Antonio Flores’ Blog

It is once again the opportunistic intuition of few: with the increasing number of property scandals in Spain, particularly those relating to failed off-plan investments, we are seeing how the legal profession is being invaded by so-called property action groups, which have started orchestrating aggressive and unethical campaigns of client poaching throughout the web and other platforms.

Among others, I can cite Spanish Property Action Group, Finca Parcs, Bulgaria-Property-Action-Group, Ramirez and Ramirez, organized and managed by non-legal professionals who cross pretty much every line when it comes to legal solicitation. The following prohibitions are flouted with ease by the below groups:

1. Payment of referral fees: The first “irregularity” is blatant: these groups are selling legal services when they are not lawyers. This means, in practical terms, that the lawyers working for or with them are incurring in the illegal practice of setting up referral fee  agreements, more ordinarily called “kick-backs”. The Spanish Legal Professional Rules and Regulations specifically ban referral fees, allowing only fee-splitting agreements either between lawyers or between professionals within the same area of work (economists, financial advisors etc.). Article 19 of the Disciplinary Legal Code stipulates that lawyers will not be able to pay, demand or accept commissions or retribution from other lawyers, or any other person, for referring clients. If these groups are run by non-legal professionals, clearly they are taking a neat kickback from whoever they designate to file their cases, or vice versa.
2. Utilization of third parties by lawyers to circumvent the provisions of the Disciplinary Legal Code. This is clearly the case with Finca Parcs: the latter is displaying a fierce and embarrassing campaign of client solicitation through various websites, where it is claimed that the group is legally represented by MC, director of CLL, and DCG Juridico, which consist of legal professionals including the father and two bothers of the former, who is also assisted by a Catedrático (translated here as a Civil Law Professor) from the University of Seville, as if this was going to make any difference.
3. Utilization of illegal publicity to gather clients: particularly objectionable is the August 2010 “Press Release” by Finca Parcs, in clear breach of article 7e) of the aforementioned code: “It is deemed as illegal client solicitation to approach, either directly or via third parties, victims of accidents or misfortunes that lack full and calm freedom to choose a lawyer as a result of a personal or collective misfortune. Yes, clients need to be advised of their rights and yes, clients need legal advice when dealing with tragedies affecting their lives. But, clients do not need to be solicited directly by attorneys/lawyers/solicitors when they are grieving or dealing with the results of a tragic event. Clients should reach out to these professionals when they are ready to do so and they should not be besieged and bombarded by those seeking to profit from their misfortune.
4. To generically or specifically encourage litigation: This is clear of all the above legal action groups, because it is their business! One example can be seen with Finca Parcs, for they have introduced an element of deceit and untruthfulness in their tormenting sales pitch: according to them, and the legal representation they have retained, abundant case law supports the unheard situation of banks being liable for clients’ deposit, regardless and irrespective of whether a bank guarantee line was ever approved by them or special accounts where used. According to the pitch, banks are always liable for refunding down payments made in respect of a failed off-plan project, for the simple (and simplistic) reason that the developer opened a bank account for them to operate: this is the essence of their strategy and their soon-to-achieve huge court windfall success, on the basis of some case law that as of yet, in spite of numerous requests, no lawyer has had sight of, unless they were referring to an isolated ruling of the Court of First Instance in Madrid (not deemed case law) where a bank is forced to indemnify a property buyer, on a failed development, since such funds were borrowed by the buyer from the developer’s bank (and hence, should have ensured that such funds were paid into a special account, protected by a guarantee, and not a normal account, in breach of the 57/1968 Act).  This ruling, which has already been analysed on a previous post, cannot be relied upon as applicable case law or jurisprudence unless it is ratified by a superior Court. Should this happen, not even then it could be of general application due to the very particular set of circumstances that surround the case.
5. Promising the achievement of results that are not exclusively dependent upon the activity of the lawyer that is publicising himself, and using means and expressions, audio-visual or in writing, that are discrediting, denigrating and scornful of the Legal Profession, the Justice and its symbols. The Spanish Property Action Group knows a bit about this, when advertising (or those of their undisclosed lawyers, for that matter) their “Get Your Money Back” seminars. They then go on to claim that people have lost their life savings or retirement funds and are all victims of the illegal activities or unscrupulous developers and the lawyers representing them, and promise, in return for a fee, a miraculous formula to recover this money (without even establishing, as one has to do, the legal position of these people they are pitching to!). The Action Group then state that those involved know how to recover funds because they have already done successfully and know the pitfalls to avoid: realistically, can anyone possibly envisage a more disgraceful and indecent way to make money?
6. All of the above in one. Finally, a special bullet point has to be dedicated to fraudulent companies known as ‘recovery rooms’, a particular type of boiler roooms specialised in fraud recovery fraud, which use registered lawyers to add appearance of legitimacy. The most prominent one is currently Ramirez and Ramirez Asesores (www.specialist-lawyers.com). Its owner, Fabian Ramirez Marcelo, an ex-timeshare reseller, in spite of the domain name he uses for his activities and his total detachment from the legal profession (as an astronaut orbiting the earth can possibly be), considers his Fuengirola recovery room, of all places, to be a specialist leading firm. But not any firm: one that cold calls thousands of victims of all sorts of scams, their names and numbers on illegal lists (sucker lists) bought in the black market, purporting to be leading lawyers in the matter and promising a quick result through the courts. Needless to say, never do these clients get anywhere because never the cases are followed up: all they do is fill out a form, take it to the courts or the police, ensure they get a stamp on it and then on to rip off the next one. The lawyer they allegedly use, Damian Vazquez, seems to not remember who Fabian Marcelo is, and when asked about his connections with Ramirez and Ramirez, claims that only occasionally has he collaborated with them. Two other lawyers I contacted also appeared to be losing memory fast when our conversation went into detail. Needless to say, again, Ramirez and Ramirez falls foul of all the above bullet points, their activities being dismissive of the most elementary rules of decency and honesty.

