El blog de Maria

The Ministry of Economy and Finance of the Community of Madrid together with the Property Management Business Association in Madrid, the regional Enterprise Confederation and the Chamber of Commerce of the same geographical area presented yesterday the Code of  Good Practices aimed at businesses within the field of real estate  management and  brokerage. 

1) May 2006:  Signed a contract for an off plan property, estimated delivery date 18 months from the building permit.

2) January 2010: No building permit, no brick.

3) I have no interest in that purchase ... can I solve?

According to the Civil Law doctrines of "loss of the thing due" we can affirm that the delay of the start of construction for a period of several months, without good cause and non expressly allowed by the consumer, gives ground for contract cancellation.

According to Sentence of the Provincial Appeal Court of Valencia dated September 2009, Case law has broadly held and established that a situation of abnormality, resistance or excessive delay opens the gate to cancellation. As these irregularities break the interest in the contract originally agreed, or  turn it into useless and even harmful, frustrating  the contract's inherent economic order  which is  within the cause, breaking the mutual  contract good faith”  ( FRAGRANTE FIDEM, FIDES NON EST SERVANDA”.

The Supreme Court, as it is mentioned in the referred Sentence of Valencia "has set that time deadlines as an essential term of the contract (STS 15/11/1977, 27/5/1987, 13/3/1987, 6/6/1991, 16 -3-2009).

 
Continuing the Valencian Court saying that "it is irrefutable under the rules of logic and sound criticism, that the inordinate delay in fulfilling the contract defeats the purpose, because the future purchasers can not be left indefinitely to the developer´s will, being this also expressly prohibited by article 1256 of the Civil Code, which says: “The validity and enforceability of contracts can not be left to one party"

 
Similarly, the Supreme Court ruled in 1998 (14 November), that "The seller is not an arbitrator who can decide when a contract needs to be fulfilled, depending on his interests or conveniences, provided the buyer complies its obligations”

How is this all covered by Real Estate Consumer Law?

 
Firstly and again: Articles 2 and 3 of Law 57/68 so forgotten and much-criticized at times, to whose I make now a reminder of their last rationale, or ratio iuris: the protection of large sums of money advanced by the client to the developer for the construction of a very important good as housing is “These two articles empower the consumer to decide between extending timeframes or cancelling the contract if the house has not been started or completed on time”.

Considerations on the speculation on real estate unit and the economic crisis lying on developers can not languish the protective force of these provisions from 1968.  Being this Law a great tool for a sustainable urban development (so much being on discussion these days).

Secondly:  The model contract (stipulation first) signed under the roof of the National Consumer Institute in 2001 to buy / sell off plan and its General Conditions (General condition Six A, Second Paragraph). They ask for clarity on the start date and delivery date.

 
Thirdly: Under the present legislative decree on Consumers rights this uncertainty in the start and delivery dates are considered “abusive2 terms (Article 85.1).

In my opinion the declaration of the abusive character of a clause which puts beginning or finishing under indetermination, as these timeframes are deemed essential by the Supreme Court, should lead to the possibility for the consumer to the reduction in the price or termination of the contract.

Saying this under the doctrines on object contract loss, essential terms and cancellation, Articles 83 and 85 of Consumers Act Integration of contract clauses and article 2 and 3 of Act 57/68.

María L. de Castro

www.costaluzlawyers.es

Winter Surf Day. Gijón. Spain by Todo-Juanjo at Flickr.com

Blog post today dedicated to Goodstich44. Translated from Expansion ( Financial Journal) today

Two important associations of Judges and Public Prosecutors are revising the current Criminal Code to introduce new offenses as including those who exercise political functions or positions of responsibility in Political Parties into the crime of bribery.

Associations  Jueces para la Democracia (JPD) and Unión Progresista de Fiscales (UPF) in its last annual meeting, proposed a series of measures to combat public corruption. They consider that “it is urgent to review the current Criminal Code” on crimes against public administration.

In the view of both associations, it is necessary “to refine technically the wording of existing crimes and offenses in line to introduce new forms of corruption that have emerged in recent times'.

