Antonio Flores’ Blog

There comes a time in the Spanish off-plan property development fiasco when the robberies, theft, misappropriation, fraud, call it what you may, stop being a surprise…it merely becomes a matter of measuring the size of the outrage.

€4,500,000 is the size of the outrage in this case, which is the combined sum paid by loyal off-plan property customers, through a local law firm, to finance a development that was to be built by Proyectos Antele/Costa Palatinum, in Murcia. In the end, the story repeats itself: nothing gets built, the monies disappear through a network of group of companies and when asked, the developer claims that the market has hit him hard.

And there is the statement of the account of Proyectos Antele/Costa Palatinum to show the trail of the fast disappearing monies.

From a legal point of view, the matter unfolded as follows:

• The sole director of this company received four and a half million from trusting buyers, mostly from the United Kingdom, took out a mortgage loan to buy the land (€13,000,000).

• For reasons unknown to us, even though it seems that he probably ran out of money, the development is halted indefinitely.

• Faced with a deluge of claims, the developer chose to do one of two: either file for voluntary receivership or offer alternative properties. He chose option number two, a development in none other than Hugo Chavez´s Venezuela (not difficult to guess how that went down…).

• Caja Murcia, the lender and the guaranteeing savings banks, in an action of unsurprising lack of solidarity and neglecting of contractual and social obligations, tries to wriggle out of responsibility; and all of it, in spite of having provided a bank guarantee in 2007 which they “unilaterally cancelled” in 2008 and now renege on, and having paid back, at least, on one occasion.

• Having the matter been submitted to criminal courts, as evidence of criminal activity was mounting, we requested the developer to give a statement, which he did, but to state that an unprecedented crisis had hit him so hard that he was unable to develop this project. As for the monies, his answer was that he had used it all to… move earth around the building site (all he could prove he did). And unworthy-of-customers-trust Caja Murcia, after confessing to have refunded at least 1 deposit, -by mistake- according to their words, said they were really never underwriting this development.

• The Judge, seemingly more comfortable dealing with purse snatchers, shoplifters and other instances of public nuisance, was hopelessly out of her depth and consequently resolved that justice was best served through the civil courts. According to her, intent to defraud had not been proven, even though the Supreme Court in Spain states that intent in a misappropriation case exists where someone diverts monies knowingly.

• The State Prosecutor, presumably not dissimilar to the sort that makes the headlines in Spain because of attaining this post of utmost responsibility at the silly age of 25, supported the shelving of the case on grounds that no evidence of fraud was produced: €4,500,000 of stolen monies seemed not a purse big enough for him…all of it in two lines.

• The acting conveyance lawyers have washed their hands of this hold-up.

• The criminal matter has now been referred to the Appeal Court. A separate civil case against Caja Murcia is now under way.

Documents

• Proyectos Antele Case: Court Requests Bank Statement from Bank  (PDF ~990 Kb)
• Proyectos Antele Case: Prosecutor Writ Requesting Dismissal (PDF)
• Proyectos Antelee Case: Criminal Case Dismissed by Judge

Antonio Flores Litigation Caja Murcia, Costa Palatinum, litigation against spanish developers, Proyectos Antele S.L.

I make no disguise that, professionally, I am closely connected to property, therefore this post, to many, will have limited significance due to obvious bias. If I was however to collate my experiences over the years, good and bad, when dealing in real estate in Spain, and I compare them with how transactions are conducted these days, I would necessarily conclude that it is now safer than ever to invest in property in Spain.

The crisis has operated like an unstoppable tsunami that has swept right across the property market, sucking in its wake dodgy agents, opportunistic developers, corrupt town hall officials, crooked mortgage brokers (like the one that conned Banesto out of a few millions) and a handful of funny lawyers. And with them, a myriad of very questionable anti-property purchaser practices that had dangerously became close to standard, in spite of almost everyone living, directly or indirectly, on these bona fide consumers or investors. It may be convenient to enumerate these unethical antics, by trades, to keep things in perspective.

We must remember that:

1. Never again should anyone pay any monies to a developer unless a bank guarantee or an insurance policy is available…, obvious isn’t it? More the point is that, realistically, insurance companies will never touch advance off-plan property payments and banks are likely to request unthinkable amounts of collateral. The immediate consequence of this is that only the very cash-strong will be able to develop and this is just good news.
2. Never again should anyone pay monies to a developer who:
   
   1. Does not own the land (Citrus Europe Ltd.)
   2. Does not have a building license (Aifos)
   3. Cannot give bank guarantees (not enough space in this post to name them),
   4. Uses the deposits for a Murcia development to run a complex in Venezuela (Proyectos Antele S.L.)
   5. Uses a bent-as-hell agent as a deposit-collector who then ends up keeping them (Grupo Mirador and Palmera Properties/Gotardo)
   6. Runs away with the portion of the purchase price, earmarked for cancelling the loan on your property, to Germany (Abacon Delta S.L.)
   7. Sells a half built complex to a third party and does not refund (Citrus Playa Macenas S.L. and Ready2Invest )
   8. Takes 60 deposits for an Almeria development to a UK company and then dissolves it (again, Citrus Europe Ltd.)
   9. Or all of those together plus sets up a Ponzi scheme, is known to have never built one property in his entire life in spite of claiming, at a fastouos ceremony, to have erected no less than 6,000 in the Costal del Sol, even persuading gullible Prince Albert to believe such bullshit!  (Sun Golf Desarrollo Inmobiliario S.A. or Mr. Ricardo Miranda Miret).
3. Never again will developers bully buyers as they were used to doing, as for example La Reserva de Marbella S.A. were experts at. I always wondered why was it that when you bought an apartment for €200,000 you were almost expecting to be treated like s**t, but if you went for a meal you were the king if you tipped handsomely…
4. Never again will developers make you sign a private purchase contract for 70% of its real price, the balance of 30% to be paid to a Switzerland account, in advance, undocumented and, of course, never to be reflected on the private purchase sale deeds…(any ideas?? :))
5. Very unlikely (never say never) will a Socialist/Communist Government, regional or otherwise, allow licenses to be granted on thousands of properties only to later, due to political opportunism and a spate of much publicized corrupt Town Hall officials arrests (which I agree with but without the cameras), instigate the revocation of almost all of these licenses, promote demolitions, warn of impending heavy fines on everyone, including the bona fide owners and, in sum, scare the hell out of thousands of those owners plus an undetermined number of potential investors in Spain.

With all we know now in respect of the degrees of criminality so many property developers ran into, an off-plan property industry that is almost non-existent (good old Taylor-Wimpey seems the only one around) and the property-associated corruption almost disappearing, the very few developers that are still around will no doubt jump through hoops to ensure that only la creme de la creme will be sold, at the right price of course!

Antonio Flores Litigation, Property, Scams Abacon Delta S.L., Aifos, Citrus Europe Ltd, Citrus Playa Macenas S.L., Grupo Mirador, Jesus Gotardo, La Reserva de Marbella S.A., Palmera Properties, Proyectos Antele S.L., Ready2Invest, Ricardo Miranda Miret, Sungolf Desarrollo Inmobiliario S.A, Taylor-Wimpey