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The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain

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“Plusvalia” tax, Facebook and others; round up of recent Spanish legal issues

February 28th, 2017

Spanish Courts have passed a few rulings in the past couple of weeks that are certainly noteworthy, the most important of which has made it fast to the headlines: the definitive challenge to the incomprehensible “plusvalia” tax, a levy that inexplicably is demanded by local authorities irrespective of whether property owners make, or not, a profit when selling.

Plusvalia Tax

According to a recent ruling by the Spanish Constitutional Tribunal, it is in unconstitutional to “tax not just a potential economic capacity but specifically, one that is fictitious, virtual or inexistent.”

The Constitutional Tribunal has ordered the legal definition of the plusvalia tax to be altered to embody the constitution principle of “economic capacity” to reflect that “only where a sale is conducted with profit can this tax be imposed on sellers”, allowing tax payers to “expose with all available evidence a situation where there is no increase in the value”.

Already several Courts have ordered Town Halls to reimburse this tax to property sellers who sold well below the price when they bought, a scenario that thousands could benefit from.

Facebook matters

Two rulings should make many think twice before posting: the Provincial Audience in Pontevedra (Galicia) has ordered a father to seek consent from his ex before uploading children’s photos on the site.

For its part, the Supreme Court has fined an online newspaper with fifteen thousand Euros for publishing Facebook personal photos taken from an account that was public. According to the high Court, the publication of photos in an open public account is for the purpose of sharing with third parties, but not for mass media consumption. But whereas the Court deemed the right to one’s personal image was effectively interfered with, this was not applicable to the right to privacy or dignity of the claimant.

Supreme Court tells lawyers to write less

The Civil Section of the Supreme Court has ordered lawyers to not exceed 25 pages in their appeal writs, and to use Times New Roman font size 12. According to the magistrates, excessively long writs are unnecessary and hinder the institutional function of this Tribunal. Failing to observe these norms can cause the claimant to lose his right to appeal!

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Trials and Tribulations of our Spanish Immigration Lawyers

June 1st, 2014

 The outcome of some Spanish residency cases never cease to surprise us. Even considering that we have successfully processed over one hundred and fifty applications in the last years, and that these cases are the exception -not the norm- both Spanish immigration civil servants and consular staff keep throwing at us, periodically, challenging decisions and behaviours that appear to mimic the antics of Spanish officials in this film, as opposed to an always simpler -and obviously preferable- direct application of the law on the matter.

I refer to a couple of inexplicable resolutions to residency applications (Investor’s and Non-Lucrative) that we thought were water-tight.

CASE 1: Russian couple that buy a property for €750,000 to obtain Investors Residency.

The case involves a couple that bought property over the threshold of €500,000 to qualify for residency. Spanish Consulate staff, on receiving our application, worked round the law to reject the applicants, verbally. Firstly, they argued that because the law said that “an investor who wishes to become a resident shall apply…”, it was not possible that a married couple applied together, unless they reached €1,000,000 the threshold. In this case they had invested €750,000 together. Secondly, they argued that the application should be filed within 3 months of purchasing the property.

In respect to the first ground for rejection, we argued that the law states that the investor the law refers can bring his wife and children under 18 years of age, within the same application. So, in practical terms, there is no difference between our application and what the law says. But to add more mystery to the Consulate’s decision, it so happens that Russian law states that, by default, assets acquired by the spouses during marriage are their community property, which means that regardless of whether either spouse buys in his/her name, or buy jointly, the property will be their community property.

The response of the Spanish Consulate in Moscow is: “…we will be guided by future case law in the matter”. That is, case law that will be produced in the next 5 years. That, or have either applicant transfer its 50% to the other so that, after thousands of Euros of costs, they can achieve the same result: have the property owned by both, through their “Community Property”.

CASE 2: Moroccan single applicant who applies for non-lucrative residency.

The lady in particular has 12 properties in Tangiers giving her just under €12,000 in monthly income (well above the €2,000/month minimum required to apply), €170,000 in cash in a Moroccan bank account and €130,000 in Spain, a jointly owned property in Estepona and no need to work for the rest of her life. The application included original documentary evidence of the above (duly translated) and so, according to the precepts of the law, should have been be plain sailing.