Thus, in the conclusions document prepared by JPD and UPF, they propose to improve the traditional configuration of bribery, currently limited to those who are part of the Administration or participate in their functions some way, to ‘expressly include those exercising political functions or positions of responsibility in political parties, who hold an undoubted influence on the authorities of these parties and can determine their behavior"

Judges and prosecutors also advocate for progressive changes on prevarication. They specifically opt for 'punishing the conduct of officials of the Administration who arbitrarily issue a report or a proposed resolution against the norm', supposes cases that are right now outside the figure of prevarication.

In the field of Urban Planning crime, both associations ask for the creation of criminal offenses relating to “illegal zoning agreements signed with the sole purpose of furthering private interests”.

Therefore, and JPD UPF require the legislator  to revise the Criminal  Code as they understand that there is a 'defective fixing of wrongful conduct' which is a 'loophole for criminality ' and claim that they is leading to “impunity for serious  criminal behavior '.

Maria

www.costaluzlawyers.es

Wilting Hibiscus in Malaga (Spain) by By-Your at Flickr.com

A question from  a forum member on corruption today:

Maria

Thanks for your replies to my questions. 

Perhaps the biggest question is, ....when those like yourself can see so clearly what the problems are, why can't those in power who are trusted to do the same, see with similar clarity and take action to make long overdue changes to benefit not only individuals, but the whole industry?   I think we have to assume that corruption is still far to acceptable in Spain, and justice is often not seen as a right, but something that so often has to be fought for, and for many it's a fight that can't be sustained for the time or money available for the individual ? 

I wonder if without '' the people '' demanding change, wheather it will take a generation to change, rather than months or years even, or will the current situation with the property industry force change sooner than that?

My answer:

Of course, the current disaster is making all ( politicians, banks, developers...) to think on new development models. Again the necessity is creating virtue. I have got my hopes on the presence of foreigners in Spain, just because you do not understand and accept certain ways we are culturally somehow used to accept and understand, and I also have my hopes on the proffessional standards that our membership in the european Union demands. European proffessionals can come and make competition to us in our own country and that will be very healthy for services quality level.

I am very proud of being a Spaniard, we are hospitable, warm, happy people with a strong social and family system but am ready to acknowledge and understand both strengths and weakenesses of my country and culture. 

Those above ( social and family ties) can turn themselves into vices if they are not correctly understood and lived out in the proffessiona field. The spoiled version of these can be the two most  damaging behaviours in proffessional life, which had a great impact on corruption during the real estate boom: the so called " amiguismo" ( buddy system, favouritism), and the " no problem" easy-say  which are at the end a lack of sense of risponsability and duty.

Artist at Tossa. By Neilalderney at Flickr.com 

We are open to admitt criticism on our services and available to all explanations. I need to add that, by essence, every explanation needs someone who is willing to understand at the other side. So, yes!... let´s do the work together.

First thing we do when we are dealing with a new client is to send a General Information document and a budget of legal costs where everything related to both the work procedure and the costs is explained from the very beginning, as much as we can.

When people ask for copies of our legal writings, we  need to deny the petition as it is part of the know-how of the  company and the litigation company. Of course the content of the writings is always explained and a copy of the head, signature and acknowledgment of reception by counterparty is also available  for those who ask.

Litigation department´s and Court´s  workload are realities which influence the timing of the case, but of course, clients rights are always covered in the meantime. Meanwhile, we are presistently trying to improve the services and the timing involved for cases to come to end, to the extent that is within our reach.

Anyhow, please send your claims and complaints to us as we will bery happy to look at them and process them as much as we can. Sometimes, clients wishes and petitions cannot be satisfied, that is part of the limits of every human activity, but we always take them into account and try to bring solutions near to their petitions.

Sam... please let me know who you are when we talk on the phone as I cannot recognise you right now.

http://www.youtube.com/watch?v=ZD0wk5cK4LU

I am so filled with emotion and hope after watching this video today. Thanks to Marta Andreasen first and then to Buzzylizie for posting the video and Sandra for posting the email address.

