Antonio Flores’ Blog

How possible is it that someone who buys a plot of land for €800,000, earmarked to develop 30 apartments, financed with a substantial mortgage loan (€600,000 only after due diligence carried out by bank), with planning permission granted and already with a few off-plan sales on the pipeline, ends up with, after some years of legal action, half-acre of land wholly unsuitable to plant even tomatoes? In Spain, this is actually possible.

The case study in question saw the valuation of the plot go down from €1,198,280.30 to just over €20,000 after the regional Government in Andalucía challenged the planning permission granted by the Town Council in Tolox, a small picturesque village embedded in the very protected “Sierra de las Nieves” natural park. The mortgage loan, as was expected, remained unaltered. The developer’s brain activity, on the contrary, visibly altered, following sleep –and planning permission— deprivation.

This textbook horror story is actually very possible in Spain, where one Government office can challenge a decision made by a hierarchically inferior office, and, although is not commonplace, it did occur to several developers that had their Tolox Town Council planning permissions revoked by the courts, on instigation of the Junta de Andalucía. Horror story as it may seem though, the mayor is currently indicted for corruption as he was –allegedly— taking bribes from some developers.

But as that great Englishman, Ken Dodd, once remarked, every cloud has a silver lining, plus VAT: it could have been far worse if hundreds of off-plan property owners had paid their deposits only to see the works stop-half way to completion (and who could have then successfully pulled out had they secured a bank guarantee or be stuck with a broke developer for the foreseeable future otherwise).

Apart from the above upside, which is a true blessing in disguise for both parties of the contract since those very off-plan buyers seeking a retirement home in this beautiful area would have hardly be willing to complete on an overvalued property, the law protects anyone who is provably damaged by an official decision, undeservedly that is, and can sue in courts.

In this instance, the Tolox Town Hall is poised to be painfully sued by all of the developers that, in different degrees, have had their expectations trashed. Current legislation allows for the following to be indemnified by the infringing Town Hall:

• Demonstrable loss of value of plot of land as a result of the planning permission revocation (where land was purchased with planning permission).
• Demonstrable loss of revenue as a result of not being able to conclude transactions on secured off-plan unit transactions (not on those not sold).
• Taxes, costs and fees incurred in when purchasing the property and/or developing the project.

If the Town Hall can prove willful misconduct or fault on the side of the applicant, the above items become non-indemnifiable. For example, where someone got planning permission from a Town Hall to build close to the sea and they did not ensure compliance with national coastal restrictions; or where clearly planning permission if granted subject to certain, and unmet, conditions. And not least, when some palm was adequately greased…

But barring those reservations, as solid judicial authority on the matter puts it: “it is clear that revoking planning permission causes a developer financially certain and provable damage for, in any event, he is impeded from legally carrying out the previously authorized activity and even, may put him on the path to demolition of whatever was built.” 

Antonio Flores Property licence revocation, planning permission in spain, Tolox

It is not unusual for the build up of a property fiasco to start like this:

… at a glittering awards ceremony held at the London Marriot in Grosvenor Square on Friday 4th of November, The Harrial Group representing the Las Torrentas Development won the best architecture (Whole Development) in the Bentley International Property Awards- the world’s biggest and most important property event”

From: http://www.lastorrentas.com/

It then gathers momentum with abundant advertorial news articles where the development receives the highest praises for being the best of its kind…on the drawing board.

The proponents of Las Torrentas, a 150 home development in the Spanish countryside town of Calasparra, The Harrial Group S.L. were directors Linda and Andrew Jones, a couple from Abergavenny, South Wales. And so excited they were that they convinced the mayor of this small agricultural town, if persuasion was at all required, to meet Abergavenny Town Council with a view to establishing a new twinning relationship between the Spanish and Welsh towns.

And then the Jones’, in a fit of hysterical excitement probably fuelled by the sums of unsecured deposits that were being transferred to their accounts by trusting purchasers, and the underserved and silly Bentley award, got confident and wrote a letter stating, among other things, that “about 15 years ago, when my husband Andrew and I started investing in property, we were shocked by the low standards of some developers”

Well, 15 years on, shocked-turned-shocking Andrew and Linda Jones have done a runner with other people’s money and are keeping a low profile, hiding presumably in Abergavenny.