But it was not: the Spanish Consul, Arturo Reig Tapia, seemingly wanting to stamp his authority over his staff but lawmakers too, rejected the application on the following not-so-elaborate excuse: “…applicant did not show enough income”.

And in a fit of remorse, he inmediately called her in -following the rejection- to get a 4-year visa multiple entry visa to travel to Spain, whenever she felt like; it was clear to us that the Consul had decided that he would not apply the law in force to this case, for reasons he only knows.

Two cases that fortunately are the exception to the rule but, nevertheless, worth commenting on.

Have you had any experience with Spanish Consular staff worth mentioning? We would love to hear about your experience.

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Questions on Tenancy Agreements in Spain Answered

February 19th, 2013

The Equity Release Victims Association Up and Running

September 24th, 2011

The Equity Release Victims Association (ERVA) – (www.erva.es) is now up and running. Having been formally incorporated last Wednesday, through a Marbella Notary Public, it has, among its aims, denouncing the magnitude of the infringements committed by a number of banks, mostly Scandinavian who, in clear breach of applicable legislation (regulatory, consumer protection, civil, banking, financial, and not the least, ethical), devised a tax-evading scheme that would be offered to pensioners to profit from them, using the illicit excuse that it was suicidal not to have a mortgage registered against their properties.

The ERVA will be formally filing claims with the appropriate Government offices, requesting formally not only that these products are banned in future but also, that the banks that offered them are disciplined in accordance to the seriousness of the offences committed. Of particular importance are:

  • Denunciation at the Spanish Prosecution Office (Fiscalia), requesting that a full investigation is conducted into the alleged tax-evasion proposition that constituted the main selling feature of these Equity Release schemes, and consequently, the well-defined target market this scheme was aimed at: financially conservative and vulnerable pensioners owners of an unencumbered retirement homes. Equally, of great significance is the financial state these schemes have left countless numbers of victims, as well as the major implications for their state of mental health and well-being  (typically, the infliction of mental and emotional anguish of being deprived of their life-savings ultimately and more immediately, a roof to live under). Even if these banks are no longer offering these obnoxious products, the writ will specifically request that the Spanish Prosecution Office, by application of article 26 of the 34/1988 Publicity Act, in relation to article 29, pursues the cessation action to prevent them from offering them in future.
  • Denunciation at the financial and insurance regulators (Comisión Nacional Mercado de Valores and Dirección General de Seguros), and the Bank of Spain (Banco de España), who will be requested that a thorough study is made into the validity of a contract of Equity Release, not approved for use in Spain under 2007 Reverse Mortgages Act and prior to its enactment, by the uses and customs of banking practices (as the Spanish equity release equivalent was not regulated formally until then although, it was specifically described as a product to allow asset “rich” pensioners access to this wealth, all the while having full guarantees of living in the property for the rest of their lives). The ERVA will specifically request that disciplinary and exemplary fines are imposed on the infringing banks, inclusive of a temporary suspension of their activities within Spain.
  • Denunciation at the Regional and National Consumers Association, to obtain a ruling condemning the publicity as false or deceptive advertising and fining these entities proportionally, in accordance to article 36 of the 26/ 1984 Consumers and Users Protection Act, applicable prior to 2007. Given the impact, relevance and geographical scope of the mis-selling of Equity Release schemes, the ERVA should request that the infractions committed by these banks are deemed “very serious” and the highest possible fines imposed (from €600,000 to 5 times the amount of the product mis-sold, as well the closing of the branch offices of the offending banks wherefrom the products were sold, for up to 5 years).

The list of proposed actions is not exhaustive and may include other proposals in the countries of origin of the offending banks.

Uncategorized

Northern Ireland Murlough Beach Vs. Dominican Republic Punta Perla

January 18th, 2011

My recent trip to Northern Ireland could have not ended in a better way: being able to enjoy the stunning beauty of the Northern Irish countryside, mountains and beaches. Strapped to a 4-seater chopper, owned by one young and successful would-be client, we followed the circular route starting off at Ulster Airfield, over Belfast city, across the country side and over the Mourne mountains (no wonder are partly owned by the Natural Trust), the 5-mile long Murlough Beach, returning alongside the coastline of Antrim (where dive-hunting seagulls and even sea-lions could be spotted, or so I thought them to be, as well as countless Saturday beach-strollers).

