Antonio Flores’ Blog

It could have not gone better: in the space of 24 hours we had managed to meet up with members of the Northern Ireland Executive, deliver the proposal (PDF), be interviewed by the BBC and the Ulster TV, and even catch a flight back on time, not before downing a couple of good local beers.

If the Northern Ireland Government decides to adhere to our proposal, which they will carefully consider in the next couple of months, it will be the first time –that we know of- that an autonomous government supports, in visible way (rather than with well-intentioned words devoid of any practical consequence), a large group of consumers defrauded in a failed property investment scheme.

Antonio Flores Litigation, Property Ocean View Properties, OVP, Ricardo Miranda Miret, Sungolf Desarrollo Inmobiliario S.A

As tempting as it may look, “handing over the keys” to the bank (dacion en pago in Spanish) , without pre-arranging this via a Notary Public and disappearing, has to be done with care, for being pretty dangerous, unless you have the right figures. Or you happen to have been lucky enough to have been judged by the court in Navarra that has ruled that the bank is not entitled to not accept the “handing” in of the keys, in a very relevant decision.

This ruling (to be discussed on a next post), however important it may seem, does not take away the horror of our mortgage foreclosure legislation. The reason for this happening is that Spanish provisions in respect of foreclosures, unlike other countries, stipulate that auctions will be valid so long as the minimum bid is over 50% of the auction start price (the latter value generally being pre-agreed when signing the mortgage deeds and equivalent to the valuation), irrespective of the current outstanding debt with the bank.

I have taken a real-life example, on a property at Jardines de Casares, and to understand this have attached the following:

• The print out we got from the bank after the property had been repossessed, showing the existing debt and the value the property achieved at auction.
• The value given to the property, in 2006, for auction purposes (coincidental with the valuation).

So we have then that property was valued, for auction purposes, at €350,700 (the auction start price), the outstanding mortgage was of €243,217 and, as usual, nobody of interest turned up (only retired law-lovers and the occasional passers-by) .

The auction kicked off with only the bank being present -and a few curious skinned time wasters -rapidly skipped the 70% ASP mark and ended being repossessed for 50% of this value. And the “summarily executed” debtor ended up, as a consequence of these unfair laws, without a property but still owing €67,867 plus a further €100,000 approximately in legal costs and arrears interest (19% p.a.).

In the above case-study, from the debtors perspective (which is the one we are interested in here), the following scenarios and consequences were possible (although only scenario 5 was probable, considering the value of the property and the area):

1. Bidder(s) turn up and bid over the debt (being over 70% of the start price): we walk away with no property but no debt and probably some spare cash.
2. Bidder(s) turn up and match the bank debt (between 50% and 70% of the start price): we walk away with no property but no debt. In this case we would have the right, within 10 days, to bring a third party to improve the bid.
3. No bidder(s) turn up but the bank repossesses for the debt value: we walk away with no property but, luckily, no debt.
4. No bidder(s) turn up and bank repossess at over 70% of the start price but under the debt: we walk away with no property and the horrific auction negative-equity.
5. As point 4 but bank repossess at under 70% of the ASP (sometimes at 50% of start price or the value of the debt): we walk away with no property and a larger auction negative-equity, worst than 4. However, albeit illusory, we still have 10 days to bring a third party to improve the bid, up to 70% or the debt.

Under the current Spanish foreclosure system, if we find ourselves in the scenarios of points 4 and 5 we can end up being chased for the difference (which is fictitious although becomes very real once the Judge’s gavel goes down!), calculated by subtracting what article 670 of the LEC (civil Procedural Act) allows the bank to keep the property for, from what we owe them, just as the couple from Wiltshire are experiencing, to their sorrow.

And so, what options do we have? Not many, but I can propose two:

• Stop paying your mortgage and try to convince the bank that it is silly to go to Court and clever to take the property back, because a) you have no property in Europe and b) you are going to live in Peru for the rest of your life (don’t be shy here, concoct a proper story, set them up!)
• If you are not in any of those scenarios, or are too honest to lie, find a friend who will be happy to put in a dummy bid to push the auction value up to the debt you have with the bank. Your friend will have to put down, as a deposit, 30% of the starting price (just over €100,000), and needs to get the bank to make a first bid equivalent to the debt. This will free you from the negative equity, and your friend will be free to get the deposit back, job done satisfactorily! Careful though: the bank’s representative may push his bid short of the debt, making your friend put a higher bid only for the bank to then…pull out. Now your friend has a problem!

And bear in mind the following:

• Most auctions end up with the bank repossessing as they will not -yet- settle for anything less than the outstanding mortgage capital (even if it is way over the market value). We should see a change happening towards mid-2011, as the Bank of Spain has already warned.
• Bidders currently discard 95% of the auctions happening in Spanish courts.

