanche to break exclusivity property sales contracts, without visible penalties.
• Solution Pro-Agent: This more harsher solution is more in line with common law, and determines that the exclusive agent did not have the opportunity to complete the task he was assigned with, and, therefore, considers that the exclusive agent would be entitled to any costs incurred in so far, plus full commission (loss of earnings). This opinion is based on the fact that, in the absence of a clear regulation, damages are to be calculated primarily by reference to the lost commission. However, it adds that courts are entitled to “moderate” or “adjust” the application of it on the basis of other circumstances, such as the dedication of the exclusive agent to selling, number of buyers who viewed the property, other sales made with the same client, bad faith displayed by the owner, final sales price, etc. There is an interesting local ruling (Malaga Appeal Court) involving the Kempinski Hotel owners and Sauer International real estate agent, where the latter was given entitlement to 5% commission (half of that agreed on contract) on a number of apartments that were sold by another agent (Kristina Szekely), because the courts understood that by having sold 74 apartments out of a total of 89 it could easily be inferred, with objectivity, that the remaining 15 would have also found a buyer through the services of the original agent.

So if we thought we knew what the penalty would be to an infringer property owner by reading a simple contract, be wise and stay away from assumptions, because Spanish courts are here to prove your assumptions wrong!

aflores Companies, Litigation, Property

I may be stretching the concept of misappropriation a bit too far, more so when criminal laws are always to be interpreted restrictively, but the absence of a bank guarantee has landed the property developer of our case study in jail after being given a two year prison sentence, a term that could have been avoided if he had done what he was supposed to do, guarantee the funds paid on account of the purchase price.

The Supreme Court has ratified an earlier ruling by the Appeal Courts in Madrid where the developer was sentenced because the deposit he received was not destined to cancelling the mortgage loan on the property, as promised. The 2010 ruling, in peseta denomination (which means that the claim was lodged prior to 2002!), describes the facts leading to the 2-year prison term ruling:

1. Property developer sells off-plan villa for 24 million pesetas.
2. Payment plan establishes that 8 million pesetas are to be paid upfront and 16 million pesetas on completion, paid in cash or alternatively by taking over the mortgage facility offered by the developer’s lender.
3. Nearing completion, the developer fails to finish the works, and, consequently, buyers are advised to complete at the earliest as unfolding events cast serious doubts on the developer’s financial solvency.
4. Buyers find out that the developer’s mortgage is of 19 million pesetas and not the figure of 16 million pesetas. Still, the latter is unable to refund the 3 million pesetas the buyer has overpaid, or redeem the mortgage down to 16 million, as he is underfunded.
5. Developer is not only unable to reduce the mortgage to 16 million pesetas but he cannot finish the works.

As a consequence of the above, the buyers sued in Court, as they felt swindled by the developer (clearly!). He was sentenced in 2002 for aggravated misappropriation (by reason of it being related to property). Seven years later, the Supreme Court understands that there is no reason to uphold the appeal and maintains the original ruling. Additionally, the developer was forced to pay damages, these being the sums lost to the developer plus interest.

However, if the developer had guaranteed the down-payments by offering an irrevocable bank guarantee or insurance policy, the buyers would have not had a chance to pursue the matter criminally because a refund would have been immediately available (especially as the license of occupancy was not issued at the time of closing). Nevertheless, by breaking statutory civil laws, he found himself in the hands of a prosecuting lawyer, a criminal prosecutor and uncompromising judges.

This ruling opens the door to heavier scrutiny on the use of deposits paid to developers, to the point that if they are used for purposes unrelated to, strictly speaking, the construction of property, criminal cases can be easily brought.

We have been informed that the developer of Los Monteros Hill Club incurred in such practice, causing at least one buyer to lose hundreds of thousands of euros, as the full purchase price was handed over but was not used to cancel the outstanding loans on the properties.

aflores Litigation, Mortgages, Property bank guarantees, Bank Guarantees in Spain, litigation against spanish developers, Los Monteros Hill Club, spanish developers

You may have heard of them, but until you actively participate in one, you don’t quite get to grasp the extent of the fraudulent machinations going on at Spanish property auctions . It happened last week, when we were approached by a client who wanted to bid for a front line Puerto Banus property at an auction being held at the Marbella Courts.

The client had previously lodged 30% of the auction price with the bank, and instructed us to bid for the property with a power of attorney, which we capped at €2,050,000. The day before the auction was interesting, as we had found out that there was a demolition order for a section of the property built without planning permission. Notwithstanding this threat, our client decided to proceed, and so we turned up at the Courts with our pink slip proving the payment of the deposit to the BBVA Court bank account and our power of attorney.