The underlying motive for my motive is less indulging, as I was meeting 70 or so failed investors who, owing to the combined efforts of Ocean View Properties, Sun Golf Desarrollo Inmobiliario S.L., it’s alleged fraudulent pyramid Ponzi Scheme and, sadly, a few thoroughly bent lawyers, had been ripped off in different degrees of gravity (one investor in particular paid €850,000).

Notwithstanding the economical adverse circumstances, a total loss of confidence in the legal system as a whole (both in the UK and Spain) and an ever-present desire to put this traumatic episode behind them, 2 organized groups decided to formally fight for their rights. Among them, my host for the helicopter trip who will, if I can convince him that we will not be shot down, spearhead an airborne assault on the HQ offices of Sun Golf Desarrollo Inmobiliario S.L. in Madrid after a quick visit to Monaco’s Prince Albert, whose arms helped break the ground on the Punta Perla development (or bluff).

If only NI had the Dominican weather, none of this would have happened. If you don’t believe it, see for yourself: can you really spot the difference between Punta Perla and Murlough Beach?

My next trip to Belfast is scheduled for the 26th of January, when the group representatives and myself will be meeting NI Government officials appointed to act on behalf of the Office of the First Minister and Deputy First Minister. If we can successfully convince them of the beneficial implications of the NI Government joining the Spanish Court case, both in terms of support for the group action but also on behalf of the NI society in general, we will have achieved a huge result.

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Spanish Inheritance Tax Don’ts #2: Seeking Exemption by Incorporation of UK Companies

December 8th, 2010

Spanish Inheritance Tax, and the ways to avoid it, is a very much debated legal matter and opinions vary enormously, depending on who you ask and particularly, what the people you ask do for a living.

Lately, a few companies have started to offer a “miracle” service, according to which, by incorporating a UK-based company and transferring the property into it, you can avoid not only Spanish Inheritance Tax, but also, if you so wish, Capital Gains Tax (in case you sell) and transfer tax (for the buyer of the shares). Interestingly, Mr. and Mrs. Hore, currently being charged by the Prosecutor with tax fraud (in Spanish), together with their ex-lawyer (already convicted on a separate case as jointly liable), did exactly the same, albeit with offshore entities, and are facing between 15 and 20 years imprisonment.

The company more actively operating this scheme, which boasts having invested over a hundred thousand pounds on an online bespoke Case Management System (the word “bespoke”, associated to a service or product, generally makes me shiver), is aggressively promoting a campaign, with the legal endorsement of some lawyers, to persuade property owners to forget everything they have been told or read in relation to the matter and dive into untested waters. That is, dive into what the Spanish Tax Office Tax-Fraud Prevention Plan considers as fiscal engineering, abusive tax-planning or anomalous business arrangements (point 2.1.h of the Plan), in particular in respect to organizations that are called “company nests”, whose only purpose is to incorporate and sell companies that are then used to conceal property (point 9.1.5. of the Plan).

Unfortunately, these types of all-encapsulating tax-avoidance schemes not always have the desired effect (equity release turned total investment fiascos), but in fact occasionally end up having totally undesired consequences for both the promoters and the beneficiaries (which include prison sentences).

So what we are now being told, by the company Wincham Investments primarily, is that, by incorporating a UK Limited Liability Company, one is exempt from having to pay IHT altogether, when one inherits. This statement, which I find mistaken (for the reasons I explain), is a result of prior misconceptions the “conceiver” of the scheme abounds with. Excerpted from their sales literature, these can be summarised as follows:

