Buying Property in Spain? It Has Never Been Safer
I make no disguise that, professionally, I am closely connected to property, therefore this post, to many, will have limited significance due to obvious bias. If I was however to collate my experiences over the years, good and bad, when dealing in real estate in Spain, and I compare them with how transactions are conducted these days, I would necessarily conclude that it is now safer than ever to invest in property in Spain.
The crisis has operated like an unstoppable tsunami that has swept right across the property market, sucking in its wake dodgy agents, opportunistic developers, corrupt town hall officials, crooked mortgage brokers (like the one that conned Banesto out of a few millions) and a handful of funny lawyers. And with them, a myriad of very questionable anti-property purchaser practices that had dangerously became close to standard, in spite of almost everyone living, directly or indirectly, on these bona fide consumers or investors. It may be convenient to enumerate these unethical antics, by trades, to keep things in perspective.
We must remember that:
- Never again should anyone pay any monies to a developer unless a bank guarantee or an insurance policy is available…, obvious isn’t it? More the point is that, realistically, insurance companies will never touch advance off-plan property payments and banks are likely to request unthinkable amounts of collateral. The immediate consequence of this is that only the very cash-strong will be able to develop and this is just good news.
- Never again should anyone pay monies to a developer who:
- Does not own the land (Citrus Europe Ltd.)
- Does not have a building license (Aifos)
- Cannot give bank guarantees (not enough space in this post to name them),
- Uses the deposits for a Murcia development to run a complex in Venezuela (Proyectos Antele S.L.)
- Uses a bent-as-hell agent as a deposit-collector who then ends up keeping them (Grupo Mirador and Palmera Properties/Gotardo)
- Runs away with the portion of the purchase price, earmarked for cancelling the loan on your property, to Germany (Abacon Delta S.L.)
- Sells a half built complex to a third party and does not refund (Citrus Playa Macenas S.L. and Ready2Invest )
- Takes 60 deposits for an Almeria development to a UK company and then dissolves it (again, Citrus Europe Ltd.)
- Or all of those together plus sets up a Ponzi scheme, is known to have never built one property in his entire life in spite of claiming, at a fastouos ceremony, to have erected no less than 6,000 in the Costal del Sol, even persuading gullible Prince Albert to believe such bullshit! (Sun Golf Desarrollo Inmobiliario S.A. or Mr. Ricardo Miranda Miret).
- Never again will developers bully buyers as they were used to doing, as for example La Reserva de Marbella S.A. were experts at. I always wondered why was it that when you bought an apartment for €200,000 you were almost expecting to be treated like s**t, but if you went for a meal you were the king if you tipped handsomely…
- Never again will developers make you sign a private purchase contract for 70% of its real price, the balance of 30% to be paid to a Switzerland account, in advance, undocumented and, of course, never to be reflected on the private purchase sale deeds…(any ideas?? :))
- Very unlikely (never say never) will a Socialist/Communist Government, regional or otherwise, allow licenses to be granted on thousands of properties only to later, due to political opportunism and a spate of much publicized corrupt Town Hall officials arrests (which I agree with but without the cameras), instigate the revocation of almost all of these licenses, promote demolitions, warn of impending heavy fines on everyone, including the bona fide owners and, in sum, scare the hell out of thousands of those owners plus an undetermined number of potential investors in Spain.
With all we know now in respect of the degrees of criminality so many property developers ran into, an off-plan property industry that is almost non-existent (good old Taylor-Wimpey seems the only one around) and the property-associated corruption almost disappearing, the very few developers that are still around will no doubt jump through hoops to ensure that only la creme de la creme will be sold, at the right price of course!
This blog speaks volumes for me.
The mere mention of dodgy agents, bank guarantees, Ponzi Schemes and a handful of funny Lawyers is a common nightmare for thousands of people.
I personally think that we are on the brink of blowing all of this fraud out of the waters, and the creators will sink in their own wave.
The tide is changing that’s for sure.