It was surprising to see some familiar faces: a couple of lawyers, a few real estate agents and two or three professional property auction dealers, known in Spain as subasteros, who are all the following in one: speculator, opportunist, outright fraudster and liar. One of these subasteros, who attempt to control the outcome of the auction by either offering you money not to bid or, more to the point, asking for it in exchange for them not bid, approached us at the start of the process like dogs sniffing out hashish at the Tangiers border, and demanded we paid €150,000 to stop the bid at €1,400,000 so that the price would not escalate. We refused on obvious grounds, and proceeded to commence the bid process.

In total we counted 6 legitimate bidders, or rather 6 bidders who had the pink slip, as we soon realized that they were mere speculators and were not prepared to even pay what the bank was owed (€1,200,000). When the bank kicked off the bid at the latter price, we soon dropped the only other bidder who seemed genuinely interested in buying the property, and began a drawn out bidding war with an overweight bold subastero (am told he is the boss of the mafiosi syndicate) who was appointed by a lawyer who in turn had been instructed by British clients. The gentleman, known to have 35 years of experience in the art of ripping off debtors and creditors alike, was determined to bag the property, and took the bid to an unaffordable (to his clients) €1,715,000, well below our limit (unknown to them) of €2,050,000.

As a summary, if you are going to a Spanish auction watch out for the following:

1. Pooling: it happens when a group of bidders pre-agree the result of the auction to either drive legitimate bidders away or cap the bidding price with a view to resell later at a higher price. Occasionally, they can resort to extortion and other more subtle ways to convey the message.
2. Dummy bidders: someone who is hidden in the crowd for the sole purpose of making false bids in an effort to artificially increase the price of the property. They work for the debtor.
3. Subasteros: Professional fraudsters who make money by generally asking for it before the auction so as to not bid. In the auction being described. we were asked to pay €150K to save €200K, which, considering the nature of the business, could have made sense.
4. Innuendo, gossip and lies: it is a typical off-putting mechanism, and it normally refers to the value, quality or hidden defects of the property. In this case, I was told by the one lawyer who was bidding through his “subastero” that the garden was being land-grabbed by the Coastal Department (via compulsory purchase) but he obviously did not think this to be a problem!
5. Dirty looks, sarcastic smiles or congratulatory hand-shakes: Each one means something, generally never good. In our case, we received 2 phone calls after the event offering us to not legally challenge the auction, in exchange for €150K Euros, which we kindly declined.

Have a look at the excerpt of the auction below, as it was one where almost every single sharp practice in the book was displayed, unsuccessfully, by professional bidders. Unless, of course, the insistent bidder was in dummy format and was working for the debtor to raise the sale price as much as possible!

• Example Spanish Property Auction Excerpt  (PDF 923 Kb)

admin Litigation, Property, Scams property auction in spain, property auction spain, property auctions spain, spain auction, spanish auction, spanish property auctions

I assume that as a reader of this blog you are aware of what is currently cooking in this part of Spain but if not there is a likely chance that you may have listened to some of the following news headlines in British, German, Dutch and Spanish TV and radio:

1. The Junta has earmarked about 10,000 properties for demolition
2. President Mugabe has defended the ongoing operation to bulldoze thousands of homes and businesses across Zimbabwe
3. Britons who face seeing their Spanish homes demolished are to be visited by Foreign Office minister Chris Bryant
4. Robert Mugabe’s Junta destroy thousands of properties in Harare
5. Hundreds of British expats stage march in Malaga over plans to demolish ‘illegal’ holiday homes

Hopefully you have spotted -minor- differences between the above news headlines: the even-numbered ones refer to an African third world country governed by a viciously corrupt megalomaniac and the rest to the second tourist destination in the world. On the other hand though there is a striking similarity between both Juntas: presumably they’ll use identical diggers and demolition techniques to smash the bricks and mortar of hundreds or, if the property-destroyer Andalusian Junta plans go ahead, thousands of houses.

Fortunately we do not live in Zimbabwe and fortunately as well Spain is now part of the EU because anyone caught out in the Spanish illegal property scandal, in particular in this part of Spain (Andalusia) is going to have necessarily (and thankfully) to bypass, within the statutory procedures, Spanish laws and tribunals because the Spanish Supreme Court, the ultimate ordinary judicial instance, is reiterative in its stance of considering that there are no bona fide buyers (good faith buyers) of properties built on illegal licenses or initially legal but rendered illegal through a subsequent Court case.

