Antonio Flores’ Blog

Spain’s shocking 20% unemployment rate may not be so shocking after all, if we read a risible court ruling where a judge has to tell 3 grownups that they are not any longer entitled to child maintenance. The ruling decided on appeal a petition from a mother of three to the effect that her children were too old to be eligible for pocket money, since they were old enough to fend off for themselves in life. The first one, 34 years of age, was a doctor in law and now studying economics. The second one, 32 years of age, had passed her exams as a tax inspector in Madrid after 10 years of studying hard to become one, and a third one, still a student, had had a few jobs, but must have found it too much hard work. The appeal judge decided that, even though the obligation to support children did not cease when they became of legal age (18 years), it was not justifiable for 3 fully qualified university graduates over 30 years old to expect being maintained by the father. He added he could not accept their plight and expectations, in this day and age, and in a modern society full with opportunities, to be fed by the male progenitor as the contrary would equate to favouring a passive fight for life that could be end up in “social parasitism”. Needless to say, the Canary Islands, where these boys were once based, have a whopping 27% unemployment that has even merited an article by the Financial Times.

So now on to the more practical side of this post, it being the obligation of the non-custodian progenitor (non-resident parent in English legal terminology) to maintain the children after a divorce in Spain (or separation for that matter) is under way, and for a good few 10 years after they become legal adults (18), I thought that publishing the amounts due by him/her (in 95% of the cases it’s the father) would help have an idea of what should be expected to be paid, since knowing this information, and consequentially what a judge would be ruling on, will reduce the litigiousness of the marriage break up.

The tables below show what should be expected to be paid by the non-resident parent depending on 2 variables, the number of children and the employment situation of the resident parent. Additionally, the courts may introduce other variables that will reflect personal and family circumstances, socio-economic environment issues, location, etc., that will singularize the final amount to be paid in each separation and/or divorce case.

The table below is applicable in the event that both parents have an income:

* NOTE: The amounts in this table have to be multiplied by 1.45 if there are 2 children, 1.65 in the case of 3 children, and 1.93 for four children. The amounts in the vertical axis correspond to the monthly income of the custodian progenitor (resident parent), and the amounts in the horizontal axis correspond to the non-custodian progenitor, both in in Euros.

The amount specified for child maintenance is subject to modification in the event of loss of job by the paying parent or increase of his/her living costs, or because the children receive an income as a result of getting a regular job or reach an age where it is no longer reasonable or ethical to maintain the payments (as per the case study of the Canary family).

Finally, Spanish legislators have introduced new legal reinforcement to deal with non-paying parents, inclusive of jail sentences, so if you are in this situation make sure that you don’t miss 2 consecutive payments or 4 non-consecutive payments, because prison terms are then readily available!

Antonio Flores Family Law, Litigation child maintenance in Spain, child support in Spain, spanish alimony

I have, for some unknown reason, always been suspicious of professionals wearing a short sleeve shirt and tie combination, unless, of course, they were cheesy used car salesmen or fast food managers. I have to say in my defense, however, that I have tried to leave behind my prejudices and move on, trying to intimate with the suspect (generally some other lawyer) in spite of his attire when work circumstances demand it, and also because I am told that looks are not everything.

The same happens with exclusive real estate commission agreements. They look one thing but may mean something, nothing, or something different from what they say or mean. And this baffling scenario is what we encounter if we research court rulings issued all over Spain when the principal, who is the property owner, decides to sell the property himself or through another agent, in spite of having signed an apparently impregnable contract with his chosen agent and shaken hands subsequently, with or without a beer.

By analyzing no less than 20 court rulings, we find out that most, if not all, agree that if the property owner sells directly, then no damages are applicable to the agent as exclusive contracts cannot impede the owner from disposing of his own property privately, unless specifically agreed (already departing from what we think “exclusive” means).

This clarified, we now look are the solutions arrived at by courts when an agent different from the initially commissioned to sell, exclusively, does the deal.