Antonio Flores Litigation, Property, Scams ambulance chasers, Bank Guarantees in Spain, Bulgaria-Property-Action-Group, Finca Parcs, litigation against spanish developers, property action groups, Ramirez and Ramirez, Ramirez and Ramirez Abogados, Ramirez and Ramirez Asesores, Spanish Property Action Group

Unlike the developer, buyers at Casa Toro (Álora – Málaga) can now feel relieved. Zurich Investments has decided to refund down payments paid towards their properties through the firm Lawyers of Spain (now Lawbird Legal Services) to 22 clients (after having lost a few in this rather tortouos legal itinerary to marauding ambulance-chasing lawyers who lie in ambush on legal-gossip websites).

Although the properties were correctly completed, these were on an untimely fashion and so buyers decided to pull out on grounds of delayed completion. As the Romans quite rightly used to say, pacta sunt servanda, or “pacts are to be observed”, which Zurich has applied correctly, since they provided to a collateral security in the event of the default.

One is left wondering, and to me still remains a mystery, about the situation that now unfolds: will Zurich chase the developer for repayment, or is the risk covered non-refundable? Will the developer have himself some side collateral? Presumably Zurich cannot just walk away being out of pocket for around €900,000 and allow the developer to resell the properties to third parties but then again, the developer may well argue that that Zurich paid out in breach of their contract, on grounds of insufficient delay.

I dont want to come about as frivolous, but I just can’t be bothered about who picks up the debris : I just want to jump on the AVE high speed train to Madrid to collect 22 checks for our ever-patient clients!

Antonio Flores Litigation, Property ambulance chasers, Bank Guarantees in Spain, Casa Toro, property in alora

My previous post on the matter (Part 1) would have not been complete if no mention was made to contracts with developers and bank guarantees so below are a list of classic legal fairy tales on the subject.

On Courts/Litigation

1. Court costs are very high in Spain. Not at all, there are no Court costs because court proceedings are free (it’s called “justicia gratuita”) except if you decide to go the Supreme Court (these magistrates are a bunch of snobs and so may request you pay a deposit). It is the lawyers who will charge you the money together with the procurators (who inexplicably have yet not been eliminated as they are totally superfluous and have the habit of falling asleep in Court hearings). But if you have a good case and you win it is likely that legal fees will be awarded on the losing party and therefore you will be reimbursed. Obviously the contrary may happen if you lose in which case fees can double.
2. You will lose if you litigate against a Spaniard or a Spanish company because the system protects them: TOTAL RUBBISH. Yes, I can see the black continent from my terrace but this does not mean that we live in a banana African republic (not yet though). Never have I heard, been told or read any complaints from anyone to the effect of denouncing the judiciary system for judging on patriotic grounds.
3. Never litigate in Spain, it will take 10 years: yes, if you decide to go all the way to the Supreme Court. But the average for a Court of First Instance ruling is 14 months and we all know that time flies…