The Supreme Court has settled a long standing difference of opinion between Civil Courts and Administrative Courts (in  favour of the latter), which considered that bona fide buyers could not avoid the application of legal limitations concerning a property, including the issue of the validity of a building license, and thus any consequence arising from the fact of it being declared void, namely demolition. Conversely, the Civil Courts were more prone to uphold the principle of protection dispensed by the land registry rules to buyers who had trusted this system to acquire property.

This is explained fairly clearly by the Supreme Court in several rulings, establishing that property purchasers automatically take over the position of the previous buyer in respect of urban limitations, and, particularly, building licenses, irrespective of whether these were registered or not. In the view of a large part of the learnt Spanish population, and the majority of the foreign, this conclusion is unfair, as it does not differentiate between situations where the buyer could have known that the license was compromised and those where there was no indication at all that this was the case.

It will certainly sound as a precipitous opinion, but if I were sitting at the European Court of Justice, I would find myself very comfortable ruling against the Andalusian Government on the following grounds:

1. Town Halls in Spain have a legal entitlement to issue build licenses conferred upon by the Spanish Constitution. This statutory prerogative is relied on by citizens when engaging in real estate transactions and should not be open to revocation by higher instances.
2. Where Town Hall actions were blatantly illegal, the Junta should have acted efficiently imposing measure to impede developers from finalizing the works and also selling these properties.
3. By accepting either Transfer Tax (7%) or Stamp Duty (1%) on ALL transactions on properties which were later rendered illegal.
4. By creating an appearance of legality where everyone made the “imperfect” transaction good by charging build license tax, Notary and Land registry fees, Transfers Taxes, Mortgage arrangement costs, property valuation fees (in Spain valuations advise on the legal validity of a transaction on behalf of banks).

If I were the judge I’d pull a fantastic Common Law principle, known as the Doctrine of Estoppel, which says the following:

A person is precluded from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth, either by the acts of judicial or legislative officers, or by his own deed, acts, or representations, either express or implied.

This principle, properly applied by the European Court of Justice, should quash any Court demolition order and send the very clear message to the Andalusian Government that in Europe it is not acceptable to throw the lives of bona fide property purchasers into abject misery on the pretext of protection of public interest. Quite like Mugabe in Zimbabwe!

admin Litigation, Property demolition orders spain, land registry in spain, spanish properties bulldozed

The more you read the more confusing it gets. It now appears that applying for land registry information via the website www.registradores.org is abusive, illegal and almost criminal. The AUDRP (Association for the Protection of Users of Public Registries) has now come up with a clear and undoubted conclusion: that Spanish land registries must not give information freely to anyone who wishes to obtain, for example, details of the owner of a property, how many charges it currently has or how many times it was bought and sold in the last few years.

According to this aatonishing finding, the Spanish Land Registries are providing information on properties and their legitimate owners without proving a “legitimate” interest, however vague this term may be. Certainly, when you apply for a “nota simple”, or a land registry certificate (an excerpt of the current status of a property) you are requested to provide a reason for which you want this nota simple. For example, if you want it because you want to sue someone´s ass off you will use an euphemism such as “legal action”, or if you wish to know if someone is in debt up to their eyeballs you will prefer to say that you will need it  to “ascertain the juridical conditions of the dwelling”. And if you have been conned by some cretin in your vicinity and he’s ran away with your money, you will have to say that you require this bit of information so as to know the economical-juridical situation of the house he bought with your money.

Whatever the reason you need this “nota simple” for, it is surely for one purpose: to know if someone owns something somewhere and if he/she does, in what legal state it is in. According to the AUDPR (until recently pretty quiet, but whose bosses now want to be seen as making some noise) giving out absolutely crucial information to ensure the safety of the Spanish property market, already under serious scrutiny, is a fraudulent money-making devious idea because it allows other people to scan the system for obscure purposes (they say) such as gossiping or pure morbid fascination…

The funny thing is that the Spanish Land Registry system, which was specifically designed to bring certainty and security to real estate transactions (or, in everyday language, to prevent con artists attracted by bricks and mortar from making a living), is being copied by other countries because of the protection and usefulness it brings to its users if it is properly implemented.