• Solution Pro-Owner: This is a restrictive opinion (also shared by French law), whereby the exclusive agent is not entitled to a commission because the essence of the mediation contract is to find a buyer, and where this has not been achieved, then no right to a commission arises. At the most, the exclusive agent will be entitled to damages, but only where these can be proved to have existed, such as meetings, sales or promotional literature,trips, staff hiring etc.In line with this view, courts have pronounced that giving the exclusive agent the right to his commission would produce “unjust enrichment”, since the main obligation of the agent is to sell, and this has not occurred as a result of his activity (it omits an important detail which is that not selling the unit may have happened due to it being sold by someone else!).The Supreme Court has added that the agent’s right to his commission (“loss of earnings” theory) when the seller breaks the exclusive contract can only be applied where there is sufficient verisimilitude to repute the earning of the commission as very probable, in its maximum approximation to an effective certainty so that the result is neither a loss nor an unjust enrichment. It also adds that the loss of earnings have to be proved, not being dubious, unfounded or founded on hope or hypothesis.Again, the courts here redefine what “exclusivity” means, and almost gives cheeky property owners carte blanche to break exclusivity property sales contracts, without visible penalties.
• Solution Pro-Agent: This more harsher solution is more in line with common law, and determines that the exclusive agent did not have the opportunity to complete the task he was assigned with, and, therefore, considers that the exclusive agent would be entitled to any costs incurred in so far, plus full commission (loss of earnings). This opinion is based on the fact that, in the absence of a clear regulation, damages are to be calculated primarily by reference to the lost commission. However, it adds that courts are entitled to “moderate” or “adjust” the application of it on the basis of other circumstances, such as the dedication of the exclusive agent to selling, number of buyers who viewed the property, other sales made with the same client, bad faith displayed by the owner, final sales price, etc. There is an interesting local ruling (Malaga Appeal Court) involving the Kempinski Hotel owners and Sauer International real estate agent, where the latter was given entitlement to 5% commission (half of that agreed on contract) on a number of apartments that were sold by another agent (Kristina Szekely), because the courts understood that by having sold 74 apartments out of a total of 89 it could easily be inferred, with objectivity, that the remaining 15 would have also found a buyer through the services of the original agent.

So if we thought we knew what the penalty would be to an infringer property owner by reading a simple contract, be wise and stay away from assumptions, because Spanish courts are here to prove your assumptions wrong!

Antonio Flores Companies, Litigation, Property

I may be stretching the concept of misappropriation a bit too far, more so when criminal laws are always to be interpreted restrictively, but the absence of a bank guarantee has landed the property developer of our case study in jail after being given a two year prison sentence, a term that could have been avoided if he had done what he was supposed to do, guarantee the funds paid on account of the purchase price.

The Supreme Court has ratified an earlier ruling by the Appeal Courts in Madrid where the developer was sentenced because the deposit he received was not destined to cancelling the mortgage loan on the property, as promised. The 2010 ruling, in peseta denomination (which means that the claim was lodged prior to 2002!), describes the facts leading to the 2-year prison term ruling:

1. Property developer sells off-plan villa for 24 million pesetas.
2. Payment plan establishes that 8 million pesetas are to be paid upfront and 16 million pesetas on completion, paid in cash or alternatively by taking over the mortgage facility offered by the developer’s lender.
3. Nearing completion, the developer fails to finish the works, and, consequently, buyers are advised to complete at the earliest as unfolding events cast serious doubts on the developer’s financial solvency.
4. Buyers find out that the developer’s mortgage is of 19 million pesetas and not the figure of 16 million pesetas. Still, the latter is unable to refund the 3 million pesetas the buyer has overpaid, or redeem the mortgage down to 16 million, as he is underfunded.
5. Developer is not only unable to reduce the mortgage to 16 million pesetas but he cannot finish the works.

As a consequence of the above, the buyers sued in Court, as they felt swindled by the developer (clearly!). He was sentenced in 2002 for aggravated misappropriation (by reason of it being related to property). Seven years later, the Supreme Court understands that there is no reason to uphold the appeal and maintains the original ruling. Additionally, the developer was forced to pay damages, these being the sums lost to the developer plus interest.

However, if the developer had guaranteed the down-payments by offering an irrevocable bank guarantee or insurance policy, the buyers would have not had a chance to pursue the matter criminally because a refund would have been immediately available (especially as the license of occupancy was not issued at the time of closing). Nevertheless, by breaking statutory civil laws, he found himself in the hands of a prosecuting lawyer, a criminal prosecutor and uncompromising judges.

This ruling opens the door to heavier scrutiny on the use of deposits paid to developers, to the point that if they are used for purposes unrelated to, strictly speaking, the construction of property, criminal cases can be easily brought.

We have been informed that the developer of Los Monteros Hill Club incurred in such practice, causing at least one buyer to lose hundreds of thousands of euros, as the full purchase price was handed over but was not used to cancel the outstanding loans on the properties.

Antonio Flores Litigation, Mortgages, Property bank guarantees, Bank Guarantees in Spain, litigation against spanish developers, Los Monteros Hill Club, spanish developers