Antonio Flores’ Blog

Pet-hating Altos de Miraflores has put Mr. Philips in an awkward position. In his position as President of the Homeowners Association he has had to give full and final notice of legal action, and eviction if necessary, to an owner who has chosen to lodge a diminute dog in his private home.

The community-regulation “infringer”, a good friend and client of the firm, was about to dispatch the animal to the Triple A (local dog rescue centre) after receiving a threatening letter (since he was in no position to sell the apartment). When I was told about the case, I immediately identified an excellent story for my blog, so I will not spare one word of the exchange of correspondence. Enjoy!

Letter from The Community of Owners to my client

Letter sent to our client. Click for larger version.

Letter from our firm to the Community of Owners

From: LAWBIRD LEGAL SERVICES

To: Mr. Ron Phillips/ President of the Community of Owners

Dear Mr. Ron Phillips,

In my position as acting lawyer for Mr. Shahram Varasteh, owner of apartment number 70 of the Edificio Altos de Miraflores, I hereby respond to your letter dated the 20th of July 2010 where you demand from my client, in connection with a number of articles of the statutes, that he moves his dog to another place or, should he does not wish to abandon his pet, that HE removes himself from HIS apartment because otherwise YOU will, pursuant to the mentioned articles, instigate legal action to ultimately deprive HIM from living in HIS apartment.

The above let me confirm to you, Mr. Philips, is incorrect.

Firstly, because we thankfully no longer live under a dictatorship. Unless, of course, one happens to live in the Community of Owners of Los Altos de Miraflores, presided by your iron-fist, extravagant and draconian forms.

You should be reminded that article 18.2 of the Spanish Constitution establishes the inviolability of one’s home. In a hierarchically superior instance, the European Convention on Human Rights established, in its article number 8, that:

1. Everyone has the right to respect for his private and family life, his home and his correspondence.
2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

Secondly, because the articles of the statutes of the Community that you preside, which prohibit dogs, are not enforceable erga omnes , that is, against all animals or people. It is now accepted by unanimous case law that controversial prohibitions like the one you wish to enforce have to be interpreted necessarily in conjunction with other fundamental rights inherent to the quality of being a property owner.

The Horizontal Property Act you refer to, in its Preamble, stipulates that the rights of enjoyment tend to give the owner the maximum possibilities of utilization, with a limit represented by concurring rights of equal importance of other members of the Community, as well as the general interest.

Such prohibition, in the words of the Madrid Provincial Audience (SAP 4th June 2001), finds, within the communal environment in which is adopted, its full enforceability and efficacy insofar as the Community members interact outside the private environment, in relation to the right to privacy and exclusive use of a private home.

It would be, in the opinion of the Madrid Court, against logic and common sense to uphold a restriction that entailed an unjust limitation and intrusion in the faculties of use and enjoyment that conform singular and private ownership, when such restriction does not respond to a legitimate and meritorious interest. And finally, that the prohibition set forth in the statutes implies, undoubtedly, a grave restriction to the right to an ample enjoyment that every owner has.

If you wish to read further I can quote the following rulings (among many), where you will find that all consider that these prohibitions are of impossible enforceability:

• Audiencia Provincial de Asturias, sec. 4ª, S 19-10-200 9
• Audiencia Provincial de Segovia, sec. 1ª, S 21-10-2005
• Audiencia Provincial de Castellón, sec. 1ª, S 14-12-2001

The position of German and French law, for your information, is also fully coincidental with it´s Spanish counterpart.

The result of all of the above is that you can indeed impede owners from having dogs if these are proved to be dirty, noisy, dangerous, disease-ridden or any other potentially annoying quality that, as far as I am told, is not pertaining to Mr. Varasteh dog (even though they may well tick all boxes for some human candidates!). This is, Mr. Phillips, the maximum amplitude of the prohibition currently in force in the Community of Owners that you preside over and if you can therefore prove to me, in the first instance, or the Courts, that this dog annoys anyone (apart from you), bearing in mind that the elasticity of the meaning of “annoyance” cannot be equated to caprice or personal or fanciful taste or distaste, nor can encapsulate animal-hating militants, dog-phobia sufferers or similar strange individuals, then Mr. Varasteh will not object to, when the Courts determine so, remove his animal from your sight.

Finally, please note that only the Town Hall or any superior legislating body can ban someone from having a street-legal animal at home (and not your Homeowners Association), to the extent that if such animal is objectively not impeding other owners from fully enjoying their private homes, communal spaces, without objective “annoyance”, then there is little you can do about it.