Now these guys from the AUDPR want to stop not only legitimate property buyers or curious would-be investors from knowing financial information on properties they are keen on, but also impede, inter alia, the Suffolk County Council, Essex County Council Trading Standards, Northumbria and West Yorkshire Police and many more law enforcement agencies in various counties (and countries) from obtaining crucial clues as to the final destination of the proceeds of diverse criminal activities. Soon after this they may want to go after Google for soaking up and divulging the names and addresses of people (and other circumstances) who are in one of the following unpleasant scenarios (details which are all legally accessible to anyone in Spain and beyond through the various Spanish Official Gazettes):

• Do not pay their Council taxes.
• Have missed social security payments.
• Do not pay road traffic fines.
• Become Spanish nationals.
• Apply for a business licenses.
• Have been convicted for fraud and swindle.
• Have been involved in a 3 am brawl in Torremolinos where the claimant, a Mr. Yossef Cheghanou, punched a Enrique Atencia Burgos because the latter said that Spaniards were all a bunch of pr*cks (in Spanish, “gilipollas”, actually I know quite a few!), for which he was reprimanded with a patriotic girly slap to which Mr. Cheghanou responded with an uppercut (good and proper!). This was the subject of an appeal at the Spanish equivalent to the Old Bailey (Tribunal Constitucional) believe it or not and we know all the details.

So now you draw your own conclusions as what information deserves to be hidden from “gossip land” and what is really important to the public, Mr. Cheghanou´s pugilist abilities or a heavily encumbered property?

I hope some bright civil servant will realize soon that the problem in Spain has not and will never be the Land Registry but the total inability to know, once and for all, if one can or cannot build a bloody house on a plot of land without having to later wonder if the planning permission was good enough, just about acceptable or bent as a nine bob note!

admin Property land registry in spain, spanish data protection act, spanish land registry

Shocking as it may seem, the fraudulent company Ramirez and Ramirez (backed by a person called Fabian Ramirez Marcelo), in full defiance of the Spanish police forces, prosecutors and judges, has come up with a daring but also brilliant idea: to persuade the local firm of lawyers Martinez-Echevarría (ME) to take up a legal instruction to defend, endorse and protect their illegal activities, inclusive of filing a legal suit against myself, a colleague and the administrator of the site belegal.com.

To cut a long story short, Ramirez and Ramirez Abogados SL (now known as Ramirez and Ramirez Asesores SL) has been, during the last few months, cold-calling thousands of victims of many different scams, purporting to be a law firm, and promising to recover the funds they had lost, against payment of an upfront fee (up to €7,000). This fraudulent scheme is being devised mainly from Fuengirola and Benalmadena boiler rooms (flats turned into call centers staffed by salespeople, mostly expats, and a few Spaniards as the legal expert ‘housewife’ of the second recorded coversation below can attest to). The same modus operandi is being shared amongst at least fifty other similar fraudulent law firms doing exactly the same, mass contacting people to request payment under false promises. And it is resulting in a scam of enormous proportions.

I could have easily understood and accepted that ME took up the instruction once a criminal prosecution was filed against Ramirez and his gang for their illegal activities, as this is our job as lawyers. Period. But to actually bring a suit against two lawyers and a company director for defamation and libel on behalf of the organisers of the above scheme, is far more than one can digest without feeling convulsions and ultimately vomiting in the closest dustbin.

Anyone who has been around in this part of Europe for a while, and has been the slightest worried for the reputation of the Costa del Sol, could have known, whether by reading the ocassional newspaper, browsing through expat webforums or just being curious, that fraudsters are still massively cold-calling victims, on false pretences, to extract money for nothing. However, anyone who is a lawyer working with foreigners, should be by now absolutely certain that this is nothing but a scam, and report it to the police and the Law Society, as we have.

So since ME is taking me to the criminal courts on counts of defamation and libel, I decided to demonstrate them, before the hearing takes place, that they are not only very very mistaken, but also their actions can bring them shame and oprobium for the foreseeable future. Therefore, I called up two numbers provided to me on the Ramirez and Ramirez website to find out how this young and dynamic firm with over a decade of experience (sic, even though the domain name was registered last October 2009), or the leading law firm specializing in litigation (sic, even though the gentleman on the phone denies being a law firm) could help clients in getting funds back.

The Recordings

The first recording is in English and not complete due to a technical glitch, but is enough to infer that something somewhere is not right with the “young and dynamic leading litigation law firm with ten years of experience”.

The second recording (I’m afraid only in Spanish) is full, and is so embarassing that I would have laughed all the way through, were it not for the sinister nature of the activities that the lady on the phone, quite clearly knowingly, was conducting.

Downloads

• Ramirez & Ramirez Introduction Letter – Letter sent to clients in which Ramirez & Ramirez confirm they are actually a law firm, and have gained considerable experience acting in many complex cases.

