Antonio Flores’ Blog

I assume that as a reader of this blog you are aware of what is currently cooking in this part of Spain but if not there is a likely chance that you may have listened to some of the following news headlines in British, German, Dutch and Spanish TV and radio:

1. The Junta has earmarked about 10,000 properties for demolition
2. President Mugabe has defended the ongoing operation to bulldoze thousands of homes and businesses across Zimbabwe
3. Britons who face seeing their Spanish homes demolished are to be visited by Foreign Office minister Chris Bryant
4. Robert Mugabe’s Junta destroy thousands of properties in Harare
5. Hundreds of British expats stage march in Malaga over plans to demolish ‘illegal’ holiday homes

Hopefully you have spotted -minor- differences between the above news headlines: the even-numbered ones refer to an African third world country governed by a viciously corrupt megalomaniac and the rest to the second tourist destination in the world. On the other hand though there is a striking similarity between both Juntas: presumably they’ll use identical diggers and demolition techniques to smash the bricks and mortar of hundreds or, if the property-destroyer Andalusian Junta plans go ahead, thousands of houses.

Fortunately we do not live in Zimbabwe and fortunately as well Spain is now part of the EU because anyone caught out in the Spanish illegal property scandal, in particular in this part of Spain (Andalusia) is going to have necessarily (and thankfully) to bypass, within the statutory procedures, Spanish laws and tribunals because the Spanish Supreme Court, the ultimate ordinary judicial instance, is reiterative in its stance of considering that there are no bona fide buyers (good faith buyers) of properties built on illegal licenses or initially legal but rendered illegal through a subsequent Court case.

The Supreme Court has settled a long standing difference of opinion between Civil Courts and Administrative Courts (in  favour of the latter), which considered that bona fide buyers could not avoid the application of legal limitations concerning a property, including the issue of the validity of a building license, and thus any consequence arising from the fact of it being declared void, namely demolition. Conversely, the Civil Courts were more prone to uphold the principle of protection dispensed by the land registry rules to buyers who had trusted this system to acquire property.

This is explained fairly clearly by the Supreme Court in several rulings, establishing that property purchasers automatically take over the position of the previous buyer in respect of urban limitations, and, particularly, building licenses, irrespective of whether these were registered or not. In the view of a large part of the learnt Spanish population, and the majority of the foreign, this conclusion is unfair, as it does not differentiate between situations where the buyer could have known that the license was compromised and those where there was no indication at all that this was the case.

It will certainly sound as a precipitous opinion, but if I were sitting at the European Court of Justice, I would find myself very comfortable ruling against the Andalusian Government on the following grounds:

1. Town Halls in Spain have a legal entitlement to issue build licenses conferred upon by the Spanish Constitution. This statutory prerogative is relied on by citizens when engaging in real estate transactions and should not be open to revocation by higher instances.
2. Where Town Hall actions were blatantly illegal, the Junta should have acted efficiently imposing measure to impede developers from finalizing the works and also selling these properties.
3. By accepting either Transfer Tax (7%) or Stamp Duty (1%) on ALL transactions on properties which were later rendered illegal.
4. By creating an appearance of legality where everyone made the “imperfect” transaction good by charging build license tax, Notary and Land registry fees, Transfers Taxes, Mortgage arrangement costs, property valuation fees (in Spain valuations advise on the legal validity of a transaction on behalf of banks).

If I were the judge I’d pull a fantastic Common Law principle, known as the Doctrine of Estoppel, which says the following:

A person is precluded from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth, either by the acts of judicial or legislative officers, or by his own deed, acts, or representations, either express or implied.

This principle, properly applied by the European Court of Justice, should quash any Court demolition order and send the very clear message to the Andalusian Government that in Europe it is not acceptable to throw the lives of bona fide property purchasers into abject misery on the pretext of protection of public interest. Quite like Mugabe in Zimbabwe!

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The more you read the more confusing it gets. It now appears that applying for land registry information via the website www.registradores.org is abusive, illegal and almost criminal. The AUDRP (Association for the Protection of Users of Public Registries) has now come up with a clear and undoubted conclusion: that Spanish land registries must not give information freely to anyone who wishes to obtain, for example, details of the owner of a property, how many charges it currently has or how many times it was bought and sold in the last few years.

According to this aatonishing finding, the Spanish Land Registries are providing information on properties and their legitimate owners without proving a “legitimate” interest, however vague this term may be. Certainly, when you apply for a “nota simple”, or a land registry certificate (an excerpt of the current status of a property) you are requested to provide a reason for which you want this nota simple. For example, if you want it because you want to sue someone´s ass off you will use an euphemism such as “legal action”, or if you wish to know if someone is in debt up to their eyeballs you will prefer to say that you will need it  to “ascertain the juridical conditions of the dwelling”. And if you have been conned by some cretin in your vicinity and he’s ran away with your money, you will have to say that you require this bit of information so as to know the economical-juridical situation of the house he bought with your money.

