Antonio Flores’ Blog

Is Spanish off-plan property development dead? I would think so, considering the diverse value judges give to misleading advertising by property developers and, consequently, an increasing lack of trust in an already damaged sector.

The story goes like this:

Recently, a property developer in the north of Spain was sentenced to 21 months imprisonment for falsely advertising, on a billboard, that the urbanization he was developing would offer gardens, swimming pool and a children’s playground. Additionally, he had also indicated that the development would include adequate sewage infrastructure, water treatment plant, lighting and sidewalks…when, according to the sentencing court, he had no intention of providing such facilities.

Yes, a tough ruling by 3 tough magistrates who imposed a 21^st century version of the Talion Law, exacting retribution to the defaulter in the most strict way possible, under Spanish law.

In an almost identical case by Court of First Instance in Murcia number 13, the Judge dealing with a dispute over unfinished facilities in Corvera Golf and Country Club accepted the following:

• That the construction of the promised 5-start hotel, to be run by Devere, was never started.
• That there are no, as recognized by the defendant, commercial centers, restaurants luxury hotel, health center nor a spa.
• That the promotional literature is fully binding, citing several Supreme Court rulings.

But, in stark contrast with the ruling that saw the Galician developer almost having to do time for fraud (received a suspended sentence), the Corvera Golf & Country Club developers, who had not built (and had no intention of doing so, as it happens), among others, a 5-star hotel, even though it had been offered, enjoyed a favourable ruling as the claimants’ civil claim for contractual default was dismissed.

And so, the question that remains to be answered: what is it that made this judge rule in such a manner?

Succinctly speaking, that the buyers did not prove that they had relied on the promised facilities to sign the contract! The judge adds that

“…the answer to the claim has to necessarily be negative for, on the one side, the contracts did not stipulate a deadline for building the promised amenities and, on the other, the buyer does not prove, in any way, that the concrete construction of the 5-start hotel and commercial center had, when exchanging contracts, such an intense relevance that it would justify pulling out the transaction should the amenities not be built…in fact, the golf course was indeed completed and the construction of such element was, as evidenced, the only element that was contractually agreed to.” 

And to further justify his anomalous decision, he supported the developer’s argument that the 4^th phase had not been completed, by which time presumably the hotel and other amenities would have been finished. What he did not feel relevant was the fact that Corvera developers had previously undertaken to the following, in respect to Phase IV:  

“By reference to the main plot number 3832 Corvera Golf & Country Club reserves its rights for a period no less than 100 YEARS, to build the FOURTH PHASE of the community, which entails, in the event of this happening within the stipulated time, the proportional redistribution of the service charges being paid by other phases within the community.

Your honour, 100 years seems an awful lot of time to wait for the 5-star hotel, would you not agree?

An appeal has already been lodged.

Antonio Flores Litigation, Property Corvera Golf and Country Club, litigation against spanish developers

In Spanish, ‘La Verdad’ means ‘The Truth’. But it is also the name of a local newspaper in the Murcia region that interviewed, back in 2006, a young and confident looking José Luis Pérez Carrión, Marketing Manager for Calidona. In this interview he extolled the virtues of the Corvera Golf  and Country Club grand project and its impressive facilities, including the PGA Olazabal-designed Golf Course (Ryder´s Cup contestant) and a 5 star De Vere-run hotel, with Spa and so many more luxuries you would expect from a hotel of this stature. Quoting Perez Carrión:

“We offer a different life-style, close to nature and the beach with a view to practice sports within an unbeatable environment and with all the facilities that the client may need. Also, owing to an agreement between the prestigious hotel chain De Vere, specialists in golf accommodation, we will be able to offer the services of a luxury hotel and a Spa.”

It´s February 2010 and la verdad is that there is no hotel, just as much as there is no equestrian centre, sports facilities, swimming pools, tennis club, private gym, commercial centre and a number of other amenities that were the primary reason for a couple of hundred people to buy in this development.

We took an interest in this case after being contacted by a few persons who had bought in Corvera Golf and Country Club, and after agreeing to take up their cases, a lawyer of the firm and a sort of specialist forensic valuer went over to draw up a report on the resort and it’s (lacking) facilities, and indeed it appears that many of them never left Corvera architect’s drawing boards, and are therefore just that, “un sueño” (a dream), as it reads on the bottom left part of the original promotional plan embedded in this post.

This is conclusive that a degree of contractual default has taken place, which will entitle buyers to file for cancellation of the contracts on the basis of misrepresentation. It is then up to the lawyers to argue the case successfully, with as much ammunition as possible (contracts, brochures, articles, witnesses, including Olazabal if required), and propel it to a successful conclusion for our clients, judge permitting.

In a similar claim we filed against Manilva Costa and Ocean View Properties, the judge of First Instance in Estepona granted contractual rescission as he found that the developer “misrepresented and misled buyers by promising, through marketing literature, facilities such as top restaurants, shops, a health and leisure club, tennis courts, Turkish baths, sauna, Jacuzzi, fully equipped gymnasium, heated pool and kindergarten service, and it is clear that none of those have been built”. He then added that “from the documents submitted to this Court, it has been established beyond doubt that the publicizing of these facilities in brochures was a fundamental element in the buyer’s decision to buy, as collectively they had induced him to proceed with the purchase of a property which was located in a relatively isolated development and distant from similar facilities.”

With respect to buyers in Corvera Golf and Country Club Phase IV, the above can be irrelevant because their properties have not even been built and therefore contractual default will come from delayed completion. The rest of phases seem to have been built more or less on time, that is, within 18 months from the date of issue of planning permission (such is the delivery date on the contract) so we are reluctant to base the case on this argument.

As with many other Court cases, we will play the devil’s advocate so as to test the quality of our legal arguments and identify weaknesses in its structure and content since Corvera will fight this case to the end. But still, the De Vere 5 star hotel is just not there!

Our case is due to be filed within days. We will keep anyone with an interest in this development posted through this blog.
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• Update March, 14 – 2010: Lawbird.com Corvera Golf and Country Club Section updated
• Update March, 03 – 2010: Photos taken last week of the unfinished facilities have been added below:

Antonio Flores Litigation, Property Calidona, Corvera Golf and Country Club, litigation against spanish developers, Manilva Costa, Manilva Costa SA, Ocean View Properties