Due diligence carried out on the development reveals the following:

1. The Harrial Group Spain S.L. never had planning permission on the plot(s), and yet they confirmed that completion would take place on the first six months of 2008. On the 6^th of May 2006 a public announcement on the official local gazette declared a period of 30 days for submission of allegations in respect of the proposed Las Torrentas project, indicating that once this stage is over, a report on ecological impact assessment will be drawn up with a view to determine the convenience of approving the project and if positive, the conditions under which it is to be carried out. The project has now been indefinitely shelved.
2. The Harrial Group Spain S.L. never provided bank guarantees to their customers. Clearly, when the funds were taken by the developer, he knew or should or could have known that the probability of the project stalling was very high, and yet chose to exchange contracts, request payment and fail to provide a bank guarantee.
3. The Harrial Group Spain S.L. has never filed company accounts with the Companies House (Alicante), since it was first created (!), which is indicative of business malpractice and lack of activity.
4. The Harrial Group Spain S.L. entry with the Companies House has been cancelled due to not having submitted tax returns, with date 19/07/201, which is indicative of business malpractice and lack of activity.
5. Press and media: What dealings did the Jones’ have with the Calasparra Town Hall are unknown, but a payment of €160,000 was made so that they would reclassify enough land to build 150 villas in an area considered of high ecological value  given the presence of river rats, partridges and other animals as well as local agricultural land.
6. And what about the development plot? All we have found is half acre of arable land suitable for…rice-growing.

Conclusions to be drawn from this:

• The Jones’, infamously advised by local lawyers, have misappropriated others peoples monies and could face prison terms in application of current jurisprudence where a property developer has not guaranteed the down payment nor has offered a refund.
• Stay well away from Bentley International Property Awards awardees, just in case.
• Always have a disclaimer opportunistically stating that “we do not hold responsibility for any errors and we cannot be held reliable directly or indirectly for any loss whatsoever”. You can then add, for full protection, something along the lines of “we are entitled to take your monies and run, and shall not be held responsible for not looking back”.

Antonio Flores Litigation, Property Las Torrentas, Linda and John Andrews, litigation against spanish developers, The Harrial Group S.L

Try to guess what is it that the following have in common: an electrical company from Alicante, a cement subcontractor from Valencia, a real estate company from the Balearics, the Spanish Inland Revenue, the Spanish Social Security, 6 banks and 65 employees (2 of which guard an empty plot), on the one side, and 150 consumers that were hoping to acquire Spanish off-plan property on the other.

You guessed right: they are all registered with the courts on occasion of a voluntary company administration arrangement of a large Alicante-based property developer, San José Construcciones, hoping to perhaps get paid some money back over the course of a number of years.

The above scenario, however normal it may appear to be these days, hides a fundamental legal flaw that brings into question, once again, a legal system that has routinely failed to protect those who deserved the utmost protection: consumers.

Such flaw can be inferred from the controversial fact that the first group of creditors are hoping to get paid with the monies of the second group, the buyers, who should have had their deposits bank-guaranteed or insured pursuant to a Franco time law, the Ley 1968/57 Act, that was specifically enacted to avoid the situation they are now in.

In this case-study the irony (or irritation) is that BBVA, the second Spanish bank in size, is queuing up to try to grab a chunk of the money they are supposed to have been guaranteeing in the first place, since they provided a collective bank guarantee to underwrite deposits on a 120-unit development, deposits on which they profited handsomely for the developer’s mortgage and various commissions were being paid out of these. Crazily enough, this bank will only agree to “voluntarily” comply with its mandatory obligation after some arm-twisting, which involves lawyers and legal action.

Another surprising aspect of this all is the fact that criminal case-law states that no developer can use consumers’ down payments for anything else but building the contractually agreed property, and this excludes real estate commissions, admin staff salaries, pocket money…etc. As there is not one brick on the plot, helping consumers get their monies back should be a priority of any property developer, particularly where many lawyers have found that the criminal route can render results (many developers are serving prison terms for this), not the least where the developer has broken the law so blatantly.