  • Wincham Investments claims: owners do not understand that their Heirs and their Estate will pay IHT in two jurisdictions…it therefore should not be assumed that one tax can be offset against the other as they are both totally different taxes on totally different entities.  I claim:  Article 47 of Rd 1629/1991 (Inheritance and Gift Tax Royal Decree) stipulates that a resident tax payer will have the right to deduct, from the final tax due, the sum paid on an equivalent tax, abroad. Non-residents are not allowed to follow this procedure, as they should claim this in the jurisdiction where they are residents. Wincham also talks about double taxation agreements, but it does not clearly mention that there is no such agreement in place between Spain and the UK (in fact, Spain has only signed 3 of such agreements, with France, Greece and Sweden). But if we investigate further, we find that HM Revenue and Customs stipulates that unilateral relief is applicable where no double taxation agreements are in place, which means that the UK will give credit to the amount of tax paid in Spain.
  • Wincham claims: under EU Treaties a UK Company is only taxed in one jurisdiction, the UK. I claim: Yes, probably, unless that company has been incorporated solely with the intention of holding Spanish property, and I base my opinion on the following:
    1. Law does not support the abuse or the anti-social use of it (Article 7 of the Spanish Civil Code).This old and basic, yet crucial, legal precept is being invoked by the Spanish Prosecutor in large fraud cases involving offshore companies, and Judges are upholding it, where they are used to evade payment of taxes.
    2. Resident tax payers will be obligated to pay taxes on goods and rights received by way of inheritance or gift, wherever these are situated. This would include foreign companies (Article 17 of Rd 1629/1991 Inheritance and Gift Tax Royal Decree). In addition, Article 18 stipulates that anyone not included in article 17 will have to pay taxes on goods and rights, of any nature, that were situated, were susceptible of being exercised or should be carried out in Spanish territory. Article 17.2 specifically stipulates that the following will be deemed as situated in Spanish territory: Real Estate.
    3. Capital Gain Taxes obtained, directly or indirectly, from property situated in Spain, will be taxed in Spain (Non-Resident Act 5/2004). In particular, the following gains are included: when they are originated or derived from rights or shares of a company, resident or not, whose assets are made of up of, primarily, directly or indirectly, property based in Spain. The gains obtained from transferring the shares of a company, resident or otherwise, that attribute its ultimate owners, the right of enjoyment of Spain. By extension, we can easily conclude that property changing hands via a UK Company would be taxed in Spain, and not abroad, unless the Spanish legislators envisaged 2 different tax treatments for what is essentially the same thing, transferring property through transfer of shares.
    4. Liability of the people involved with companies deemed fraudulent by the Tax Office. (article 43 of the Ley 58/2003 General Tributaria): Point g) refers to the liability of persons or entities that have the effective control, total or partial, direct or indirect, of the juridical persons (companies) or in which there is a shared or joint decision making process, when it is verified that the juridical persons have been created or utilized in an abusive or fraudulent manner with the purpose of eluding the patrimonial universal responsibility in respect of the Tax Office, and there is a uniqueness of people and economical or financial spheres, or confusion or diversion of assets. Point h) refers to the liability of the persons and entities of which the tax  payer is in control of, partially or totally, directly or indirectly, for the tax obligations of the taxpayer, when it is verified that the juridical persons have been created or utilized in an abusive or fraudulent manner with the purpose of eluding the patrimonial universal responsibility in respect of the Tax Office, and there is a uniqueness of people and economical or financial spheres, or confusion or diversion of assets Although both scenarios seem similar they are quite distinct since one refers to the people in charge of the companies that are used to defraud, and the other the companies that are under the control of the defrauding taxpayer.Note that these 2 points have been enacted, and added to the previous law, by virtue of the more recent 2006 Act on Prevention of Tax Fraud (Ley 36/2006, de 29 de noviembre, de medidas para la prevención del fraude fiscal). All of which sounds too symptomatic of a specific intent to curtail tax evasion by using companies.
    5. Using companies for a purpose other than trading. There is abundant Supreme Court case law, but, in essence and for the sake of brevity, what the Supreme Court is against is the utilization of companies for the purpose of achieving a result distinct from the normal and genuine purpose of incorporating one, which is to trade. There are references to the fraudulent use and abuse of companies in many instances, the artificial creation of juridical entities or the mere appearance to obtain a result contrary to law, fictitious entity, inconsistency of juridical person, instrumentation, mere formal juridical personality, confusion of personalities, substantial confusion and identity etc. If we put our Joe Bloggs hat on, what would we think if one someone transferred his property into a company and next day sold it? Indeed, it would strike us as rather hanky-panky.
  • Wincham claims: Whilst the Statue of Limitations on Taxation in Spain is 4 years this would not be relevant if the Spanish Government could subsequently prove a fraudulent non-disclosure had taken place. There is no such Statute of Limitations for fraud, and therefore, there is a very real risk the Spanish Authorities would claim that there was deliberate criminal withholding of information and thereby enforce the Tax retrospectively. Misuse the Statute of Limitations in this manner is a criminal act and highly dangerous method of Tax evasion – not to be advised! …Whilst this is possible and we have seen Probate cases where the Taxes have been evaded in Spain by employing this method
    I claim:Christ, what a load of mumbo-jumbo!