Whatever the reason you need this “nota simple” for, it is surely for one purpose: to know if someone owns something somewhere and if he/she does, in what legal state it is in. According to the AUDPR (until recently pretty quiet, but whose bosses now want to be seen as making some noise) giving out absolutely crucial information to ensure the safety of the Spanish property market, already under serious scrutiny, is a fraudulent money-making devious idea because it allows other people to scan the system for obscure purposes (they say) such as gossiping or pure morbid fascination…

The funny thing is that the Spanish Land Registry system, which was specifically designed to bring certainty and security to real estate transactions (or, in everyday language, to prevent con artists attracted by bricks and mortar from making a living), is being copied by other countries because of the protection and usefulness it brings to its users if it is properly implemented.

Now these guys from the AUDPR want to stop not only legitimate property buyers or curious would-be investors from knowing financial information on properties they are keen on, but also impede, inter alia, the Suffolk County Council, Essex County Council Trading Standards, Northumbria and West Yorkshire Police and many more law enforcement agencies in various counties (and countries) from obtaining crucial clues as to the final destination of the proceeds of diverse criminal activities. Soon after this they may want to go after Google for soaking up and divulging the names and addresses of people (and other circumstances) who are in one of the following unpleasant scenarios (details which are all legally accessible to anyone in Spain and beyond through the various Spanish Official Gazettes):

• Do not pay their Council taxes.
• Have missed social security payments.
• Do not pay road traffic fines.
• Become Spanish nationals.
• Apply for a business licenses.
• Have been convicted for fraud and swindle.
• Have been involved in a 3 am brawl in Torremolinos where the claimant, a Mr. Yossef Cheghanou, punched a Enrique Atencia Burgos because the latter said that Spaniards were all a bunch of pr*cks (in Spanish, “gilipollas”, actually I know quite a few!), for which he was reprimanded with a patriotic girly slap to which Mr. Cheghanou responded with an uppercut (good and proper!). This was the subject of an appeal at the Spanish equivalent to the Old Bailey (Tribunal Constitucional) believe it or not and we know all the details.

So now you draw your own conclusions as what information deserves to be hidden from “gossip land” and what is really important to the public, Mr. Cheghanou´s pugilist abilities or a heavily encumbered property?

I hope some bright civil servant will realize soon that the problem in Spain has not and will never be the Land Registry but the total inability to know, once and for all, if one can or cannot build a bloody house on a plot of land without having to later wonder if the planning permission was good enough, just about acceptable or bent as a nine bob note!

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Shocking as it may seem, the fraudulent company Ramirez and Ramirez (backed by a person called Fabian Ramirez Marcelo), in full defiance of the Spanish police forces, prosecutors and judges, has come up with a daring but also brilliant idea: to persuade the local firm of lawyers Martinez-Echevarría (ME) to take up a legal instruction to defend, endorse and protect their illegal activities, inclusive of filing a legal suit against myself, a colleague and the administrator of the site belegal.com.

To cut a long story short, Ramirez and Ramirez Abogados SL (now known as Ramirez and Ramirez Asesores SL) has been, during the last few months, cold-calling thousands of victims of many different scams, purporting to be a law firm, and promising to recover the funds they had lost, against payment of an upfront fee (up to €7,000). This fraudulent scheme is being devised mainly from Fuengirola and Benalmadena boiler rooms (flats turned into call centers staffed by salespeople, mostly expats, and a few Spaniards as the legal expert ‘housewife’ of the second recorded coversation below can attest to). The same modus operandi is being shared amongst at least fifty other similar fraudulent law firms doing exactly the same, mass contacting people to request payment under false promises. And it is resulting in a scam of enormous proportions.

I could have easily understood and accepted that ME took up the instruction once a criminal prosecution was filed against Ramirez and his gang for their illegal activities, as this is our job as lawyers. Period. But to actually bring a suit against two lawyers and a company director for defamation and libel on behalf of the organisers of the above scheme, is far more than one can digest without feeling convulsions and ultimately vomiting in the closest dustbin.

Anyone who has been around in this part of Europe for a while, and has been the slightest worried for the reputation of the Costa del Sol, could have known, whether by reading the ocassional newspaper, browsing through expat webforums or just being curious, that fraudsters are still massively cold-calling victims, on false pretences, to extract money for nothing. However, anyone who is a lawyer working with foreigners, should be by now absolutely certain that this is nothing but a scam, and report it to the police and the Law Society, as we have.

So since ME is taking me to the criminal courts on counts of defamation and libel, I decided to demonstrate them, before the hearing takes place, that they are not only very very mistaken, but also their actions can bring them shame and oprobium for the foreseeable future. Therefore, I called up two numbers provided to me on the Ramirez and Ramirez website to find out how this young and dynamic firm with over a decade of experience (sic, even though the domain name was registered last October 2009), or the leading law firm specializing in litigation (sic, even though the gentleman on the phone denies being a law firm) could help clients in getting funds back.