It is therefore clear that the prohibition, established by your community, of keeping a dog in a private property is null and void and therefore unenforceable.

I will request in any event from Mr. Varasteh that he immediately disallows his pet any enjoyment of the communal areas as well as ensures that his Maltese Bichon is always on a lead when in transit, through those areas of community public use, to the D-point, or defecation point, where of course he will clean up after it (pursuant to dog-owning municipal ordinances).

Should you have any query in respect of the above do not hesitate to contact me.

With kind regards

Sincerely

Lawbird Legal Services

aflores Litigation, Property

We have just learnt from a letter published on the Ocean View Properties on belegal.com thread that Ricardo Miranda Miret has been issued with an arrest warrant by the Courts of Santo Domingo (Dominican Republic).

This comes as no surprise since his dealings have been obscure and manifestly fraudulent, but one would have thought that the choice of country, the Dominican Republic, and his supposedly good connections with the President of the country and, it would appear as well with Monaco’s Prince Albert (unless the photos have been manipulated), should have been enough to ensure immunity and, more irritatingly, impunity.

But since the above, albeit crucial for the people who invested at Punta Perla, seems still far away and relates to the dealings of Miranda Miret and the previous owners of the land (one of which, CCF21 Inversiones S.L., lost a property via public auction to a client of ours), we have now been made privvy to classified information containing proof of transfers between Sungolf Desarrollo Inmobiliario S.A., Paraiso Tropical, Punta Perla Caribbean Ltd. and Miret’s personal account.
We cannot disclose the source of the leak nor the full document but will say that it is a report dated the 17th of August 2006 released by La Caixa Savings Bank on petition of the SEPBLAC (Servicio Ejecutivo de Comision de Prevencion de Blanqueo de Capitales e Infracciones Monetarias), which is the Spanish Anti-Money Laundering Office, investigating the largest corruption case ever seen in a Spanish Court (Operacion Malaya).

This report is important, for it specifies the routes taken by millions of USD that left the UK and Spain to different recipients in Spain, the US, Gibraltar, the Dominican Republic and Mr. Miret’s personal account.

SunGolf Desarrollo Inmobiliario S.A Deposit 1

SunGolf Desarrollo Inmobiliario S.A Deposit 2

Paraiso Tropical Deposit

The one thing that struck me when reading is that I could not see any names of builders, Spanish town halls (or Moroccan for that matter), architects, building surveyors, lawyers and generally anyone habitually connected to property developing, even though taxes were paid (but what for?!).

On the contrary we can see the following:

• Paraiso Tropical S.A., which is the company that owns the Punta Perla land, and which is the subject of the fraud court case in the Dominican Republic.
• Sungolf Desarrollo Inmobiliario S.L., which is the company that purportedly intended to develop a resort of over 300 units in Estepona (Estepona Beach and Country Club) and which not only did it not purchase the land or applied for planning permission, but in fact shipped the millions to the owners of Paraiso Tropical, a sugar producing company called Central Romana Corporation, cash in hand and till today unknown individuals never related with the business of property developing.
• Berkeley Property Investments S.L., which is showing today as still owned by Sean Woodhall and administered by Nicholas Stewart Wood (presumably from Grant Thornton, OVP insolvency administrators).
• Central Romana Corporation, which is a sugar manufacturer based in the Dominican Republic.
• Hallard Investments Limited, which is a company based at Grosvenor Street, number 17, London.
• Inversiones CFF S.A., which was one of the shareholders of Paraiso Tropical S.A. allegedly dupped by Mr. Miranda Miret according to the court ruling issuing the arrest warrant.
• Cash in hand, which was taken out and presumably spent on expensive restaurants and clubs, business lunches, gifts and presents, call girls (according to one source) and any other unrelated-to-property-developing activities.

I feel that I have now done enough, and not because I have other work to do (which I have) but because I am limited to what info I can pick up by spending hours in front of my desktop, a few contacts and this blog (and more importantly, the belegal.com forum). It is now up to individuals who have lost their money to team up, put names and amounts on a piece of paper, get qualified legal representation and file a suit, because it is only then when will the national Governments, with their unlimited resources and power, be forced to do something and find out where and with whom did each pound paid towards a dream homes end up.

aflores Litigation, Property Berkeley Property Investments S.L, Inversiones CFF S.A., Paraiso Tropical S.A., Punta Perla Caribbean Ltd, Ricardo Miranda Miret, Sungolf Desarrollo Inmobiliario S.A

Many years back, when I was starting my life in the legal world, I remember dealing, on behalf of two British couples, with two Spanish-Venezuelan property developing brothers who had a smallish urbanization on the side of the motorway in Calahonda, Mijas. On carrying the due diligence, I noted that they were not using any form of limited liability company, just a civil partnership (in Spanish it refers to business!), which meant that they were personally and directly answerable for any wrong doing. As it was the first time I had come across such audacious business set up, I asked them why did they not use a regular company, to which the answer was even more brazen: “because we are the only property developers who have cojones in the Costa del Sol, and will never hide, cheat or run away”.