    1. Firstly, the Statute of Limitations on Tax is so protected that, according to Spanish Supreme Court case law (STS 12 November 1998), the recognition and enforcement of the “prescripcion“, as it is called in Spain, is an obligation of the Spanish authorities that cannot even be waived by payment of the tax, after the period has elapsed (not that anyone would want to, but it has happened, by mistake!). The above Court ruling says that once you win the “prescripcion” the authorities will have to accept it “ex officio“, that is, as an official obligation. This applies whether you owed them 10 Euros or 10 million Euros, even if they missed you by 1 day…(that is, 4 years and 1 day counting from the last day to voluntarily pay the tax).
    2. Secondly, they claim that one is committing a fraud if you utilize the Statute of Limitations: well, this is exactly what it was meant for as, otherwise, why enact this law? But for the sake of argument, if we assumed the contrary, how can you commit a fraud if you have not formally accepted the inheritance? In other words, how can you ever be liable for payment of taxes on something you have never accepted as being yours, even if someone wants you to be an inheritor by naming you on a will?
    3. Thirdly, they have invented a new type of fraud, the fraud of non-disclosure, according to which not telling the tax office that you may be interested in inheriting would amount to a deliberate criminal withholding of information as a result of which they would enforce the Tax retrospectively. This extraordinary concept must have been coined by their bespoke Case Management System, unless it is a typing error by the RTN paper printers, or so I would like to think. Some serious clarification required her, please.
    4. Fourthly, although the word “fraud” is clear, it can be confusing: under Spanish law, not paying taxes would either be described as a fiscal infraction (minor, serious or very serious) for tax frauds under €120,000 per fiscal year, or tax crime, if it is over € 120,000 per fiscal year. In the latter case, the statute of limitations is  5 years, provided you have been caught within the 4 years mentioned above (as otherwise there would not be a valid base for a claim, according to Supreme Court case law /STS 10 October 2001).
  • Wincham claims (connected to the previous point):  Every year the registered owner of the property has to submit annual Tax Declarations to the Spanish Government, this is very difficult for a deceased person to do and we are aware that the Tax office is looking closely at properties and levying hefty fines where annual tax submissions have not been submitted. I claim: Yes, paying taxes after you have answered your last call is huge task, surely! The above silly statement intends to hide the known fact that non-resident income tax is probably the less important and least interesting tax for the Spanish Tax Office (particularly in terms of the revenue it brings), so much so that they only attempt to collect it when you decide to sell your property. We submit thousands of declarations every year, and do it electronically, in batches, without knowing if the property owners have or have not paid the tax previously (unless we have helped them), are living in Spain, abroad, or are indeed still alive. All we get from the tax payers is a transfer with an instruction to pay the tax. Not once has the tax office enquired about any of the tax declarations we have submitted on behalf of our clients, they just cannot possibly monitor each calculation. So yes, anyone can pay it, not a problem. Full stop.

In summary, in the opinion of this blogger, using a UK company incorporated purposely is not a real, valid or legitimate vehicle to circumvent the obligation to pay Inheritance Tax in Spain, unless of course, as it generally happens, the Tax Office does not find out of the death of the owners of the shares, in tax-time, and therefore the maligned 4 year Statute of Limitation kicks in, after all!

And, if in doubt about what is written above, you can always get it from the horse’s mouth, which is the Non-residents’ Inheritance Tax Office.

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How Can Lawyers Help Struggling Borrowers With Their Mortgage Loan

November 5th, 2010

Following my previous post, where I propose a decalogue of tips to obtain a response from the bank when it is just not possible to keep repaying, below I have excerpted a sample of a letter of instruction, given to a lawyer, to act on behalf of the troubled borrower when nothing else has worked. The associated fees are not so important (there is absolute freedom in this respect) but it would give a guidance as to what should be expected when having to deal with this scenario and the actions that can be taken.