The case continues…

aflores Litigation, Scams Ramirez and Ramirez Abogados, Ramirez and Ramirez Asesores, spanish boiler rooms, timeshare resale scam

Although selling a property without acceptance of the lender is considered to be, together with not paying the mortgage installments, a forceful reason for foreclosing, the reality is that, in these times of tight financing, it is being used an easy way for cheap and easy finance. How is this possible? I’ll show you below…

Article 118 of the Mortgage Act stipulates that a mortgage loan can be transferred provided the creditor has agreed to it, expressly or tacitly. In our case study (a client of our firm), the bank would have refused to approve the transfer because the property owner had obtained an 80% loan-to-value in 2006, and the valuation was now 25% less. As a result, the property was in some negative equity, the owner was desperate to get rid of the debt and the buyer wanted a 100% loan to value property.

So what did we do? We went straight to the Notary and signed the deeds of transfer with €0 payment. Previously, the buyer had opened an account with the lender and told them that, being a friend of the debtor (owner still at the time) he was going to start covering the mortgage repayments on his behalf, and instructed the lender to debit these from his account. Additionally, we took out a new insurance policy, through the bank, but in the name of the new owner. The idea behind this has been to force the bank to tacitly agree to the transfer of the loan, as they will have been inadvertently accepting repayments and issuing insurance policies in the name of the new owner, who will also have the deeds to his name, thus precluding them from opposing this de facto reality.

Although this is a very quick way to obtain 100% finance, it is risky because:

1. The lender could still foreclose on the property on the basis of its unauthorized transfer if they find out within a certain number of months; it is not clear how many months, but if nobody tells them, they will not find out. However, if they are getting religiously paid, it would be rather stupid to do so.
2. If the new buyer stops paying, the bank could still hold the previous owner liable, although it is possible to successfully argue that the bank tacitly consented to the transfer.

This ‘clandestine’ maneuver is useful when buyer and seller have certain trust in each other, and the owner’s desperation to sell is matched by buyer’s keenness on the property. Allowing principals of up to 100% of the property value, this is like a non-status mortgage on steroids!

aflores Mortgages, Property bank repossessions, foreclosure in spain, non status mortgages in spain, spanish mortgages

Everyone knows that a mortgage loan title deed is a lengthy document with elaborate legal clauses and complex formulas where the main conditions of the loan agreement are set out. What most people don’t know, however, is that banks tend to include restrictions as to what one can and cannot do with the property. The latter restrictions are what we are more interested in, because breaking them entitles the bank to cancel the loan agreement and request repayment of 100% of the remaining capital.

It has to be said that some of them are clearly abusive and would not withstand a legal challenge on application of the Consumer Protection Act, but going through some of the restrictions makes interesting reading if only to see how one-sided can banking contracts be.

We have used a standard mortgage loan contract, in this case from Caja Rural de Granada (savings bank), although they are all pretty much the same. As an example, this “Caja” can foreclose on the loan if:

1. You are late by 10 days in making a repayment (that’s ten days, never mind 6 months!).
2. You don’t pay the IBI (Council Tax) or Basura (Rubbish Collection Fee) receipts and insurance policies (IBI can be as low as €200s per year and Rubbish collection €40 per six months).
3. You don’t pay the Notary fees for the mortgage deed (possibly the daftest of them all when it is the banks who take the money from you, upfront, to pay for the Notary fees!).
4. You use the property for any other activity other than what has been agreed (any ideas? ).
5. The property catches fire or is damaged and as a consequence it loses value (this could make sense but you have the bank forcing you take out insurance to cover this anyway).
6. You don’t give the bank the original mortgage deed within 6 months from signing the loan agreement (does anyone know where the original mortgage deed for their property is? From a legal point, it is completely irrelevant where the deeds are once they are registered so you can keep them in a safe, like some villagers do to get proper sleep, or use them to get the barbecue going, it really makes no difference).
7. You rent the property without prior consent of the bank and/or in detrimental conditions for the landlord (this clause is outright illegal and deserves no further comment).
8. You sell the property without the bank’s consent (they must first find out and then choose to add another property to their plentiful property portfolio!).

The notorious stupidity of some of the above clauses makes one laugh, but let’s look closely at what clause 8 entails. Recently I have been advising on some transactions on behalf of willing buyers and sellers without notifying the bank, because the bank has, quite simply, refused the buyer’s application on financial grounds. I will leave this for my next blog post.

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