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The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain


Archive for August, 2010

President of Community of Owners Launches Full Legal-Offensive Against 3 Kg Maltese Bichon

August 31st, 2010

Pet-hating Altos de Miraflores has put Mr. Philips in an awkward position. In his position as President of the Homeowners Association he has had to give full and final notice of legal action, and eviction if necessary, to an owner who has chosen to lodge a diminute dog in his private home.

The community-regulation “infringer”, a good friend and client of the firm, was about to dispatch the animal to the Triple A (local dog rescue centre) after receiving a threatening letter (since he was in no position to sell the apartment). When I was told about the case, I immediately identified an excellent story for my blog, so I will not spare one word of the exchange of correspondence. Enjoy!

Letter from The Community of Owners to my client

Letter sent to our client. Click for larger version.

Letter from our firm to the Community of Owners


To: Mr. Ron Phillips/ President of the Community of Owners

Dear Mr. Ron Phillips,

In my position as acting lawyer for Mr. Shahram Varasteh, owner of apartment number 70 of the Edificio Altos de Miraflores, I hereby respond to your letter dated the 20th of July 2010 where you demand from my client, in connection with a number of articles of the statutes, that he moves his dog to another place or, should he does not wish to abandon his pet, that HE removes himself from HIS apartment because otherwise YOU will, pursuant to the mentioned articles, instigate legal action to ultimately deprive HIM from living in HIS apartment.

The above let me confirm to you, Mr. Philips, is incorrect.

Firstly, because we thankfully no longer live under a dictatorship. Unless, of course, one happens to live in the Community of Owners of Los Altos de Miraflores, presided by your iron-fist, extravagant and draconian forms.

You should be reminded that article 18.2 of the Spanish Constitution establishes the inviolability of one’s home. In a hierarchically superior instance, the European Convention on Human Rights established, in its article number 8, that:

  1. Everyone has the right to respect for his private and family life, his home and his correspondence.
  2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

Secondly, because the articles of the statutes of the Community that you preside, which prohibit dogs, are not enforceable erga omnes , that is, against all animals or people. It is now accepted by unanimous case law that controversial prohibitions like the one you wish to enforce have to be interpreted necessarily in conjunction with other fundamental rights inherent to the quality of being a property owner.

The Horizontal Property Act you refer to, in its Preamble, stipulates that the rights of enjoyment tend to give the owner the maximum possibilities of utilization, with a limit represented by concurring rights of equal importance of other members of the Community, as well as the general interest.

Such prohibition, in the words of the Madrid Provincial Audience (SAP 4th June 2001), finds, within the communal environment in which is adopted, its full enforceability and efficacy insofar as the Community members interact outside the private environment, in relation to the right to privacy and exclusive use of a private home.

It would be, in the opinion of the Madrid Court, against logic and common sense to uphold a restriction that entailed an unjust limitation and intrusion in the faculties of use and enjoyment that conform singular and private ownership, when such restriction does not respond to a legitimate and meritorious interest. And finally, that the prohibition set forth in the statutes implies, undoubtedly, a grave restriction to the right to an ample enjoyment that every owner has.

If you wish to read further I can quote the following rulings (among many), where you will find that all consider that these prohibitions are of impossible enforceability:

  • Audiencia Provincial de Asturias, sec. 4ª, S 19-10-200 9
  • Audiencia Provincial de Segovia, sec. 1ª, S 21-10-2005
  • Audiencia Provincial de Castellón, sec. 1ª, S 14-12-2001

The position of German and French law, for your information, is also fully coincidental with it´s Spanish counterpart.

The result of all of the above is that you can indeed impede owners from having dogs if these are proved to be dirty, noisy, dangerous, disease-ridden or any other potentially annoying quality that, as far as I am told, is not pertaining to Mr. Varasteh dog (even though they may well tick all boxes for some human candidates!). This is, Mr. Phillips, the maximum amplitude of the prohibition currently in force in the Community of Owners that you preside over and if you can therefore prove to me, in the first instance, or the Courts, that this dog annoys anyone (apart from you), bearing in mind that the elasticity of the meaning of “annoyance” cannot be equated to caprice or personal or fanciful taste or distaste, nor can encapsulate animal-hating militants, dog-phobia sufferers or similar strange individuals, then Mr. Varasteh will not object to, when the Courts determine so, remove his animal from your sight.