Letter to Potential Client

Dear Mr Doe

In relation to our services regarding your mortgage loan, our firm can act for you in three distinct stages:

  1. Actions to attempt to reduce the mortgage installment whether by re-mortgaging, conversion of the repayment to interest only, reduction of the interest rate being applied (3.5 % should be the interest payable now) or a combination of all. The acceptance by the bank implies signing a contract with the new conditions and requires that you are present, unless we act for you with a power of attorney.
  2. Actions to attempt to obtain an agreement whereby the debt is to be cancelled against transfer of the property to the bank, if repaying a loan is not possible. The acceptance by the bank implies signing a mortgage deed of transfer of the property and requires that you are present, unless we act for you with a power of attorney.
  3. Actions in a Court of Law should none of the above are attained. In this instance you may need to have a lawyer acting for you if the equity on the property is substantial as you may wish to try to sell before auction (or ensure you get a fair deal) and this requires liaison with Court proceedings. Also, if you reach the auction stage, having a lawyer may help in ensuring that if there are bidders for the property they can get the information for the property promptly, even if it means providing them with access to it (many bidders refrain precisely because they cannot access the property, which is an obvious thing!). Finally, note that it is possible for the bank to foreclose and adjudicate the property, through the Courts, for 50% of the value of the property for mortgage purposes (that generally coincides with the valuation), which could be far less than the debt. This means that if the value of the property is 100.000 the debt is 90.000 Euros, the bank could end up keeping the property for 50.000 Euros, and you would still owe 40.000 Euros. It is therefore recommendable to appoint a lawyer and find a “dummy” bidder (who would be a friend) to force the bank to push up the bid as much as possible. This however would require lodging 30% of the value of the property for mortgage purposes, a deposit that would be reimbursed by the Courts.

Courts can take up to 12 months to finally adjudicate the property to the creditor or a third party so there is some time to act.

If the equity is negligible or negative (the outstanding mortgage loan will need to be increased by an average of 10 per cent for legal fees and arrears) there is no point in incurring in heavy legal fees unless there is an opportunity to sell it, or there is a risk that a substantial portion of the debt will remain unsettled (as explained in point 3).  Renting the property during this period will bring in some cash but it is advisable to inform the tenant of the situation, unless it is for short rental.

Our fees to act on your behalf have already taken into account the financial difficulties faced and are as follows:

  • For Stage 1: 750 Euros plus VAT (inclusive of signing at the Notary office).
  • For Stage 2: 1400 Euros plus VAT (inclusive of signing at the Notary office
  • For Stage 1 and 2: 1600 Euros VAT.
  • For stage 3: will depend on the value of the property (minus whichever amount paid as above).

Although it is not possible to force banks to agree, acting quickly can help your position as bankers sympathise with borrowers who are sincere and upfront in their proposals. We are aware that your current predicament is shared by many property owners and that you may sustain a monetary loss if you eventually lose the property. In addition, it is important that you take some measures to limit or even eliminate completely any bad credit records both in Spain and in your country as well as to try and prevent any further action by the bank.

Mortgages, Property, Uncategorized , ,

The Ultimate Spanish Consumer Law Solicitor

September 25th, 2009
If you thought a team of lawyers would resemble the above, you were mistaken!

If you thought a team of lawyers would resemble the above, you were mistaken!

When instructing a lawyer to defend a matter one has to identify a number of qualities within which we should highlight decency, professionalism, independency, honour, etc. The Consejo General de la Abogacia Española (Bar Association) establishes that not only these but a rather larger number of other obligations have to be met by the professional in charge of the matter before he undertakes to carry out the assignment.

As a lawyer I have to admit to a rather lack of conformity of lawyers’ modes and behaviours with the spirit of this legislative document which is also there to protect them. Invariably, age and experience (and of course financial success) makes some of us feel of an irritating superior kind which at times can be seen as patronizing by the layman, clearly a mistaken attitude if we want to be, ultimately, respected.

Fortunately younger generations are fully abiding, to the syllabus, with the obligations set forth by the “Estatuto General de la Abogacia”, which is the manual or rule book of the Spanish Bar Association, and one lawyer in particular, codenamed Panchito, has appreciatively condescended to our intellectual level in order to be fully understood.