On Contracts with Developers and Bank Guarantees

Lately, a very popular topic on legal-gossip websites:

1. I have a contract with a developer, don’t want to proceed and I have been advised by someone with a zillion posts on an expat website forum that a particular lawyer will succeed because he/she is an expert in Consumer Protection Law: run away, would not touch it with a barge pole! The reason is simple: no decent lawyer will want this type publicity because it is immoral. Lawyers should never give sweeping legal advice on a particular subject without reading a contract and analyzing all elements. Those who fail to follow this principle are regarded as ambulance chasers.
2. I have a bank guarantee/insurance policy and therefore can just cash it and walk away: NO, this would defeat the purpose of the bank guarantee which is to protect the investor from a failed property investment and not serve as a getaway facility. You can however cancel and try to execute, directly or through the Courts, where notoriously a delay has taken place. Results are varied, from banks/insurers paying happily to refusing point bank, with similar results when going to Courts (recently Banesto has accepted to pay 80% of 11 deposits they were guaranteeing in a Court case we filed against them and their client, Promaga).
3. Statutory Force majeure and Acts of God are not applicable in Spanish law: WHY NOT? Article 1.105 of the Spanish Civil Code, in force since the 19th century, says the contrary. Developers can excuse themselves for not completing on time if they can prove that the delay was caused by events catalogued as any of the two.
4. The developer has delivered my property one month late and therefore they are at default and have to return my money, by law: NO judge will accept this unless specifically written into the contract and no developer is stupid enough to have done that. The exact amount of days or months of delay will depend on the wording of the contract, the reasons for the delay, the judge ruling the case (some say that 3 months is enough and others say that 9 months does not defeat the economical purpose of the contract and so it is insufficient).
5. I bought a new property, I could not complete, the developer delivered on time and summoned me for completion, after which they cancelled. I have lost my deposit and cannot do anything. Not always. It is quite possible that the contract was a one-sided agreement because it was entered with the developer at a time when they had (limited) precious properties for seemingly endless numbers of keen property investors (i.e., property boom) and so it was a case of take-it-or-leave sort of agreement. The consequence of this is that clauses which can be considered as unequal, could not be negotiated at the time of buying, are not reciprocal and are not proportioned are null and void. This includes the clause where the buyer loses the deposit if he does not complete if the developer does not include one where he will refund twice the deposit if he too fails.
6. I have bought a property from a developer and therefore I am a consumer, which gives me the right to cancel the contract if I wish: No, careful! Being a consumer does not mean that you have every right, if you wish to pull out, to cancel your contract and demand your monies back. There are times where developers have fully complied with the contract and there is little hope in successfully winning a case for contractual default, in fact they are open to enforce completion of the transaction, both in Spain and in your own country if they deem it appropriate.
7. I wish to cancel my off-plan contract and I’ve been told I have a “Solid Case”. You may well have one, a very strong one in fact, in which case cashing that bank guarantee is a plausible option and alternatively a Court case. But once again be cautious: there are some pseudo-legal website forums where you are told pretty much that no matter what you have done and/or the developer has done you always always have a ‘strong case’. To put a comparison it’s like a doctor telling a moribund terminally ill patient that no matter how serious the ailing is they will make a quick recovery (I could not find a less graphic comparison but it is how I see it). Examples of this are for example fallacies such as the one that says if you don’t get a mortgage you can pull out in any case, or that one whereby if the developer is late by 1 month you can pull out.

This list is by far comprehensive so if you come across anymore do let us know!

Antonio Flores Litigation, Property ambulance chasers, legal gossip, litigation against spanish developers, spanish courts

Some 12 months ago we were dumped by a client who was buying an off-plan unit in the development known as Bahía de las Rocas. It was no surprise that the newly acting “scavenging” lawyer, was operating from the expat-legal-gossip omnibus portal known as Eye On Spain (www.eyeonspain.com), wherefrom she had lured our client and probably told her how deep was our tie with the introducing agent, how horrible the developer was and how biased we were as a firm.

