Is my lawyer professionally negligent?

Hello,

Could someone who understands Spanish law please advise whether I can sue my lawyer for professional negligence?

Our developer has gone into Administration, their bankers have repossessed the site, and in court last week, allegedly, the bank offered in full and final settlement an amount equivalent to 25% of all deposits paid by those people buying off plan. I say allegedly, as the lawyer does not even bother to return phone calls, or emails.

I understand 15 or so buyers , ( all Spanish) have received full refunds.

I understood my lawyer had a professional obligation to request a bank guarantee - Is this correct?

My lawyer is going will take 5% of the money recovered, which is a kick in the teeth givn I have paid him for doing the conveyancing, and is suggesting we go after the developer. Seems a bit pointless to me given the developer has gone bust.

Any advice would be gratefully received.

Ps, this is the letter we received. Sounds like a load of rubbish to me.

Dear Sir and Madam

The purpose of this letter is to update you the situation of the “CONCURSO VOLUNTARIO DE ACREEDORES� (receivership situation) of ACONSA - the developer of the Euro Cam Beach complex in Torrox - declared due to its situation of financial insolvency.

The Administrators have requested the definite liquidation of the company. This means that, apart from the practical impossibility of paying the credits, the purchase contracts have to be cancelled. Since the Bank will either be awarded or will acquire the buildings which were in construction and abandoned, it has offered the buyers a compensation of 500.000 Euros, which will have to be distributed proportionally to the deposits paid by each one: this implies a refund of approximately 25% of the amounts paid.

Accepting this offer not only means receiving money, but it also signifies that the rest of the quantities will not be given up and that the claim will be maintained until the end against the developer. It also implies the immediate resolution of the purchase contracts and to this end, it is necessary that you make a special power of attorney, which template you will find here attached. It is very urgent that you have a Notary officialise that special power with his signature and an apostille and that you send it to us to the direction of this office.

The moment the contracts of resolution are signed, the Bank will give the amount offered and we will proceed to distribute it among the buyers, deducting, as you already know, 5% of the amount claimed to cover the Court Proctors and the Lawyers´ fees for the legal actions necessary to carry on with the claim.

It is very important to insist on the emergency of having the special power of attorney done and sent to our office. This operation has to be all done during the first fortnight of October, since, if it is done later, it will be even more difficult to carry it out and will imply a possible risk of not receiving any refund at all.

Should you have any questions, please feel free to contact us, either by phone, email or any other way you prefer to the following contact details:

“Name of lawyer redacted for obvious reasons�

Dear Sir/Madam,

I'm sorry we are unable to advice further as we lack the facts and we're unfamiliar on your predicament.

Yours faithfully,

Hi, thanks for this.

I have sent a request for someone to contact me from your office, however the question I am posed was simply asking whether my lawyer was duty bound to get a bank guarantee to protect my deposit. He hasn't and therefore, can I sue him for not doing so. The apartment was off-plan,and I understand under spanish law, the lawyer must seek to get a guarantee to protect deposits.

Am I correct in my thinking? If so, surely he is negligent in not doing so.

Dear Sir/Madam,

Law 57/68 establishes that it's the developer's duty to hand you a bank guarantee or insurance policy to secure your stage payments in an off plan purchase. The law doesn't mention anywhere it's the lawyers' obligation.

Furthermore in the Building Act (Law 38/99) penalties are imposed only on developers for non-compliance, not on the conveyance lawyer handling for failure of compliance on the issuance and obtention of bank guarantees.

That's what the Law rules.

Now we can start a contentious debate on whether lawyers are responsible or not to obtain these BGs from developers on behalf of their clients.

The fact is that in light of the above laws which specifically rule this matter nowhere does it mention that lawyers are obliged or its part of their duty of care to obtain them.

We've written an article that endeavoured to wrap-up the matter of Spanish bank guarantees for off-the-plan properties. It's worth a read:

Bank Guarantees in Spain: All That You Ever Wanted to Know but Were Afraid to Ask - 12th November 2008

Another matter being what is our personal stance on this matter.

Our opinion is that it's obvious it's part of the integral duty of care of any conveyance lawyer towards his client to ensure that each and every stage payment, including the initial security deposit which strikes the property off the market, is secured by means of valid bank guarantees or insurance policies.

But our opinion is non-consequential.

What matters really is what the Law rules and nowhere does it rule that it's the lawyers' duty, much less his responsibility, to secure them. Which is why on taking this matter up to a Bar Association it unsurprisingly fails each time as from a strict legal point of view the matter is clear, in our humble opinion.

I believe one should clearly distinguish between lege ferenda and lege lata; even more so lawyers on passing legal advice and opinions in public venues such as fora.

I am fully aware that the above statement may cause some controversy, but that's the legal exposition of how matters are currently. Which is why we always add the tag on our legal articles and advice.- make sure you hire an independent lawyer/law firm. Many of these legal pitfalls are easily avoidable on having hired someone independent that cares only for the client's interests and has no vested interests of their own lurking away in the back of their minds.