Finally, please note that only the Town Hall or any superior legislating body can ban someone from having a street-legal animal at home (and not your Homeowners Association), to the extent that if such animal is objectively not impeding other owners from fully enjoying their private homes, communal spaces, without objective “annoyance”, then there is little you can do about it.

It is therefore clear that the prohibition, established by your community, of keeping a dog in a private property is null and void and therefore unenforceable.

I will request in any event from Mr. Varasteh that he immediately disallows his pet any enjoyment of the communal areas as well as ensures that his Maltese Bichon is always on a lead when in transit, through those areas of community public use, to the D-point, or defecation point, where of course he will clean up after it (pursuant to dog-owning municipal ordinances).

Should you have any query in respect of the above do not hesitate to contact me.

With kind regards


Lawbird Legal Services

Litigation, Property

Spanish Tax Office: No Easing Up on VAT Woes

August 25th, 2010

Taxes are a funny thing. One day you get a registered letter, sent via the post office, with a on the spot demand for €2 surcharge, and another day Mr. Roca, the brains behind the biggest corruption ring ever to hit the headlines, faces an €800 million fine for, among other counts, Tax Fraud.

Whatever your problems with the Tax Office are, small or big, I find a very worrying pattern among some professionals in the real estate business: they are still providing tax advice to people buying real estate in Spain and the VAT refund they are supposedly entitled to if they buy through a company.This Costa del Sol legal/tax-gossip is all the more dangerous as it openly despises the complexities and sophistications of VAT tax provisions.

I am talking about advice relating to VAT refund when buying plots of land or property, and is no small talk if one considers that it accounts for 8% (or 18% on plots of land), but also if we think that it can make the difference between buying or walking out of the real estate’s office.

This inexpert advice is presumably given out innocently, but the excitement it creates is not nearly as exciting as the tax officers’ desire to quash the application and return a letter with a fine equating to 50% of the VAT amount trying to be recovered!

This “Sonderbehandlung”, or Special Treatment, is reserved by the VAT officials to those they deem are trying to cheat the Tax Office and so the matter demands some adjustment in perspective. But this is only one side of the (horror) story, because we could also find that having paid VAT, and having been entitled to a refund, the seller of the plot or property who charged us the tax is not a trader and therefore not only will we struggle to obtain a VAT refund but also we will have to pay Transfer tax on top of the VAT!

So as to not bore readers, I will succinctly explain 3 real life case scenarios:

  1. A property holding company buys a plot at La Mairena, Ojen, from a legitimate land trader with a view to develop it and sell the finalized property. The buyer claims a VAT refund and receives, by way of return letter, a rejection to the application and a fine of 50% of the VAT that the unsuspecting applicant was after, because the Tax Office, in a display of extreme distrust, considers that the company was never intended to be used to carry out a commercial activity, but rather only as a means to apply and obtain the VAT refund, since the property, they contend, was to be used as living accommodation for the owner of the company. The Tax Office concludes that the property holding company has no other property, no prior experience in construction, no offices (either owned or rented), no employees, is not registered with the Tax Office with a specific “epigrafe” (which is a communication made with respect to the activity the company intends to do) and is not proven that the property was intended to be sold through real estate agents (this particular requirement was used, by a client of our firm, to demonstrate in extremis the genuineness of the claim).
  2. An individual buys plot of land at La Quinta, Marbella, and pays VAT for it (16%, now 18%). Some weeks later the Regional Tax Office sends a tax demand for Transfer Tax for an additional 8%, as it is determined that the seller should have not sold with VAT because he is not a property or land developing professional, in fact has, objectively, no business organization as such, and, consequently, the deal is subject to Transfer Tax and not VAT. Connected to the above is the situation whereby the buyer is a proper trader, buys with VAT and intends to claim it back. His surprise is massive when he is told he does not have an entitlement to a VAT refund but he stills has to pay Transfer Tax.
  3. An import-export company based in Torremolinos buys a new flat and tries to shave off the VAT paid, alleging that the apartment is being used by the company to carry out its activity. Input VAT is deducted, but 1 year later a letter arrives indicating that application for a VAT refund was made irregularly and it has to be repaid. Applying the Lennartz UE doctrine, the applicant manages to keep 50% of the tax arguing that 50% of the apartment is used for business office purposes and the other 50% for private living purposes.

