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The Spanish Lawyer Online
The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain


Archive for October, 2009

Buy-To-Let Investors Backing Out of Spanish Off-Plan Deals Face Court Action

October 9th, 2009

Promaga/Vista Hermosa, Hercesa Dona Julia, Altos de Alcaucin and Arrohabitatge/Don Juan are some of the developers/developments which, having read a recent article published on the Daily Telegraph titled Buy-to-let investors backing out of off-plan deals face court action, are now avidly typing their lawsuits. The article goes on to say:

UK Buy-to-let investors reneging on off-plan property purchase contracts need to be aware that they risk losing more than just their deposits, warns City law firm Wedlake Bell. It said “hundreds of buy-to-let investors have already been pursued through the courts for trying to wriggle out of off-plan contracts'”.

Developers have 2 options if they want to cause concern to their (still) clients:

  1. Option 1: they can file a suit in their countries of origin through the local Courts as the address on the contract is normally their home address.
  2. Option 2: they can file a suit in Spain in accordance to the jurisdiction clause (which invariably says Spanish Courts are competent) and request that the suit in notified in the Uk, or if the address for notification is their lawyers’ address, have defendants summoned through the former. A favourable Court sentence can then be enforced in the UK.

It may sound as if I wanted to take sides and encourage these horrible developers, as some want to put them, to take away the sleep from Spanish off-plan property buyers, but far from this it is a warning that these things happen here as they are already happening in Britain and presumably an various other countries. It is therefore not something exclusive to Spain as in fact Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters is applicable to all the UE and is now being used with success by claimants all over Europe.

On my next post I will explain how we are using this EU regulation in an interesting (and reverse) case against OceanView Properties and Manilva Costa S.A.. Our client sued these 2 companies for contractual default in the purchase of a property in a development known as Gardens of Manilva and won the case. We are now enforcing the sentence in Seville, where the developer is based, and are not expecting any disruptions in the process of having it accepted and upheld as, after all, Europe is now a one big country!

Litigation, Property , , , , , , , ,

Another Horror Story… This One Self Inflicted Though

October 7th, 2009

A client of ours has lost sleep over a Spanish property transaction and we cannot possibly help. The story is a mixture of error, oversight, greed and ultimately theft which has the potential of landing our client in a criminal court.

It all starts when our client, the seller (let’s call him Mr Smith) is about to sign over title deeds to the buyer of his property (lets call him Mr Jones) after having exchanged private purchase contracts. As Mr Smith had a mortgage, we phoned up his bank to give them notice of the impending closing at the Notary office and ask them to attend to formalize the cancellation of the mortgage deed. The bank kindly advised that they had no one available to attend on that particular date and so it was agreed between the seller’s bank (BBVA) and the purchaser’s bank (Bankinter) that Bankinter would transfer the amount of the outstanding mortgage to BBVA by interbank transfer (which is a safe method of transferring prior to singing the deeds).

As it happened, the transfer was made and all parties concurred at the Notary office where the transfer of title was effected and Bankinter signed the mortgage loan agreement. It is after this when the problems started… Our client, Mr Smith, when sorting the outstanding matters and preparing to transfer the proceeds of the sale, realized that his account had been credited with the sum of the loan he owed and which had been transferred by Bankinter. Mr Smith, who had expected to find €50K was delighted to find €150K and unconcerned about the consequences he decided to transfer the full sum to his UK account. He did not seemed curious as to how his account had received such windfall, nor what the consequences would be if he appropriated what was clearly not his, or even what would the Inland Revenue say about this rather hefty and inexplicable sum.

When his bank realized the mistake, they tried to recall the transfer to UK, but it was late. Following a few unreturned calls and emails, our client eventually accepted a mistake had happened and proposed to return the funds to his bank. Meanwhile Bankinter and its lawyers had started to get nervous because Mr Jones mortgage had not been cancelled, and were threatening legal action.

Mr Smith had taken €100K and proposed to return the same amount, but, as he had sent the funds to his UK account and 12 months had elapsed, the exchange rate was to affect him horribly. The result was that he now had to buy €100K, a currency now 30% more expensive! To add to his problems, his bank, who was now being sued by Bankinter for negligence, decided to send him legal notice of criminal action for misappropriation (the Spanish Penal Code envisages the action of intending to keep monies received by mistake).

Surprisingly, our client in an attempt to find “the guilty party”, turned on us and accused us of poor advice for his problems, i.e. not informing him that he was likely to receive a sum which was not intended for him, and in an even funnier twist, he demanded from us the extra €30K it would cost him to buy €100K. Needless to say, his demand was rejected, and, given the breakdown in the solicitor/client relationship, we decided to give him “the sack”.

This specific problem was clearly a mistake on the part of BBVA because the transfer received in Mr Smith’s account should have been frozen, as it is customary, until used to cancel the loan. This oversight could have also been avoided by BBVA attending the Notary and cancelling the loan simultaneously to the purchase and new loan formalizing. However, BBVA representatives, instead of getting off their lazy asses and walking 10 minutes to the notary, said the magical words: don’t worry, I will do it mañana mañana!!

Litigation, Mortgages, Property , , ,