Financially ailing developers are probably too traumatized by what has happened and can only hope the market will recover one day (and that lawyers will not press too hard). On the contrary banks shirking their legal, and ethical, responsibilities towards trusting property buyers (Spanish and foreign alike) has to now come to an end, particularly where abundant bank-guarantee case law is invariably favouring consumers and banks are seemingly getting unlimited funding from the Spanish State.

–

Adaptation of the post originally written for the Olive Press – The Banks Are to Blame.

Antonio Flores Litigation, Property Bank Guarantees in Spain, BBVA, Ley 1968/57, litigation against spanish developers, San José Construcciones

The percentage of disputes within Spain’s communities of owners that find their way to the courts is substantial, to the extent that they now make up a significant share of Courts case load. The nature of these disputes ranges from the rather boring (from a practicing lawyer’s point of view) money claim to the more exciting topic of activities that may or may not be allowed within the urbanization or block, as well as how owners’ rights are exercised in respect to others. The variety of scenarios and circumstances and the corresponding case law mean that lawyers not always have straight answers and therefore, a case by case analysis is required.

So which activities are deemed illegal?

In principle, those forbidden expressly by the statutes; such prohibition can be upheld so far as they are not against the laws and, generally, the supreme of all laws, the Constitution. As a rule of thumb, the following are illegal: activities deemed cumbersome, immoral, obnoxious, unhealthy, dangerous or contrary to morals.

I can mention a few real cases, such as a kindergarten or school, a bar, a laboratory, a massage parlour, a poker room, a druggy that has the home and himself in a total state of decay, a manufacturer handling gunpowder, a dog or cat breeding business.

A medical practice was considered to be acceptable by one ruling, whereas a traumatologist was banned from opening his business due to courts deeming the activity as cumbersome given the high circulation of clientele.

One other court rulings deemed acceptable that a taxidermist (yes, he who is an expert in the art or operation of preparing, stuffing, and mounting the skins of dead animals for exhibition in a lifelike state) got his license. And another one also found in favour of a radiologist’s practice.

Finally, another Judge deemed that insurance brokerage was a noisy activity and thus banned it because the clients used the lift continuously…

And what about noisy or cumbersome neighbours, how is that dealt with?

This is a tricky one as what is right for someone may be wrong for another and where in doubt, a dispute is bound to arise: as an example, excessive noises, invasions of privacy, improper use of the communal areas and generally, any behaviour susceptible of interfering with someone else’s right to a peaceful living.

Courts know that the difficulty to deal with such dispute means they have to strike a fine balance between diverse, and occasionally opposing, rights, and to that extent they have come up with the Theory of Due Tolerance, which marks the boundary lines of our behaviour in respect to that of others. This theory encapsulates 5 principles:

1. Reciprocity: if for example other neighbours do the same unopposed, we may infer it is correct to follow suit.
2. Just or fair balance: if diverse behaviours are not on a collision path, they should be allowed to exist.
3. Estoppel: it stops one going against one’s owns actions.
4. Prolonged consent: it seems an obvious consequence that a certain behaviour that has been unopposed for a long period of time should be acceptable by who consents.
5. Permissiveness: it mixes consent with the notion of social acceptability.

Antonio Flores Property Community of Owners, Community Statutes

A row between the Secretariat of Labour and Immigration and the Central Police Station is threatening to discourage hundreds of potential property buyers from taking the plunge. The former has ruled, against the opinion of the latter, that the obligatory NIE numbers can no longer be applied by representatives with a power of attorney and so personal attendance is mandatory (as from the 3^rd Jan 2012).

Although the reason behind the disagreement appears to be how both Government offices interpret a particular norm, the consequences can be devastating given that NIE numbers are now required for almost anything and many people will just not feel that Spain is a country worth investing in if you need to queue up at 6 AM at police stations, get a ticket, walk to a specific bank to pay the fee and then go back to the police station to apply for the number: buying property, setting up a business, signing up for a job and many other legal matters just don’t deserve this third-world treatment. In Madrid, a city that aspires to become a European financial hub, you can expect a 3 month wait for an appointment to apply for the NIE.

