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

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!

aflores 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!

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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

Soon after we received a court ruling against property developer Manilva Costa S.A. as a consequence of its dealings with the demised real estate agent Ocean View Properties (OVP), we began to receive new enquiries from private purchase contract holders of Estepona Beach and Country Club. Purchasers had been left stranded in this legal limbo, perfectly orchestrated between developer, agent and appointed lawyer, the latter being the more reproachable of the three for his failure to even get a contract signed by someone (yes, monies were paid to Ocean View Properties and contracts sent to the clients to sign, and then never returned to them with an original signature; never mind about bank guarantees… frightening!).

But at least though, Manilva Costa S.A. managed to finish the properties, and have a finished product which says something about them, even if the properties were delivered late, specifications did not match the agreed ones on contract, and additional facilities were never built.

What has happened with Estepona Golf & Country Club is similar in its inception, but where the development was meant to go there is a void plot, and of course, as above, no contracts were ever exchanged, no bank guarantees to protect the investment secured, no building license granted and it appears that not even was the plot owned by the developer. Unfortunately for these investors, Spanish lawyers appointed to protect them seemingly worked rather on behalf of the deal, because nothing, except for a receipt, did the clients get.

The consequences are, in principle, that investors are now left with little options to sue on a civil court because they have few or no documents to pursue Sungolf Desarrollo Inmobiliario S.A., the Spanish developer, nor Ocean View Properties, since it is now wound up. So I decided to investigate this matter further, and to my surprise I found an interesting article (in Spanish), where a link is established between the above two companies with the biggest corruption case ever to be started in Spain, Operacion Malaya, and with a development known as Punta Perla, a massive $2.5 billion resort.

According to the Sepblac (Spanish Anti-Money Laundering Specialist Service) Sean Woodhall is the necessary link between the Spanish investors, which include Antonio Roca (the mastermind of the massive Marbella Town Hall corruption ring still in prison), Tomás Olivo (owner of La Cañada commercial center and indicted for money laundering), Carlos Sánchez and Andrés Lietor (both businessmen connected to Roca and also indicted for money laundering), and the Dominican projects. The report also says that Woodhall was fronting Berkeley Property Investments, and was the beneficiary of substantial funds forwarded by Sungolf Desarrollo Inmobiliario S.A, and it refers to a project of 395 units in Estepona it is developing and selling with the assistance of Ocean View Properties (it would appear that Ricardo Miranda Miret, Sungolf director, introduced Woodhall to Carlos Sánchez and defined him as his partner).

If one reads the article and analyses how the whole plan was concocted, it seems clear that there was not the slightest intention to build and sell 395 units in Estepona by either Sungolf Desarrollo Inmobiliario S.A or OVP, respectively, but just to extract €30 million to buy into the Dominican Republic Punta Perla development, which makes this a massive swindle equivalent in size to the Fortuna Land scam although with an international component.

What the Spanish investigators at the time never did was link this money laundering scheme with the Estepona Beach & Country Club scam; pending consultation of the report which we are expecting to get a copy of, it seems that there is sufficient evidence to consider criminal prosecution against Ricardo Miranda Miret, the director of the company at the time (and still is) and its shareholders Rosa María Prado Rubio and Javier Espinosa. The local reporter for El Mundo (largest Spanish newspaper), who incidentally is a client of our firm, has taken a big interest in the matter and we will be meeting him early next week to consider lines of investigation to find out where were the funds paid by buyers for apartments at Estepona Beach & Country Club fraudulently diverted.

Interesting reading:

• Operación Malaya: La Conexión Dominicana (article in Spanish)

aflores Litigation, Property Andrés Lietor, Antonio Roca, Berkeley Property Investments, Estepona Beach and Country Club, Fortuna Land Scam, Manilva Costa S.A, Ocean View Properties, Operacion Malaya, OVP, Punta Perla, Ricardo Miranda Miret, Sean Woodhall, Sungolf Desarrollo Inmobiliario S.A, Tomás Olivo