You can of course always follow the path of claiming against their Professional Indemnity Insurance, providing they are registered lawyers, and see how that turns out.

If the laws need to be addressed on this grey area, so be it. But the above is a brief exposition of how things are currently.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

I am an English lawyer and read lawbird's post with astonishment not to say shock and horror. Frankly the idea that your lawyer has advised you to pay a deposit without confirming that all the necessary paperwork is in place and particularly a bank guarantee is horrifying to me. I own my own firm in Northwest England. If any of my staff had acted in this fashion two things at least would have happened. 1. They would have been out of the door with their P45 clutched in their hot little hand. and 2. I would have expected to have made a claim on my indemnity insurance.

The idea that it is not the lawyer's responsibility to ensure that bank guarantees are in place is frankly outrageous. What are you employing the lawyer to do? Answer - conveyancing. What is the object of conveyancing? To transfer a good title and to ensure when purchasing off plan that the client's funds are protected. Has this been achieved? NO.

Why has this not been achieved? Because the lawyer did not check that the bank guarantee was in place.

Why did the lawyer not check this? Your guess is as good as mine.

What should you do? Employ a decent lawyer and settle in for the long haul. If Spain does not have a code of conduct for its lawyers similar to that of the SRA in England then it fails in its obligations under the European Convention. Simple as that.

Rant over.

Dear Colleague,

I understand your rant.

If you re-read my post it says that we believe its part of the integral duty of care of the conveyace lawyer to ensure these bank guarantees are in place as it stands to logic.

However, what the original poster is asking is if there is any redress against his lawyer on having failed to secure them. My reply is that, in strict accordance with our laws, it's the developer's duty, not the lawyer's to obtain and issue a bank guarantee. Laws impose fines exclusively on developers on failing to issue them to off plan buyers. There are no fines imposed on lawyers for not obtaining them. Moreover, if you take such a case before one of the The Law Societies they will normally rule that the lawyer was not responsible in attaining them, again with strict accordance of our laws.

I agree with you that the laws need to be amended on this point. But that's how things are right now and that's how I tell them. Now you may find it shocking but that's the current state of matters relating to this point.

Which is why its very important that you can rely and trust on a law firm to secure them on your behalf.

And just to correct you, you must first pay and then the bank guarantee is issued, normally 30-40 days after. It's not the other way round. This could also be changed of course to better prtotect the interests of consumers.

Yours faithfully,

Dear Sirs

I am not all that clued up on the legalities of these bank guarantees and how does they really operate in the favour of the buyer when clearly they did me NO good when the crunch came. My property was delayed on delivery by 6 months by the builder to March-2009. But March-2009 came and went and there was no news from any parties including my lawyer or the builder that when will the property will be delivered. I was under the impression that I could with my lawyers’ help would be able to enforce my bank guarantee soon after March-2009. But I was told NO it’s at the discretion of the Bank or Judge or whatever - I don’t quite know what legal argument on this is. Anyway as far I was concerned the bank guarantee did me no good or my laywer for that matter.

Even though the property was completed Nov-2009 but not having a licence of habitation I should have been entitled to make a claim on the bank guarantee. But alas I was told NO; I must cancel the contract and Litigate. This is the only option.

So why the bias of buying in Spain is weighs towards the builder when things go wrong and it’s the buyer who has to do all the hard work of fighting for his rights and paying for in many ways - financially, emotionally, and endless stressfully.

So my plea is this that I ask humbly to our dear Spanish Lawyers please do not abandon us in this needy times of making claims on breached contracts and help to restore our faith in Spain and its legal systems.

Lawbird,

I have read your reply with incredulity. Forget what the law says. What does the Spanish equivalent of the Solicitors Regulation Authority say about a lawyer's duty to clients? If it does not say that your duty is to investigate title properly and provide a comprehensive service to your client and not to act in a case where there is a conflict of interest, then frankly it should not be in business.

If I were in the unfortunate position of many of the clients of spanish lawyers, I can assure you that I would be beating down the doors of the local law society to make a serious complaint about the way that my affairs have been handled.

To rely upon what the law says is only half the answer. Are you required to have professional indemnity insurance? If not, why not? And, further, if you do not have insurance, how are spanish lawyers meant to compensate their clients when their work falls way below the standard expected of a reasonably competent lawyer and the client suffers loss as a result?

There must be something along these lines, surely to God? Or, am I living in an over regulated world?

Dear Colleague,

All registered lawyers to practice Law in Spain have Professional Indemnity Insurance, yes. We are always insisting from this forum to hire only such registered lawyers. In fact we even have a page warning against unregulated lawyers and law firms:

Public Warning.-Scammers passing themselves off as Spanish lawyers and law firms - 13th March 2009

Again, I repeat I understand where you are coming from. But the law is the law. In this case it's a law that is now 41 years old and needs serious amendment to correct many issues, amongst them this one you correctly point out.

Cases that have been brought against lawyers on failure to obtain a bank guarantee are seldom won because the laws are clear in our opinion. I repeat once more, that one thing is lege ferenda and a different matter is lege data. With all due respect, I believe you are confusing both.