Hi, Your first line stating “Never again……insurance policy is available” Then you say “Obvious isn’t it” Well if the Spanish Lawyers had been following the law of the land i.e. Lay 57/68 for the last FORTY TWO YEARS, we would not be in this position “obvious isn’t it”
Hi gord,
You seem familiar to me….
Are you a lawyer or are you just an advocate like myself?
Hi Gordon, you are right, lawyers should have been far more cautious when acting for property buyers in the boom years and a minority of these (lawyers) should have refrained altogether from taking on these clients, due to a clear lack of independence. I will say however that a large number of property buyers were so keen to invest that there were largely unconcerned with the legalities and only when matters started to go the other way, they began their search for culprits. Our firm particularly chose not to represent 60 clients buying from Citrus Group in 2006 and, notwithstanding that we made them sign a letter saying that we recommended them not to proceed, they still did…
In my opinion, it is important that an analysis of a combination of facts in the context of the “happy” years is done to know, within each individual case, how responsibilities are to be shared. Of course, I will admit to lawyers being 100% responsible in many instances but I cannot agree with blanket accusations that are nothing but demagogy.
Hi, As an Englishman who has purchased many homes throughout the UK, with the aid of our reliable English Lawyers, I thought that when we were purchasing a property in Spain, that we would deal with it as we did in England.
We engaged our Spanish lawyer, who we believed would act in our best interest and would be duty bound to ensure that all the requirements of LEY 57/68 were included. How wrong we were, he failed miserably, he ignored LEY 57/68, consequently we lost our life savings.
How can you say we were unconcerned with the legalities when we engaged a Spanish Lawyer to do just that.
Obviously I am not blaming all Spanish lawyers, but this is farcical, when a large number of professional people get away with ignoring a particular law. Who oversees the law ?
Gordon, many people bought without lawyers (mostly non-English) and others relied more in the agent than the lawyer. And more people than I can remember bought without bank guarantees and sold at a profit.
If your lawyer was negligent then you need to bring an action against him, as he is professionally liable for wrongful advice. If he never checked whether a bank guarantee was available at all, he was clearly negligent.
If there was a guarantee in place (a general one) but the individual one was never issued after payment was made, notwithstanding his attempts and notices sent to the developer, then he cannot be blamed although you would most certainly have recourse against the bank or insurer (back in the day, banks or insurers would not simultaneously given out the guarantee or policy against payment, but a few days or weeks after, except when you bought from a few strong developers, like Grupo C, who would hand them over on payment of the deposit).
If you property was finished, then the guarantee would have lost its purpose.
We must have enforced 200 guarantees and policies and are still doing so, some directly and some through the Courts.
I find this debate very intersting-
Gordon,
First of all-
Not all UK lawyers are reliable (I have personal experience of one or two that are out only to make a shit load of money).
Secondly-
Who was your Spanish lawyer that so badly advised you that you feel the need to express your frustrations to a decent law firm?
From a personal point of view I will be very interested in your answer, as I am in the process of setting up an association against a certain law firm in Spain.
Hi, Maybe your interpretation of negligence is different to mine, but he incorporated a clause in our contract which said “In case of requiring a bank guarantee or assurance of the monies paid will be obligated to provide it once the licence of work is obtained, the cost of this being with the purchaser” Therefore due to our developer never having planning permission etc. our property was never built,and we were never supplied with a bank guarantee. He also failed to point out that there were other clauses which gave us the right to cancel if the developer failed to do certain things within a certain time. He was definitely not an independant lawyer acting on our behalf.
Michele, I have no problems with naming this person however Mr.Flores may not wish me to name other lawyers.
Hello Gordon, naming is not a problem with me, we all have names after all. But I can also see that the developer has, personally, missapropriated your monies as if he had no planning permission, no construction was built nor a refund was made available, where did the monies go? Unless he can prove that he used them exclusively on disbursements related to that specific construction (mortgage interest, materials etc.), then Spanish law is very clear: your deposit has been diverted and consequently, missapropriated.
Hi Michele, The Spanish Lawyer in question is [EDITED] and in 2004 his offices were in Malaga.