Our advice had been consistent throughout the transaction, advising the client that we could see no grounds for pulling out. She had tried to convince us in turn that, according to what the agents had told her, the property should have had a certain orientation, with views to a certain place. We spoke to the developer to verify this but could not find indications of any contractual infringement from where to successfully launch a claim.

Some months after we received the standard fax from the above lawyer asking for all the documents, and soon after the developer’s lawyer summoned us to Court to give witness statement. Out of curiosity we picked the phone up and called the developer, to find out that they had been sued not for the property having the wrong views but for, and here we go… delayed completion!!

But something was not right in all of this because, according to some simple calculations made with our desktop Casio calculator, the delay was of…cero days!!! Our curiosity went even further and, when reading the claimant’s petition, we noticed that it looked like a copy and paste piece of work because it made no sense whatsoever. How could any lawyer in his right mind consider NO delay as a fundamental breach of contract? What advice did this lawyer give to the client when offering her legal services? How could this lawyer, when cross examining us, ask us questions which answers directly exposed the entire satisfaction of the client with the property? But the funniest thing of all was that our client admitted in Court that she had been at all times informed and updated by us of the course of the works, without her manifesting any dissent.

The outcome was as predictable as clockwork: The judge ruled in favour of the developer, and sentenced the claimant to pay the legal bill. (An ‘anonymized’ copy of the ruling is available upon request.)

The legal conclusions of this botched attempt to trick the judges can be summarized as follows:

1. Contractual extensions on property transactions are legal.
2. Force majeure and Acts of God grounds for opposition are valid under Spanish law in case of non-performance.
3. Lawyers should do a minimum pre-hearing preparation before entering the Court room if only to avoid, when cross-examining the previous lawyers, look very silly.
4. Lawyers should tell their clients that they can, and sometimes should, lie in Court when being cross-examined, because the other party will most certainly lie too! (there is no such thing as perjury in Spain).
5. Generally, lawyers should make their clients sign a disclaimer when persuading a client to start a Court case with no options whatsoever of winning a case.

From an economic point of view losing this case will mean a legal bill of between €20K, and nothing achieved. Too bad for reckless litigators!

Antonio Flores Litigation, Property ambulance chasers, Bahía de las Rocas, litigation against spanish developers

Over 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.

Antonio Flores Uncategorized ambulance chasers, Cortijo del Mar, FM Consulting, Grupo Labaro

Mr. Jorge Montull Urquijo, working from his Marbella Court Two desk,  has just produced a surprising ruling in favour of developer Brismar Cuatro SL, responsible for Las Palmeras de Calahonda development, which seemed guilty on at least two “counts”, only to discover that thus was not the case:

1. Delay in delivery of the apartment: According to Mr. Montull, and contrary to what was considered enough, a 6 month delay in the delivery of the apartment cannot be considered a serious and grave breach of contract. He supports his opinion on abundant case law from the Supreme Court and determines that “a 6 month delay does not impede the economic objective of the contract and is therefore not a contractual default but a mere delay”.
2. Absence of a bank guarantee: In the same manner as above, but less surprising, the judge considers that not giving a bank guarantee is no reason to cancel a contract. He contends that the plaintiffs did not prove the developer put them at risk by not giving them a bank guarantee. Additionally, he argues that the plaintiffs did not make a formal request for the guarantee and concludes that “providing a bank guarantee is not an essential but an accessory obligation and dependant on the principal one, this being the delivery of the property” (he then goes on to support his conclusion with Supreme Court case law).

The above will no doubt make many wonder where do the laws stand in Spain in respect of the consumer and more importantly will give an insight as to how some judges think. It also serves as a reality reminder to some colleagues writing in forums who always seem to find legal loopholes in contracts to convince desperate investors to drag them into Court, of course after a credit card swipe to put them in funds (and thank you very much Mr. Client!).

Always remember that judges are not machines to whom you can apply a formula to obtain a result: after all, law is anything but an exact science in the hands of (imperfect) human beings.

Antonio Flores Litigation, Property ambulance chasers, Brismar Cuatro SL, Las Palmeras de Calahonda, litigation against spanish developers, spanish property lawyers

I was surprised to receive last week three letters from one firm in Fuengirola requesting that we passed the files of three clients who had purchased at Altos de Alcaucin. After talking to another client I found out that this particular firm was encouraging them to sue the developer in Court to obtain a refund of 80% of the deposit paid so far due to a extremely twisted interpretation given to a clause inserted in the contract.