Also, there is a total lack of uniformity in what documentation is required: for EU and Non-EU citizens alike, some police stations in the Costa Blanca are asking for notarized documents of the property one wishes to buy, others will accept a reservation contract (original or copy) and proof of payment of deposit and if you are not around to pick the number up, you will have to give an official power of attorney to someone if you are in Ibiza. The random nature of documentation requirements is perplexing to professionals and unbearable to investors.

Spanish Consulates, not particularly equipped to assist investors, have been commissioned to process applications and return an NIE number within 5 working days (RD 557/2011), a tall order for some of such offices not used to dull admin work. And that is if you have a consulate nearby, as cost-cutting has meant that the Spanish Government has closed many (e.g. Manchester and Hamburg), so if you happen to be a billionaire currently in Vladivostok looking at buying a property for a zillion euros that you have already visited and reserved, and you are told that you need to fly to Moscow, or back to Marbella, to apply for the NIE that you forgot to get whilst property hunting, then Spain has a problem.

The property industry is dismayed by what are probably the weirdest, craziest and most idiotic laws around Europe, and is hoping that as with most things, common sense will ultimately prevail.

Antonio Flores Property NIE Number, spanish red tape

It sometimes happens that, when you start off a new business venture where reputation is considered to be crucial, you need to start off with a slate cleaner than clean. Of course, it is quite possible that one has left a few debts unpaid, particularly with lending entities (who cares, really!) and perhaps a bit of social security or taxes, as they are the last to the get paid, generally.

What is just defies prudency and common sense is starting off a business consisting on sorting out other people’s real estate problems when you have a few skeletons in the cupboard that are rattling like a dildo in a biscuit tin.

Because, this is exactly what is happening with Restructuring & Recovery Consulting Group, fronted by Mark Farber. The story (PDF)(the real one might I say) is actually one that he has twisted to make it one of his case histories, the truth being far from what he claims it to be.

Indeed, the project was located in Inland Andalusia, in Casarabonela to be accurate, it was certainly close to 20 hectares, and changes in regional planning laws did render the project unacceptable (no mention of the crisis here nor running out of cash). And this is as far you can stretch the truth, as the rest is a load of imaginative B.S.

Not only was there no proper project in place, but also, nobody proceeded to immediately discuss the situation with local and regional planning authorities, and no agreement was reached that re-zoning would be acceptable if the project was repositioned as a tourist oriented resort rather than a straight residencial developement.

And, on top of the pile, you get the worst lie of all: a large amount of money was also owed to a local savings bank which had already begun the process of recovery. Mark, it is Lawbird’s clients who are owed the money, and they are a British couple and not a local savings bank, unless they have morphed into some rural lender in the last couple of weeks. And they are owed close to €1,300,000 which seems they will never get if, as your lawyers say, the company that owns the cortijo (Rural Excellence S.L.) will be swallowed by the bankrupt Ecur Constructora Urbanizadora S.L., which owns I assume also part of Restructuring & Recovery Consulting Group, given your statements.

And finally, you have not been instrumental in negotiating with the savings bank to refinance the debt, because there is no such thing. If any, you have been instrumental in keeping my clients like a mushroom, in the dark and being fed bullshit. And unpaid. Oh, and also, killing a good number of avocado trees by failing to water them…

See you in court!

Antonio Flores Litigation, Property Restructuring & Recovery Consulting Group

Last Sunday morning, while cycling around La Cala area, I spotted what looked like an isolated bored Spanish donkey with what looked like a kind of a smallish stork on its back, the latter presumably going about the job of cleansing the animal from parasites, and the former happily accepting it. This is what they call symbiosis, or a mutually beneficial relationship involving close physical contact between two organisms that aren’t the same species. I took some pictures but the mobile was not powerful, unfortunately. In a strange mental composition exercise whilst negotiating the curves, I immediately thought of more than a handful of Spanish property developers and Mr. Carlo S. Mottola, in what could be one of the biggest cases or fraud in the Spanish property sector, and the relationship they had struck to bring misery, anguish and pain to, once again, off-plan property buyers. On the one side of the fraud, sitting comfortably on top of the donkey, Mr. Mottola, the man behind the bogus Compagnie Des Garanties de Du Luxembourg S.A., Company of Guaranties Ltd. and Cauzione, flouting every mandatory insurance legislation provision and without a penny behind him, and with the Spanish Insurance watchdog DGS (Dirección General de Seguros) warning about his activities as early as 2003 (and who incidentally have done nothing since), erected himself as the provider of surety contracts worth tens of millions of pounds knowing full well he could have never honoured them, if we notice the following:

