Options before final Court Hearing

[Unregistered]

Hello.
We paid 30% deposits for an off-plan house in Valencia - we also paid in full for extra building work that was not standard (larger lounge, garage, an extra room) - the house was finally completed but over 18 months past the contract deadline due to various delays with the builder and local authorities (the LFO only happened a further 10 months after the house was finished). Our plan was to relocate. We sold our house in the UK to finance a large part of the purchase and were going to have a small mortgage to complete the purchase. So we rented a house in the UK on the strength that the house in Spain was "about to be ready"... this didn't happen and we have been in rental accommodation ever since (nearly three years later). Because of the delays our savings have been depleting, then during this the Pound crashed against the Euro which has now meant that we cannot afford to complete as the mortgage required is too much. So on the advice of our Spanish lawyer we decided to take the builder to court. The first hearing (in November 2009) took about 12 months to get to court and we now have another (and final hearing) in April. This first hearing revealed that the builder didn't have any money to pay our deposits back (approx 90,000 Euros) and that they have a large mortgage on the property. We are now hearing that the builder is in severe financial difficulty and if they go into liquidation the bank will take the house leaving us with nothing. Our lawyer says that we should win in April but there will be nothing for us. I asked the lawyer about putting a charge on the builder's assets and was told that Spanish law is different to English law. Our original bank guarantee was never renewed and then when checked it was found to be fake.
What happens if the the builder is still in business at the time of the April hearing and we win the case? Does the Court sieze the house, sell it and give us back the money? We cannot seem to get any clear answers. Some of the other purchasers on this development are also in the same position and 3 have sold the propety onto someone else and have taken a loss to try and recoup some of their money. This could be another option for us. Any help would be greatly appreciated before it is too late.
Thanks for reading this...
P & R

[Lawbird Lawyer]

Dear Sir or Madam,

You depict a difficult case.

I'm surprised you have not set a charge (provisional embargo) on the developer's assets, merely as a precaution. As we we write, there's no point in litigating if there are no assets. It's just throwing away good money after bad litigating.

10 Reasons Why Your Case Against a Spanish Developer May be Thrown Out of Court - 30th September 2008

Quoting an excerpt:

It is not advisable in general to sue a developer which has no assets under his name; a law suit in such a case would be a complete waste of both time & money. In short, it would be putting good money after bad. That is why on suing, your litigation lawyer will endeavour to find developer’s assets and request from the judge, if needed be, to place a provisional charge. This will effectively avoid the developer selling-off these assets as they have a legal hold placed on them. This encumbrance placed by your lawyer will ensure your financial interests depending on the ruling’s outcome.

More on placing charges on debtor's assets:

Is Litigation Against Spanish Developers Worthwhile? - 23rd May 2008

Quoting an excerpt:

What happens if a developer files for bankruptcy?

In accordance with Law 57/68 a purchaser can claim on their bank guarantee or insurance policy during the construction process, as they are executive titles which secure their interim payments. If they don’t have the guarantees or insurance they stand to lose all their down payments.

That is why if you do not have a bank guarantee, on filing a law suit, a litigation lawyer will request provisionally for a hold to be placed on the developer’s assets until the final ruling. This stops the developer from selling these assets and they act as a sort of guarantee (it isn’t really a guarantee in the sense of a bank guarantee) to recover the stage payments at a later date. The judge has to decide on whether they will allow it or not. The plaintiff’s lawyer will have to prove not only that his client has a case but also that the developer is undergoing a delicate financial situation which may lead him to insolvency in the future.

On seizing the developer’s assets the judge will request that you place an amount of funds in court as a guarantee for the developers’ frozen assets. This amount varies for a standard off-plan purchase in proportion to the value of the assets requested to be frozen. The aforementioned amount is refunded to yourself when the final ruling is published, which puts an end to litigation (long before the assets are sold off in a public auction). However if your lawyer loses the case these funds may be used by the defendant as guarantee. A further non-refundable amount of approximately 2.500€ will have to be paid as well as associated expenses on executing the developer’s assets (auction appraisal, execution procedure, barrister fees etc).

However, in many cases the developer’s bank accounts are frozen (with funds in them) or out-of-court settlements are reached before the ruling, so there is no need to provide the guarantee on the developers’ frozen assets because the stage payments may be obtained by other means.

I trust the above is helpful.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Unregistered]

4 of us have used a local lawyer to start proceedings against a developer for not completing on time, we won the case in May 2009 at a cost of 9k euro each
lawyer advised that we wait for the developer's appeal before we apply for the "execution of the sentence".
the appeal was presented in June 2009 and we applied for to the court.
in the mean time we paid another 4k euro each to defend the appeal.
no hearing date being given for the appeal or the execution of the sentence.

since we won the case, how long before the court can give order for the execution? is there time limit? the lawyer says it is up to the court!!
can we force the developer to pay us back our deposit once the execution order is granted or do we havt to wait until the appeal hearing?
and is there further procedure to force the developer to pay after the execution order? and what is the time scale?
is there any goverment website showing litigations process and time allocated for each stage of the litigation and is there a process to speed court dealing with matters.
for example: is there maximium time for the court to deal with our application for the execution of the sentence?
many thanks
Salah Kamil
UK

[Lawbird Lawyer]

Dear Sir,

It is up to the court, yes.

Please be advised we cannot represent those who have already issued legal proceedings against defendants.

Yours faithfully,

[gulabgang]

I share with you your fear of increasing legal costs but 80,000 Euros is a very substantial amount which you are entitled to get back, with interest, due to the developer not complying with their part of the contract (when you did). In addition to this legal action will also request that costs are awarded and that you therefore walk away without having to pay costs.