Unfortunately for many purchasers, the development was finished on time and in accordance to planning permission granted, receiving therefore the first occupation license equally in a timely fashion. Yet some buyers have chosen to attempt to cancel the contract on the basis of a particular interpretation given to clause 5th, which stipulates that the default in the payment of any installment will be cause of contractual cancelation, pursuant to article 1504 of the civil code, the developer having to return 80% of the deposit and keeping the balance as compensation.

According to the interpretation of the firm a buyer would be entitled to cancel the contract at any time by simply not paying an installment (or completion balance) and would then request that 80% was returned to him. We understand quite the opposite: that the right to cancel is a prerogative of the seller/developer should they chose to, in application of article 1504 of the Civil Code, which would in turn trigger the obligation to return 80% of the deposit.

Having advised our clients that we consider that there is little or no chance of persuading a judge that the clause can be interpreted inversely, in particular when the building has been finished correctly and on time, thus kindly declining a request to represent them in Court (and in agreement with many other colleagues), some have decided that we are seemingly acting suspiciously and have managed to find a lawyer who will agree and endorse the interpretation they wish to hear.

And here comes the danger as Spanish courts, notorious for upholding the validity of contracts, will almost certainly rule in favour of the developer and will award costs against the losing party (the buyers) who will be back to square one, but carrying a legal bill of around €15k plus interest for late completion.

We have never been against contract cancellation, quite the contrary: we have successfully represented clients against many property developers who we considered had trespassed the line of breach of contract, having previously warned our clients of the implications. I’m afraid however that the legal representation offered to our former clients lacks the understanding of the consequences on the side of the buyers and has been offered as a mere business: you pay me and I will sue on your behalf! I wish them every success.

Antonio Flores Litigation, Property Altos de Alcaucin, ambulance chasers

More often than is desirable some of my colleagues tend to overindulge in optimism when providing a legal opinion on a soon-to-be litigation matter. You can often hear and read on online forums the words “You have a strong case!“. This sort of a ‘closer’ phrase when selling services can bring about nasty surprises, especially if the judge thinks otherwise.

So I tend not to use this language when dealing with my clients, and will, on the contrary, give them a more elaborate opinion which will invariably include playing the devil’s advocate and exclude encouraging clients to file a case. Let’s not forget that the opposing party will also be assisted by expert legal advice who knows the law, case law and how certain judges perceive different types of disputes.

In my opinion any lawyer needs to be very frank and open about the possibilities of obtaining a favourable ruling and should provide a per cent ratio of success, which even in the most blatantly clear case should not exceed 75% (so run away from the 95% success rate claims, and do it quickly!).

Litigation is a double-edged sword that can turn out to be very expensive for our clients, especially if a case is lost and therefore we (lawyers) should contemplate all -legally- available options prior to dragging our clients into courtroom, with their best interests as the main motivation and the legal fee bill as the last!

Antonio Flores Litigation, Property ambulance chasers, litigation against spanish developers, spanish developer, spanish developers, spanish development, spanish property developer, spanish property developers

The tragic Barajas accident has brought about a singular controversy, never heard before in this part of Europe (or at least Spain). Spanish newspapers started it all off and the Spanish Law Society has now taken an interest in the matter. I am referring to the so called “ambulance chasers“, a funny and graphic term given to lawyers who hurry to disaster sites to solicit business from the injured or the relatives of those who have died.

The Spanish Law Society is now studying whether to take disciplinary actions against Spanish law firms who have hooked up with their American counterparts in a quest to attract as much of the personal injury legal compensation business as possible, almost right at the scene of the accident. Also, the Dean of the Las Palmas Law Society has affirmed that that some Spanish law firms are in clear breach of the Law Society Rules and Statutes in respect of legal business solicitation (articles 7. and 8.) and has equally recommended exemplary disciplinary action.

Aggressive solicitation of legal work  is not uncommon in Spain and temptations arise when those targeted are foreigners caught up in nightmarish legal wrangles, for example when buying property. I suppose it is not always possible to differentiate what is ethical from unscrupulous but the above case seems a clear example of someone wanting to profit from someone else’s misfortune. Too bad for those Spanish firms!

Antonio Flores Uncategorized ambulance chasers, spanair accident, spanish lawyers