Panchito, member of the Costaluz Lawyers Team, and who has distinguished himself with fully taking onboard every recommendation and obligation the lawyers’ bible sets forth, including that of appearing in Court with a full suit, tie, black shoes, white shirt and a robe, and at choice, a cap or beret (although looking at the suspect’s photograph I would propose to his honour that a wig is accepted), is setting the standards of the legal profession in Spain.

On a recent speech given by Panchito about Spanish Consumer Law, his field of expertise, at the Spanish Consumers Association annual convention, we were astounded by the force of his words: his clear, concise, jargon-free intervention is to be remembered in coming years. One will say that it is a triumph of speechwriting in this mind-numbing issue.

If you wish to contact Panchito you may do so by visiting this link. I swear you’ll not be disappointed with the services rendered just as Real Madrid is not regretting for one minute having hired Cristiano Ronaldo.

Uncategorized

This Would Never Happen in the UK

August 27th, 2009

this-would-never-happen-in-the-ukOver the years I have been working as a lawyer I have often had to listen to harsh criticism, from our clients, of the Spanish legal system. This, although understandable, was almost always accompanied by the phrase “this would not happen in the UK” which left me intrigued as to the virtues of a legal system which I am aware protects far more consumers than companies.

Last week I was confronted by a client (possibly soon to be ex after listening to a popular ambulance-chasing solicitor operating from a popular expat website) who had a good go at us for what she thought was a deficient protection of her interests. The matter in question involved UK clients who had bought at a development called Cortijo del Mar, being built by Grupo Labaro (which went into voluntary receivership) and subsequently bought by FM Consulting.

All the ingredients of a legal nightmare were put in place: a significant deposit paid, a developer which went bust, the 2008 property crash and presumably the loss of regular income of the investors. Significantly, the new developers FM Consulting bought the development (in cash so I’ve heard) and progressed with the construction, advising clients that some delay would be expected but nonetheless the properties would be finished. All the while, the investor’s money had been guaranteed by a bank guarantee.

Yesterday I was reading the Times Online and came across an article about investors who stood to lose hundreds of thousands of Euros to a developer that went bust, here we go, I thought! According to the article, Dylan Harvey Residential Ltd (DHR), part of the Dylan Harvey Group, had gone into administration two weeks ago with debts of £100 million. I then read that “the investors’ case against the group has been building for more than a year, as angry depositors tried and failed to get their money back on the projects that had still not been started. Many who asked for a full refund were invited to transfer their deposits to another project.”  Inmediately the comment “this would not happen in the UK” came to mind although in a reverse manner: bank guarantees would never happen in the UK and that is why these investors are out of pocket! In Spain, most developers had given bank guarantees so investor options had the backing of, in principle, solid banks and insurance companies.

Going back to our clients, I advised them that it was not us who found a development for them, it was not us urged them to invest and it was certainly not us who went bust. Now that the developer has resumed construction they are eager to pull out as the property may not be worth the original price they agreed to buy it at. It does seem that although a contract protects their position, a bank guarantee protects their investment and the Courts their interest we are to blame for everything which has happened and this view is unfortunately shared by a couple of self-proclaimed “bank guarantee” experts and I-will-tell-you-what-you-wish-to-listen legal advisors.

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Arrest of Alcaucin Mayor: Another Opportunistic Action?

February 28th, 2009

Yesterday morning saw the arrest of the mayor of Alcaucin, his 2 daughters and several other persons in connection to an alleged corruption case involving illegal constructions. The arrest took place a few days prior to the regional elections in the Basque country and Galicia and although the main suspect is of Socialist affiliation it does seem that the Government may have wanted to set an example within their own ranks and play down the accusations of bias for previous police actions against municipalities governed by non-socialist parties (in Marbella, Alhaurin and in Madrid just recently). 

It appears that some some 4 developments and an undetermined number of houses are in the epicenter of the investigations for having obtained planning permission ilegally although no confirmation has yet been released.  

What is surprising is that the Junta de Andalucia did not take action before as they did in other villages and pueblos in respect of ´abnormal´ licenses (Coin, Mijas, Gaucin), following normal legal administrative channels, but rather preferred that the Guardia Civil proceeded to mount an anti-terrorist operation very much geared for public consumption.

Uncategorized