1. His Luxembourg company, boasting a share capital of €24,283,800 on the letter head of the policies given out by the hundreds in the years 2003-2008, had actually been referred to the Courts on the 10th of November 2003 by the Luxembourg Prosecution Service and, after a remarkably quick Court process (which we can only dream of here), the company was “pronounced dissolved and ordered its liquidation” for what was deemed as grave legal contraventions, these being not submitting a Balance Sheet nor a Profit Loss Statement since the company’s incorporation, in 1999, nor having a known address since the company was reported to the authorities in 2003. Just as his insured property buyers have been used to, he failed to turn up to the hearing…
2. His accountants in London, Arram Berlyn Gardner, had already warned, in early 2009, that the company was not a viable enterprise.

   

3. Lack of any recorded payments on claims (or perhaps one or two smallish at the beginning to give himself a credibility that he lacked) to any of the hundreds of people who would have been entitled to a payout.
4. Record of payments made to companies under his control, or directly related to him, one in the Channel Islands and the other one in the US: And again in 2008, another payment: And what about the American company?

At the other end of the scam, the Spanish developers, the donkeys in the symbiosis relationship and in real life too, real quadrupeds who, after having their applications for bank guarantees or insurance policies turned down by the likes of Santander, BBVA, AXA, Zurich and many others, resorted to the unscrupulous Mr. Mottola, who would, oblivious to what is right or honourable, and legal too, print off as many policies as required to provide sham covers to the unsuspecting property purchasers. If you wish to know what these policies look like think about the lottery prize certificates that Nigerians send you by email on a monthly basis, when you strike lucky with them: they actually look genuine in comparison to Mottola’s “monopoly” policies.

But the net is now closing: already, the Malaga High Court, in a civil ruling involving a developer currently serving time for tax fraud and indicted on further corruption and swindle charges, stated that: Lastly, to have a perspective on the behaviour of Naviro in this matter, we need to refer also to the surety policy invoked by the defendant, which happens to be completely bogus for the company “Compagnie Des Garanties S.A. is not authorized to operate in Spain, as has been proven in 2 reports, one from the Bank of Spain and a further one from the Insurance Directorate General. And recently, a story about one bogus insurer which is being investigated by the police for insurance fraud for having offered bogus insurance cover and will be presumably soon accused of criminal swindle. The lady in particular was registered with the Companies House to…distribute electrical appliances. Compagnies des Garanties Ltd. is equally currently registered in Spain as a branch operation, and duly registered too with the tax office to carry out the activity of…Maintenance and Repairs of Motor Vehicles. This further dent on Spain’s already appalling reputation for not looking after foreign investors bodes badly for the Government’s plan to bring back foreign investment (a child would see this), not to mention nationals of Spain who have also been caught out in this scam.

And so, who will pay for this? Well, difficult to say now but it seems that a the spectrum of responsibilities will range from possibly criminal to civil and potentially, administrative, given the supervisor’s failure to bring this man to justice, but more importantly, for having allowed him to operate since he was discovered, back in 2003!

And what does the law say?

• Article 4.2 of the 2004 Private Insurance Organization and Supervision Act (Real Decreto Legislativo 6/2004, de 29 de octubre, por el que se aprueba el texto refundido de la Ley de ordenación y supervisión de los seguros privados) states that any “contracts signed with an unauthorized entity, or one whose authorization was revoked, will be deemed null and void…in the event of a claim being registered the persons or entities responsible will have to pay as if the policy had been valid…The obligation will be joint of the company and any persons who would have authorized or permitted the conclusion of a contract.”
• Article 48.3 of the same, when stipulating the administrative fines, states that…the dispositions of this article will be understood to be applicable without prejudice to any other responsibilities, including criminal, that may be incurred in.
• Article 248 of Spain’s Penal Code: A person who, with the intent of gaining a benefit, uses deceit to produce error in another person, inducing him/her to dispose of own or third party valuables, will be liable to be sentenced to imprisonment for 1 to 6 years.