Antonio Flores Mortgages, Property bank repossessions, dacion en pago, foreclosure in spain, spanish property auctions

My recent trip to Northern Ireland could have not ended in a better way: being able to enjoy the stunning beauty of the Northern Irish countryside, mountains and beaches. Strapped to a 4-seater chopper, owned by one young and successful would-be client, we followed the circular route starting off at Ulster Airfield, over Belfast city, across the country side and over the Mourne mountains (no wonder are partly owned by the Natural Trust), the 5-mile long Murlough Beach, returning alongside the coastline of Antrim (where dive-hunting seagulls and even sea-lions could be spotted, or so I thought them to be, as well as countless Saturday beach-strollers).

The underlying motive for my motive is less indulging, as I was meeting 70 or so failed investors who, owing to the combined efforts of Ocean View Properties, Sun Golf Desarrollo Inmobiliario S.L., it’s alleged fraudulent pyramid Ponzi Scheme and, sadly, a few thoroughly bent lawyers, had been ripped off in different degrees of gravity (one investor in particular paid €850,000).

Notwithstanding the economical adverse circumstances, a total loss of confidence in the legal system as a whole (both in the UK and Spain) and an ever-present desire to put this traumatic episode behind them, 2 organized groups decided to formally fight for their rights. Among them, my host for the helicopter trip who will, if I can convince him that we will not be shot down, spearhead an airborne assault on the HQ offices of Sun Golf Desarrollo Inmobiliario S.L. in Madrid after a quick visit to Monaco’s Prince Albert, whose arms helped break the ground on the Punta Perla development (or bluff).

If only NI had the Dominican weather, none of this would have happened. If you don’t believe it, see for yourself: can you really spot the difference between Punta Perla and Murlough Beach?

My next trip to Belfast is scheduled for the 26th of January, when the group representatives and myself will be meeting NI Government officials appointed to act on behalf of the Office of the First Minister and Deputy First Minister. If we can successfully convince them of the beneficial implications of the NI Government joining the Spanish Court case, both in terms of support for the group action but also on behalf of the NI society in general, we will have achieved a huge result.

Antonio Flores Uncategorized Estepona Beach and Country Club, Lawbird, Ocean View Properties, Punta Perla, Punta Perla Caribbean Ltd, Ricardo Miranda Miret

The Palmera Properties story has all the ingredients of the ordinary run-of-the-mill property investment bungle:  dishonest real estate agents,  contractual misrepresentation, down payments never paid down (kept by agents), nor refunded (to our clients, that we know), unbuilt properties, invalid contract reselling, sluggish courts, bumbling judges unkeen on seeing instances of criminal misappropriation when even a child would see them, frustrated lawyers and very angry buyers.

The difference perhaps with other similar rip-off stories is that Palmera Properties, after leaving around one hundred or so clients with no money and no property, still operates, under the same trading name, although they will not admit to it unless, that is, you pretend to be a willing buyer from Scotland and awake their greed.

Today’s story is about an undercover operation triggered by a client who, having been awarded an unenforceable favourable ruling by a civil court in Torremolinos (due to clever concealment of assets), discovers that Palmera Properties, a now one-man band led by Jesus Gotardo, is still operating.

From the new Palmera Properties Website, Mr. Gotardo has resumed his activities, the same ones that merited an arrest warrant being issued by a Madrid Court (he is currently on bail).

Such cheek could not go uninvestigated, and so we commissioned a Brighton-born journalist with a very plausible rhotic Scottish inflection, who, purporting to be a property investor, met up with two agents sent by Gotardo, a meeting arranged through the above website by a mysterious “Ruben”. And what we found is that Mr. Gotardo, of all people, is again dealing in real estate, notwithstanding his history of calamity, his huge indebtedness to creditors (five from our practise among them) and his firm intention of not repairing the immense damage caused to his ex-clients other than by offering…another property.

Sharp Gotardo smelt a rat an hour after the meeting finished and was quick to send “Mark Biggs”, “the journalist from Inverness”, a threatening email, which I quote below:

Dear Mr Biggs

I am very surprised of the report we got from your meeting. it seems that you hide the fact that you are an existing client. We are here to help with any issues. Palmera as a company is facing a bankrupcy procedure. We just acted as agents and we dont hold any deposits as these were paid to developers. We can help if you honestly let us know your situation without making our friend to loose time.

Given the circustances and based on previous experiences we have no other option than keep record of your false intentioned emails and testimony of our friend independent company and put these events under the knowledge of spanish authorities to avoid any threat or errors in your behave in this situation ( last people tried these tactics spend 2 weeks in spanish prison i can send you sentence if you want me to)

Should you require our help please be honest an we will help as we can. What is the development you paid for and we will give you full report.