The Recordings

The first recording is in English and not complete due to a technical glitch, but is enough to infer that something somewhere is not right with the “young and dynamic leading litigation law firm with ten years of experience”.

The second recording (I’m afraid only in Spanish) is full, and is so embarassing that I would have laughed all the way through, were it not for the sinister nature of the activities that the lady on the phone, quite clearly knowingly, was conducting.

Downloads

• Ramirez & Ramirez Introduction Letter – Letter sent to clients in which Ramirez & Ramirez confirm they are actually a law firm, and have gained considerable experience acting in many complex cases.

The case continues…

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Although selling a property without acceptance of the lender is considered to be, together with not paying the mortgage installments, a forceful reason for foreclosing, the reality is that, in these times of tight financing, it is being used an easy way for cheap and easy finance. How is this possible? I’ll show you below…

Article 118 of the Mortgage Act stipulates that a mortgage loan can be transferred provided the creditor has agreed to it, expressly or tacitly. In our case study (a client of our firm), the bank would have refused to approve the transfer because the property owner had obtained an 80% loan-to-value in 2006, and the valuation was now 25% less. As a result, the property was in some negative equity, the owner was desperate to get rid of the debt and the buyer wanted a 100% loan to value property.

So what did we do? We went straight to the Notary and signed the deeds of transfer with €0 payment. Previously, the buyer had opened an account with the lender and told them that, being a friend of the debtor (owner still at the time) he was going to start covering the mortgage repayments on his behalf, and instructed the lender to debit these from his account. Additionally, we took out a new insurance policy, through the bank, but in the name of the new owner. The idea behind this has been to force the bank to tacitly agree to the transfer of the loan, as they will have been inadvertently accepting repayments and issuing insurance policies in the name of the new owner, who will also have the deeds to his name, thus precluding them from opposing this de facto reality.

Although this is a very quick way to obtain 100% finance, it is risky because:

1. The lender could still foreclose on the property on the basis of its unauthorized transfer if they find out within a certain number of months; it is not clear how many months, but if nobody tells them, they will not find out. However, if they are getting religiously paid, it would be rather stupid to do so.
2. If the new buyer stops paying, the bank could still hold the previous owner liable, although it is possible to successfully argue that the bank tacitly consented to the transfer.

This ‘clandestine’ maneuver is useful when buyer and seller have certain trust in each other, and the owner’s desperation to sell is matched by buyer’s keenness on the property. Allowing principals of up to 100% of the property value, this is like a non-status mortgage on steroids!

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Everyone knows that a mortgage loan title deed is a lengthy document with elaborate legal clauses and complex formulas where the main conditions of the loan agreement are set out. What most people don’t know, however, is that banks tend to include restrictions as to what one can and cannot do with the property. The latter restrictions are what we are more interested in, because breaking them entitles the bank to cancel the loan agreement and request repayment of 100% of the remaining capital.

It has to be said that some of them are clearly abusive and would not withstand a legal challenge on application of the Consumer Protection Act, but going through some of the restrictions makes interesting reading if only to see how one-sided can banking contracts be.

We have used a standard mortgage loan contract, in this case from Caja Rural de Granada (savings bank), although they are all pretty much the same. As an example, this “Caja” can foreclose on the loan if:

1. You are late by 10 days in making a repayment (that’s ten days, never mind 6 months!).
2. You don’t pay the IBI (Council Tax) or Basura (Rubbish Collection Fee) receipts and insurance policies (IBI can be as low as €200s per year and Rubbish collection €40 per six months).
3. You don’t pay the Notary fees for the mortgage deed (possibly the daftest of them all when it is the banks who take the money from you, upfront, to pay for the Notary fees!).
4. You use the property for any other activity other than what has been agreed (any ideas? :)).
5. The property catches fire or is damaged and as a consequence it loses value (this could make sense but you have the bank forcing you take out insurance to cover this anyway).
6. You don’t give the bank the original mortgage deed within 6 months from signing the loan agreement (does anyone know where the original mortgage deed for their property is? From a legal point, it is completely irrelevant where the deeds are once they are registered so you can keep them in a safe, like some villagers do to get proper sleep, or use them to get the barbecue going, it really makes no difference).
7. You rent the property without prior consent of the bank and/or in detrimental conditions for the landlord (this clause is outright illegal and deserves no further comment).
8. You sell the property without the bank’s consent (they must first find out and then choose to add another property to their plentiful property portfolio!).

The notorious stupidity of some of the above clauses makes one laugh, but let’s look closely at what clause 8 entails. Recently I have been advising on some transactions on behalf of willing buyers and sellers without notifying the bank, because the bank has, quite simply, refused the buyer’s application on financial grounds. I will leave this for my next blog post.

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