The above came to my mind upon receiving a few enquiries on MRI (Macanthony Realty Investments) failed investments, two particularly relating to undelivered (yet paid) furniture packages on holiday homes by a company linked to the one above. I decided to investigate further, and, thanks to the ever expanding power of internet, came across several illogical pieces of content (videos, press releases etc.), in what appears to be a very determined but futile attempt to saturate Google first page. A few were relating to Peterborough United, under the very appropriate name of “Darragh Macanthony is part of the furniture”. Another was a video showing some nerds trying to salvage a chair from the powerful drag of a mighty electromagnetic MRI scan (after perhaps having swallowed the rest of the furniture packages promised by MRI, in what could be the only furniture-gobbling black hole ever to be discovered!).

I then went to read some of the -literally- hundreds of comments on threads opened to deal with the matter on various websites and blog posts (some being platforms for affected victims) that said that Macanthony, being part of the furniture, had also disappeared with it and of course the money. Before this happened, someone within the company must have been appointed to deal with the furious posters, as London law firm Carter Ruck has been on their cases, sending letters with notice of legal action.

Before I provide my opinion on what I believe may be the legal position of the victims, if we were to apply Spanish laws, I do have to admire Darragh Macanthony’s braveness in putting his own name to each one of the companies he set up in his few good years of glory, because, by doing this, he has seriously jeopardized the protection limited liability companies give to shareholders by precisely saying that the companies are him and he is his companies, and at the same time leading people to think that he might have set up all these companies to prevent legitimate plaintiffs from accessing his personal wealth to obtain legal remedies.

The doctrine of the lifting of the veil, originated in the US, has kept legal writers, scholars, judges and lawyers very busy for very long, but as far as Spain is concerned, the Supreme Court has established in numerous occasions that, if the existence of a limited liability company is simply an external form that does not imply a real separation of assets because it is merely a commercial format given to the activities of one individual (or a few), and thus it cannot be established that one is acting in the name of another person (a juridical person, in this case) but acting on behalf of oneself, then there is one single economic and financial reality.

I am always intent on not boring my readers but the Supreme Court has prevalence here, because it could well be the case the Mr. Darragh Macanthony is personally responsible, with his present and future assets, inclusive of his Peterborough Football Club, if a court of justice ever determines he has used his protective corporate shield to defraud legitimate expectations of people who contracted with one of his companies, all the while protecting himself.

These are some general notions alluded by the Supreme Court to establish when company owners should be stripped naked of the company protection:

• Abuse of rights, which happens when one takes to the last consequences the juridical or corporate personality, when this official intention does not correspond to reality but to a socially and ethically reproachable activity.
• Antisocial use of companies, which happens when, by use of the protection dispensed by using a company, one frustrates the expectations of bona fide clients whose rights are irreparably harmed.
• Artificial creation of multiple companies, all owned by the same person, to obtain a  result contrary to law, pure fictitious entity, inconsistency of the juridical person, decoupling of one person into several companies, instrumentation, confusion of personal and juridical personalities, substantial confusion and identity, single economic unit etc.
• Decapitalisation of the companies.
• Facade or vehicle to allow someone to walk away with impunity from massive monetary damage inflicted to a numerous group of bona fide persons by willful misconduct, fault or negligence.
• Company being the “alter ego” of the main shareholder.

All the above pertains to civil actions that may be available, but what about a criminal edge? This is always more difficult to prove, but already some colleagues have pointed out that failure to deliver furniture could be seen as a form of “criminalized juridical contracts”, a subtype of swindle which applies to people who, knowing that they will not be able to comply, enter into civil contracts and take money upfront, with the result of default and loss for the purchaser.

If it can be proven that MRI was taking on money for furniture package contracts when they were already defaulting on others due to financial inability, it would seem sensible for out-of-pocket MRI ex-clients to take this route.

aflores Litigation, Property Carter Ruck, Daragh Macanthony, Macanthony Realty Investments, MRI, MRI furniture

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!

aflores 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)

aflores 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!

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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…

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