And what about the regulator, the DGS, who did have knowledge of this since, at least, 2003? In my opinion much more could have been done, in 9 years, to prevent this individual from ripping customers off through unscrupulous developers even if that meant filing a denuncia via the Prosecution Service, a job that would have taken a civil servant one morning. To our knowledge, Mottola’s offices are still open, except for the processing claims side of things, which is what he never intended to anyway. This inaction is consistent with nonfeasance in public office, or negligence, which would constitute grounds for a claim against the Spanish State. Documents

• 2007 audited accounts (PDF 275 Kb)
• 2008 and 1st half 2009 accounts (PDF 466 Kb)
• 2005 French Branch of Compagnie des Garanties Forced Liquidation (PDF 1,095 Kb)

Antonio Flores Property, Scams Carlo S. Mottola, Compagnie des Garanties, Compagnie des Guaranties, Company of Guaranties Ltd. and Cauzione, Dirección General de Seguros

About to wind down for the weekend, yesterday evening I received an email from Alexandra Goss, personal finance reporter for the Sunday Times, in relation to a few enquiries sent by Spanish property buyers, and sellers, that were unexpectedly receiving letters from the Spanish tax office challenging the prices at which they had bought, and sold, their properties in Spain, respectively.

Indeed, one thing came to her mind considering the state the Socialist Government has left Spain in: the Spanish Tax Office (AEAT) is desperate for revenue and are finding avenues to levy extra demands for transfer tax from property buyers, and so, if the Spanish property market was not an already depressed sector of Spanish economy, they now come, as real predators, to make it even harder for people to buy, and sell.

This is the real paradox of it all: the Spanish Interior Minister flies out to England to do his silly property-selling road show, and in Spain, those buyers get shafted by the Inland Revenue his Government controls. The good thing? That courts are, mostly, not contaminated with the wrong ideology and will employ reasoning and logic to counteract this property-buying prevention scheme, and will mostly, again, throw out of court these extra tax demands.

What should one do if one receives one of these letters, after of course all the understandable cursing and imprecating? Well, go get a lawyer that knows his stuff and appeal within the stipulated timeframe, by choosing one of the 2 legally available avenues:

1. Challenge the “unreasoned”, “standardized” valuations made by the tax office that happen to be nothing else than some formulas being applied on unknown coefficients by a computer program that pumps out wholly impossible valuations (a 2-bedroom flat on a 200-unit empty development in Manilva worth €280,000?). The funny thing about this is that University graduates sign off these valuations, knowing that they are essentially wrong and untrue (land registrars in most of Andalusia are in charge of the Transfer Tax collection, and/or “arquitectos tecnicos” employed by the Andalusian Government, the same graduates that think that the property is twice as expensive!).This is what the courts in Spain think about these predatory extra tax demands:
   • Supreme Court 14^th December 1998: The valuation carried out by the architect for the Tax Office is a standardized printed form full of scant references that have the weight of an opinion rather than that of a property valuation, and therefore one cannot assume it has any reasoning or justifiable criteria, losing its legally binding effect.
   • Economical Administrative Tribunal 20-06-1995: The legal mandate granted to the Tax Office to raise supplementary tax demand fails due to the Tax Office not following a logical process when arriving at property values but rather by using abstract figures when calculating these. Also, the Tax Office fails to properly provide a valuation when they simply perform arithmetical calculations on the basis of a unitary basic module, without reasoning or justification, and certainly can never comply with the law when to this value or figure, a stereotyped all-purpose text is added on as reasoning. (Tantamount to calling the “arquitecto tecnico” a dumbass).
2. Carry out a proper valuation by a proper “arquitecto técnico”, or as they don’t like to be called, “aparejador”, who will surely determine that the property’s real value is either the price you paid for or sold it for, or perhaps less, and submit it, hoping that the “arquitecto tecnico” working for the Tax Office will abide by the norms of ethics of their profession and admit to being wrong. Because the funny thing here is that, depending on whether these university graduates work for you, or the Tax Office, their opinion of what the quoted property is worth will be €140,000 or €280,000, respectively. It´s funny, certainly, but it is also very worrying.

This subject matter is very very interesting, and so expect some interesting, and surprising, developments very soon, including a legal suit against the Andalusian Tax Office.