The poster asks if there's any redress against the lawyer on failing to obtain them. But the fact is that if you take such a case before the Law Society or claim against the Lawyer's insurance cover it will most likely fail for the very reasons I've explained above and that can also be found in my article on the matter:

Bank Guarantees in Spain: All That You Ever Wanted to Know but Were Afraid to Ask - 12th November 2008

I can only write on behalf of my law firm, we've always obtained them and we've had zero complaints on this issue. We do not condone such lack of duty of care, we are merely pointing out that redress on this matter is rarely successful and many people can attest to this.

My posts are factual as per the current laws. My reply was that according to our laws, lege data, it is not established it's the lawyers duty, whether one agrees with it or not, period. This is simply a fact and we can discuss the matter all night long if you wish but it will be lege ferenda or what the rules and laws should ideally be not as they stand right now.

All reputable law firms and lawyers obtain these bank guarantees and execute them recovering the funds on behalf of their clients. The gist of this is that you must hire only lawyers or law firms which are reputable and you know you can trust and rely on them to obtain them.

The poster above can lodge a complaint before the Law Society if he wishes or claim against the Professional Indemnity Insurance of the lawyer (at an expense which will be even greater if he loses). I just stress that these type of actions are often fruitless because of our existing laws.

Law 57/68 clearly states it's the duty of the developer to issue them, at no time are lawyers mentioned. Moreover, the fines which are imposed in other laws, such as the Building Act, on failure to obtain them are imposed only on the developer, not on the lawyer. Hence the failure in the actions taken against lawyers on this matter.

Once more, I repeat that I agree with you and share your rant, but that's how things are and unless these laws are changed will continue to be.

Regards,
Raymundo LarraÃ*n Nesbitt

Quote:

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Originally Posted by Unregistered

Dear Sirs

I am not all that clued up on the legalities of these bank guarantees and how does they really operate in the favour of the buyer when clearly they did me NO good when the crunch came. My property was delayed on delivery by 6 months by the builder to March-2009. But March-2009 came and went and there was no news from any parties including my lawyer or the builder that when will the property will be delivered. I was under the impression that I could with my lawyers’ help would be able to enforce my bank guarantee soon after March-2009. But I was told NO it’s at the discretion of the Bank or Judge or whatever - I don’t quite know what legal argument on this is. Anyway as far I was concerned the bank guarantee did me no good or my laywer for that matter.

Even though the property was completed Nov-2009 but not having a licence of habitation I should have been entitled to make a claim on the bank guarantee. But alas I was told NO; I must cancel the contract and Litigate. This is the only option.

So why the bias of buying in Spain is weighs towards the builder when things go wrong and it’s the buyer who has to do all the hard work of fighting for his rights and paying for in many ways - financially, emotionally, and endless stressfully.

So my plea is this that I ask humbly to our dear Spanish Lawyers please do not abandon us in this needy times of making claims on breached contracts and help to restore our faith in Spain and its legal systems.

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Dear Sir or Madam,

If there's eight months delay as you write you can already start to execute them if you wish.

Execution of bank guarantees is not an easy task as there are always many different issues involved.

Bank Guarantees are in themselves an Executive Title that follow a swift Execution Procedure. That's the theory anyhow.

Having written the above, in practice, this is only if there is no opposition from the bank's or insurance company's lawyer. If there is then the case may be thrown out of court. In your case the property is finished (probably with a Certificate of End of Construction but still lacks the mandatory Licence of First Occupation). You would then have to pay for the expenses of this Executive Procedure on failing it and you would have to follow what is known as an Ordinary Procedure to execute the bank guarantee, which entails again more legal expenses. An Ordinary Procedure is far from swift although the new law 13/2009 tries to shorthen the timeline to deliver rulings.

The whole process may wear down some people as its lengthy and expensive at times.

As I do not know the facts of your case I dare not give an opinion on your case.

Yours faithfully,

I have now been told by the developer that he has obtained the LoFO and as far as he is concerned he has filled his obligation and he does not want to refund the deposit rather he wants me to complete.

My questions are:

Why does the Cancellation of the contract NOT automatically come into force and the Bank pays up against the Guarantee already in place? Surely the once the contract has been breached - the other party in this case the builder - the Bank should honour the Guarantee!

Why does the Spanish justice system allows this sort of clear cut cases to drag on and have the buyer go to more expenses and instigate litigation?

Why the legal ethics in Spain has have gone out of the window?

Why does the Lawyers do not fight for the rights of the party who has been wronged?

I know only the problems get aired. That’s because there are just too many problems. I very much hope that my problem gets sorted and that I give you my word that I will the first one to commend the Lawyers on this forum who are now handling my case.

Here is wishing for the justice to be done and my restoration in Spain and its Legal system. So that I can resume my holidays to Spain and eventually buy the property that I really want rather than the one that I was pushed into and now in trouble!

Thank you for letting me use the space on your Forum to air my views.