Hi Mr.Flores, Unfortunately the developer was AIFOS, and I concur 100% with your assumptions, now with regard to my money I too would like to know where it has gone.
Hi Gordon,
The law firm that you mention is not the one that I dealt with.
I am in the process of setting up an Associaton to sue Martinez Echevarria (one of the largest law firms in Spain) through the Spanish Court System.
I am a member of a forum that has over 1300 members to date.
Are you in touch with others that have suffered the same experience as you?
There are options that you can take that are affordable.
If you can get a group together to fight your cause (it doesn’t even have to be a large group), you could do it affordably with 10 people, and if you get more on board your costs will decrease.
If you would like any info” then please post back here and I will give you my email address.
I can advise you of my findings from the research that I have done (not just me, there are a few of us working on this for the majority).
I have to add that Antonio Flores (that is Lawbird) will not be representing the association that will be filing against Martinez Echevarria (for reasons that I will not go into), but Lawbird as a firm will shortly be representing a group of us on a different matter.
I have had dealings with Antonio Flores and Lawbird for over 10 months to date (I recently met up with Antonio in Marbella), and I feel confident enough to endorse this law firm.
I will add that I live in the UK, and this is a genuine offer of help.
Hi Michele, I don’t suppose it will do any harm, although I have been dealing with this matter since 2004, and in more detail since 2008, when my English Agent kindly admitted to me that after four years of deceipt and lies, regarding progress reports,and my Contract translation, that my property was not going to be built, and the best part was, that AIFOS did not have any money for my refund !!!!!
I have joined the two petitions, one run by Suzie called “The Spanish Property Scandal” and the second run by Keith called “The Spanish Bank Guarantee Petition”
Hi gordon,
please send your email address to aflores@lawbird.com
Antonio can then pass your email address onto me and I will contact you.
Also, I have to add that Antonio can give you the correct guidance and advice if you are serious about getting your money back.
I know that it is difficult knowing who to trust, (and what to do for the best), so I can only add that you should go with your gut instinct.
Petitions are good as it proves the numbers of the amount of people being ripped off, but at the end of the day action needs to be taken to get a result.
All is not lost, but it will take a great deal of hard work to seek justice.
Hope this helps,
Rgs,
Michele.
P.S
Is this your lawyer/law firm?
[EDITED]
Hi Michele,First of all to explain a little more, MATA was my conveyancing Spanish Lawyer from 2004 to 2008, which was when my English Agent confessed to me that after four years of lies, that my property was never going to be built. After some brief enquiries I soon ascertained that MATA was not an independant lawyer acting on my behalf, so I changed lawyers and engaged Lawbirds, who over the following three years took AIFOS to Court, we won our case, we even had an embargo, but not one penny was paid by Aifos and as you are probably aware, the rest is history. I am now awaiting the outcome of the “AIFOS CREDITORS” decision. So I am at a loss as to what else I can do, without this one piece of paper the “BANK GUARANTEE” !
Regarding your e-mail address for MATA, I am not sure, although how many lawyers have the same name ?
hi antonio..i have a property in alicante, it was purchased with cash in 2003, my name and my partners name are on the deeds..she left of her own free will and returned to england in the august 2009..the property is worth around 180000 euroes, she has recently asked for £30,000 to have the villa signed over to me..i have paid the taxes, electricity, water, food, diesel etc out of my own private bank account for the last 5 years.
please advise
Thanks Antonio for such a great post, Buying property in Spain is really not safer at all.
After reading your post and a other blog post http://www.thespanishbrick.com/2012/property-news-and-views/some-qa-about-spanish-property-today/2938
I am really surprised that what is all happening in the Spanish Property market.
As i was thinking to invest in Property in Spain, So please response will it be safe right now to invest or should i wait some more…
Jimmy, I believe that the market is safe to invest in although taking the necessary precautions, that is. A different thing is whether one believes it will keep going down or, if one has found something that suits him/her, if that particular unit will also drop.