Palmera is not based anymore in malaga  and we are just assisting our people with some relations of friend compamies ready to help. To abuse of these good will factor will only generate problems and lack of help for your situation.

thanks

Ruben

I wonder if that Spanish prison he is talking about is the same that gladly opened the doors to him… But as the meeting is the central theme of this post and a picture is worth a thousand words, we decided that we had to film the meeting, which you can now watch.

Video

Start: Lady says that Gotardo is not her boss, that he´s just someone (contact) who sends the client. When asked if he is an agent, after thinking up a response during 3 seconds, she says that she thinks so…
Verónica is who receives emails from Gotardo (Ruben for us).

0’52”: Lady says that Gotardo and “Ruben” are friends of the owner of her company. She confirms that Palmera Properties makes money out of this and that some commission would go to Palmera Properties. Young Verónica, on the contrary, says that Palmera is just a contact by “friendship”. Lady again confirms that it is a split commission deal because Gotardo is who brings the client. Veronica says Gotardo could not come as he had another meeting. She then adds that he has nothing to do with this.

1’58”: Palmera guys are friends of the President of Mangle. When asked again about the commission, Veronica smiles, doubts for a second, and says that she thinks so, but that she is not sure.

Antonio Flores Litigation, Property, Scams Jesus Gotardo, Palmera Properties

Banks must have done something really dodgy in respect of these Russian-roulette swap contracts, because, besides the deluge of rulings tagging these instruments as the epitome of banking misrepresentation, one particular court in Madrid has now issued, at the request of the Banking Services’ Consumers Association, a search warrant in the central offices of the BBVA bank, the second biggest in Spain.

The execution of the measure was set for the 21st of December, since the bank was refusing to provide the court with a list of consumers that had signed up to the protection provided by these contracts against interest rate fluctuations, thinking this was the case. To avoid further embarrassment, BBVA decided to hand in the paperwork a few days before the deadline.

Statistically, I would say that 3 courts out of 4 are now rendering these contracts as null and void since they were sold as an insurance cover in the event of heavy interest rate fluctuations (upwards obviously) but craftily concealed the scenario where, if they went down, the bank would be cashing in. Courts understand that these contracts hid a complex financial-speculative derivative product that has caused thousands to lose millions in favour of banks.

Fortunately for lawyers acting on behalf of victims of this misrepresentation, each bank has a standard contract that applies throughout Spain, so, once a ruling is reached by a Court in respect of say, Banco Sabadell or Caja España, it is very difficult for a claim brought under the same grounds to be rejected by a different court (but may happen, after all, it’s the judiciary!).

So what’s the solution to this then? Well, if you ask me with my lawyer’s hat on, I’d say instruct me! But if you want to give it a go yourself, and give me a miss, this is what I propose:

1. Ask your bank for a copy of the swap contract, in case you don’t have it.
2. Go to the extraordinary website of the Asuapedefin and Apymifid associations and try to find the name of your bank among the 100 or so favourable rulings posted there (the column on the right of the screen). If you can find it, print it.
3. Get a letter out to the bank advising them that, due to the swap contract’s absolute nullity, you will not accept any more withdrawals from your bank account.  I have typed up a letter (see below) that will help you address these issues, and which you will need sent via official channels, i.e. “burofax”, irrespective of whether you hand-deliver or fax it, to ensure acknowledgement of content and recorded delivery, for litigation purposes.
4. If you can personally go to the branch to deliver the letter, do it. If you have found a copy of a ruling against your bank, don’t forget to enclose it.
5. The following can happen once they get the letter:
   1. that they bin it (very likely),
   2. that they make you an offer or settlement, which would normally come in a roundabout way so that you don’t notice that what they’re really after is to sting you once again (likely),
   3. or that they accept tearing up the contract and reimbursing you the sums you have lost so far (very unlikely).
6. If they offer you an offer or settlement, analise it carefully. At this point you need to understand one thing: a derivative contract is an agreement that is known, to financiers, as a “zero-sum game”. This means that one party’s loss is equal to its counterparty’s gain and therefore, the only way for you to win is that the bank loses, and vice versa. So when negotiating, do keep this in mind.
7. If you get really tired of trying to get an answer from the financial entity, then your best bet is to hire legal representation and go to court. This will allow you to get on with your life and with more productive matters.

Documents

• Swap Cancellation Letter to Bank Template (PDf – 121Kb)

Antonio Flores Litigation, Mortgages, Property abusive mortgage clauses, Banco Sabadell, BBVA, Caja España, mortgage clip, spanish swap, Swap Clause