VAT is a complex tax and is the most visible example of the permanent war between the Spanish Inland Revenue and tax payers that merits an abrupt treatment, inspired by distrust, of the former on the latter. But also, VAT is the Inland Revenue’s obsession so careful when dealing with it.

Taxes , , ,

The Evidence that Ocean View Properties Money Was Shipped in All Directions

August 7th, 2010

We have just learnt from a letter published on the Ocean View Properties on thread that Ricardo Miranda Miret has been issued with an arrest warrant by the Courts of Santo Domingo (Dominican Republic).

This comes as no surprise since his dealings have been obscure and manifestly fraudulent, but one would have thought that the choice of country, the Dominican Republic, and his supposedly good connections with the President of the country and, it would appear as well with Monaco’s Prince Albert (unless the photos have been manipulated), should have been enough to ensure immunity and, more irritatingly, impunity.

But since the above, albeit crucial for the people who invested at Punta Perla, seems still far away and relates to the dealings of Miranda Miret and the previous owners of the land (one of which, CCF21 Inversiones S.L., lost a property via public auction to a client of ours), we have now been made privvy to classified information containing proof of transfers between Sungolf Desarrollo Inmobiliario S.A., Paraiso Tropical, Punta Perla Caribbean Ltd. and Miret’s personal account.
We cannot disclose the source of the leak nor the full document but will say that it is a report dated the 17th of August 2006 released by La Caixa Savings Bank on petition of the SEPBLAC (Servicio Ejecutivo de Comision de Prevencion de Blanqueo de Capitales e Infracciones Monetarias), which is the Spanish Anti-Money Laundering Office, investigating the largest corruption case ever seen in a Spanish Court (Operacion Malaya).

This report is important, for it specifies the routes taken by millions of USD that left the UK and Spain to different recipients in Spain, the US, Gibraltar, the Dominican Republic and Mr. Miret’s personal account.

SunGolf Desarrollo Inmobiliario S.A Deposit 1

SunGolf Desarrollo Inmobiliario S.A Deposit 2

Paraiso Tropical Deposit

The one thing that struck me when reading is that I could not see any names of builders, Spanish town halls (or Moroccan for that matter), architects, building surveyors, lawyers and generally anyone habitually connected to property developing, even though taxes were paid (but what for?!).

On the contrary we can see the following:

  • Paraiso Tropical S.A., which is the company that owns the Punta Perla land, and which is the subject of the fraud court case in the Dominican Republic.
  • Sungolf Desarrollo Inmobiliario S.L., which is the company that purportedly intended to develop a resort of over 300 units in Estepona (Estepona Beach and Country Club) and which not only did it not purchase the land or applied for planning permission, but in fact shipped the millions to the owners of Paraiso Tropical, a sugar producing company called Central Romana Corporation, cash in hand and till today unknown individuals never related with the business of property developing.
  • Berkeley Property Investments S.L., which is showing today as still owned by Sean Woodhall and administered by Nicholas Stewart Wood (presumably from Grant Thornton, OVP insolvency administrators).
  • Central Romana Corporation, which is a sugar manufacturer based in the Dominican Republic.
  • Hallard Investments Limited, which is a company based at Grosvenor Street, number 17, London.
  • Inversiones CFF S.A., which was one of the shareholders of Paraiso Tropical S.A. allegedly dupped by Mr. Miranda Miret according to the court ruling issuing the arrest warrant.
  • Cash in hand, which was taken out and presumably spent on expensive restaurants and clubs, business lunches, gifts and presents, call girls (according to one source) and any other unrelated-to-property-developing activities.

I feel that I have now done enough, and not because I have other work to do (which I have) but because I am limited to what info I can pick up by spending hours in front of my desktop, a few contacts and this blog (and more importantly, the forum). It is now up to individuals who have lost their money to team up, put names and amounts on a piece of paper, get qualified legal representation and file a suit, because it is only then when will the national Governments, with their unlimited resources and power, be forced to do something and find out where and with whom did each pound paid towards a dream homes end up.

Litigation, Property , , , , ,

Is Darragh Macanthony No Longer Part of the Furniture?