Anyhow, check tomorrow the Money Section in the Sunday Times, I am quoted there.

Antonio Flores Property, Taxes spanish property taxes, Spanish Tax Office, spanish transfer tax

Spanish Minister Jose Blanco, “Pepiño” as he is known to his closer aides, has made a right fool of himself, again, by traveling to the United Kingdom with a bag full of unsold substandard properties that are unlikely to find buyers in the next 5 years, unless, of course, prices are slashed by at least half.

What he was not expecting the outrage among representatives of thousands of people who have not had their properties built (and deposits returned), or have had licenses on new properties revoked, demolition orders passed (in a number of cases, well-deserved), supplementary tax requests filed by the regional tax offices and a few other property-buying prevention measures applied by the Socialist authorities.

The only good thing, I suppose, is that thanks to the suffering inflicted on thousands of Brits (and Spaniards, French etc.) who bought a few years ago, we can say that one can safely trod through the Spanish property-legality minefield because all explosive artifacts have been identified and defused.

There still seem to be doubts in respect of the bona fide buyer, or good-faith-third-party buyer that buys a property, and the license of subsequently declared illegal. Well, according to the Spanish Supreme Court, in a recent ruling (December 2010) that quotes similar resolutions, anyone buying a property that has its original license revoked, is not protected by the reliance placed on the records of the land registry.

The reason is, according to the Magistrates, that the protection dispensed by the registry is only applicable to rights acquired in good faith and with good title, even if the previous one is declared void, and it is not therefore applicable to vices or defects appertaining to the object being transferred, so that if a license has to be declared null and void by application of the laws, then the new buyer “subrogates” the position of the prior owner and will be obliged to sustain the consequence the law envisages (and we all think about demolition here). Luckily though, most real estate professionals now know full well what is kosher and is meant to stay like that, or being legal could be potentially declared illegal (rural properties, mostly).

And so, what is the recourse for anyone caught up in the above situation then? The Supreme Court leaves the door open to file an action requesting compensation, from the Spanish State, if it was proved that the owner was a victim of a defective application of administrative decisions (typically, the grant of a license declared illegal later).

And what about the missing bank guarantees on failed developments? This is probably the hottest of topics (or potatoes), alongside the stupid retrospective coastal laws approved by our Socialist Business-Killer Government (soon to be ousted, thank God!). In relation to this topic, I have to admit that, even though I do not agree with some of Keith Rule’s antics, particularly the blind endorsement of a particular law firm, he has demonstrated that there is substance behind his proposal.

Antonio Flores Property bank guarantees

Acting on behalf of over 160 claimants (of a total of 290), Lawbird, in conjunction with the Prosecutor and other accusing lawyers, has secured prison sentences for 10 individuals acussed of masterminding the largest timeshare resale scam ever to hit the Costa del Sol. A further 8 are on the run and a ninth passed away.

The agreement was almost inevitable given the particulars of a complex case that, lasting more than 10 years, would have been downplayed due to the mitigating effect of the abnormal judicial delay in administering justice. In the end, all of the accused individuals have agreed to prison sentences that, due to an pre-agreed reduction (under 2 years) , will not see them spend time as an Alhaurin prison immate for illicit association and swindle by theft.

W. Prinsloo, a man of frail appearance deemed the gang´s ideological beacon, was absent due to having died some years earlier. He had also been accused possessing an unlicensed gun, a .22 rimfire pistol, that would have made him not eligible for a suspended sentence. Being familiar with handguns as a licensed owner (I too have a .22, and a 9 mm., plus a .357), we have better places to store them rather than, well, in his “office” desk drawer, as Prinsloo did…

The ruling also obliges the convicted conmen to repay over half a million Euros, as civil liability compensation, within a period of 2 years.

And what about Argentinian conman Fabian Marcelo Ramirez, a man who is still cold-calling hundreds in spite of having being arrested 4 times? I do hope that he now sees that his moment is coming.

Documents

• 2011-05 – Timeshare Resale Scam Case Sentence (PDF – 2 Mbytes)

Antonio Flores Litigation, Property, Scams courts, malaga, muldoon, prinsloo, Ramirez and Ramirez Asesores, scam, timeshare