August 2nd, 2010

Many years back, when I was starting my life in the legal world, I remember dealing, on behalf of two British couples, with two Spanish-Venezuelan property developing brothers who had a smallish urbanization on the side of the motorway in Calahonda, Mijas. On carrying the due diligence, I noted that they were not using any form of limited liability company, just a civil partnership (in Spanish it refers to business!), which meant that they were personally and directly answerable for any wrong doing. As it was the first time I had come across such audacious business set up, I asked them why did they not use a regular company, to which the answer was even more brazen: “because we are the only property developers who have cojones in the Costa del Sol, and will never hide, cheat or run away”.

The above came to my mind upon receiving a few enquiries on MRI (Macanthony Realty Investments) failed investments, two particularly relating to undelivered (yet paid) furniture packages on holiday homes by a company linked to the one above. I decided to investigate further, and, thanks to the ever expanding power of internet, came across several illogical pieces of content (videos, press releases etc.), in what appears to be a very determined but futile attempt to saturate Google first page. A few were relating to Peterborough United, under the very appropriate name of “Darragh Macanthony is part of the furniture”. Another was a video showing some nerds trying to salvage a chair from the powerful drag of a mighty electromagnetic MRI scan (after perhaps having swallowed the rest of the furniture packages promised by MRI, in what could be the only furniture-gobbling black hole ever to be discovered!).

I then went to read some of the -literally- hundreds of comments on threads opened to deal with the matter on various websites and blog posts (some being platforms for affected victims) that said that Macanthony, being part of the furniture, had also disappeared with it and of course the money. Before this happened, someone within the company must have been appointed to deal with the furious posters, as London law firm Carter Ruck has been on their cases, sending letters with notice of legal action.

Before I provide my opinion on what I believe may be the legal position of the victims, if we were to apply Spanish laws, I do have to admire Darragh Macanthony’s braveness in putting his own name to each one of the companies he set up in his few good years of glory, because, by doing this, he has seriously jeopardized the protection limited liability companies give to shareholders by precisely saying that the companies are him and he is his companies, and at the same time leading people to think that he might have set up all these companies to prevent legitimate plaintiffs from accessing his personal wealth to obtain legal remedies.

The doctrine of the lifting of the veil, originated in the US, has kept legal writers, scholars, judges and lawyers very busy for very long, but as far as Spain is concerned, the Supreme Court has established in numerous occasions that, if the existence of a limited liability company is simply an external form that does not imply a real separation of assets because it is merely a commercial format given to the activities of one individual (or a few), and thus it cannot be established that one is acting in the name of another person (a juridical person, in this case) but acting on behalf of oneself, then there is one single economic and financial reality.

I am always intent on not boring my readers but the Supreme Court has prevalence here, because it could well be the case the Mr. Darragh Macanthony is personally responsible, with his present and future assets, inclusive of his Peterborough Football Club, if a court of justice ever determines he has used his protective corporate shield to defraud legitimate expectations of people who contracted with one of his companies, all the while protecting himself.

These are some general notions alluded by the Supreme Court to establish when company owners should be stripped naked of the company protection:

  • Abuse of rights, which happens when one takes to the last consequences the juridical or corporate personality, when this official intention does not correspond to reality but to a socially and ethically reproachable activity.
  • Antisocial use of companies, which happens when, by use of the protection dispensed by using a company, one frustrates the expectations of bona fide clients whose rights are irreparably harmed.
  • Artificial creation of multiple companies, all owned by the same person, to obtain a  result contrary to law, pure fictitious entity, inconsistency of the juridical person, decoupling of one person into several companies, instrumentation, confusion of personal and juridical personalities, substantial confusion and identity, single economic unit etc.
  • Decapitalisation of the companies.
  • Facade or vehicle to allow someone to walk away with impunity from massive monetary damage inflicted to a numerous group of bona fide persons by willful misconduct, fault or negligence.
  • Company being the “alter ego” of the main shareholder.

All the above pertains to civil actions that may be available, but what about a criminal edge? This is always more difficult to prove, but already some colleagues have pointed out that failure to deliver furniture could be seen as a form of “criminalized juridical contracts”, a subtype of swindle which applies to people who, knowing that they will not be able to comply, enter into civil contracts and take money upfront, with the result of default and loss for the purchaser.

If it can be proven that MRI was taking on money for furniture package contracts when they were already defaulting on others due to financial inability, it would seem sensible for out-of-pocket MRI ex-clients to take this route.

Litigation, Property , , , ,