I am contacting Marta  today and will tell her about our past and future actions for the legal restoration of so many disasters.

We will be paying attention of course to Banks´liabilities under Law 57/68.

Rain in Spain. ( Tossa de Mar) By Monkeyleader at Flickr.com

The Spanish Presidency of the European Union has set among its priorities in the Agenda, to promote the common European regulation of Inheritance Law

The criterion to select the applicable Law will be the habitual residence of the deceased at the time of his/her death. The bet for the use of this criterion is justified because it has been used in other Community instruments such as Rome I and Rome II, in the Hague convention and by several member estates.

In my opinion, not a very wise criterion as Inheritance Law is the field of Law where tradition and culture have the heaviest weight.  This might imply a lack of identification/ acceptation and the proliferation of uses to avoid the application of the corresponding Inheritance Law; especially among those foreigners who are not under the  rules regarding forced heirs of the Ancient-Rome Law tradition.

What do you think?

Maria

The wave. Guggenheim Museum. Blibao. Spain. by Dani_vr at Flickr.com

This has been my favourite reading of my daily Legal Today´s newsletter. An interesting contribution of Jorge Palacios Plaza, BA in Political Science and Sociology from the Universidad Complutense de Madrid. He explains how in the daily practice of law, emotional intelligence is an interesting tool.

In order to pay attention to our emotional intelligence we need to work on:  

Self-awareness: The way our emotions affect our conduct. Strengths and weaknesses and ways to improve.

Self-management of our emotions: so we do not get easily overwhelmed by moment´s emotion, focusing in objectives more than in obstacles.

Positive and optimistic behavior

Recognition of others´emotions.

I agree that much energy, worries, euros, paper and hours of Court would be saved if we, lawyers, would obligatorily  submit to modern codes of professional conduct inspired by Goleman and co ( Masters of the Emotional Intelligence stuff). This goes to Law Societies.

I always perceive lots of defensiveness and aggressiveness in the counterparty, and I think it is just because we are not sure about the willingness to negotiate and flexibility of the opposite. We are deformed by overuse of force and are afraid to end up being the weak part of the negotiation if we are flexible.

It is definitely necessary to reinforce and  spread the negotiating style with clear and fair game rules so that both parties can be  comfortable in their role as negotiators. We may need to start practising this style with our counterparties in our daily professional hours: the good is diffusive, said Thomas Aquinas.
 
The current crisis, which demands quicker solutions, the overloading of the courts, the need of  a fast and general restore of economy that is within our main worries today,  are heavy reasons to a change from litigiousness to negotiation  through flexibility and self-confidence.

Win-win schemes again: there is a famous judicial motto in Spain which writes: “A bad deal is better than a good lawsuit." I would say… there is never a bad deal if it avoids a litigation.

Be confident.

Maria

Olas en la Bahía: Bay Waves by Xavier Fargas at Flickr.com

http://property.timesonline.co.uk/tol/life_and_style/property/article6990040.ece

After reading the article, which my dear friend Steven Kenyon sent to me yesterday, I  just wanted to point out that Mr. Smalley has an action against the Local Council for damages and he has rights to be compensated of financial and moral damages. As he is a great fighter I just  can wish and see nothing but a success for him.

We will be very pleased to help out if needed. Andalucia needs indeed reforms and breaking from many old status-quos.

Los Pozos de la Nieve, Constantina, Sevilla, Spain by Top Rural at Flickr.com

Yes, using an aggressive debt collection agency better than resorting to negotiation or Court  settlement talks about high weakness! This is very simple an obvious.

I wish there was a solution acceptable for all parties involved, with full respect towards consumers rights which has been so ignored and infringed during the high-sales period.

I am sure than buyers, developer and Bank could reach a valid agreement through a due and respectful dialogue. No fear making, no threat: that always make things worse.

With all my respect to everyone involved,

Maria

Sacristía Hotel. Tarifa by Chodaboy at Flickr.com

For those of you with a funny curiosity on Spanish Law, Lawyers...: a great Spanish-English Law dictionary to start the week with.

Best wishes,

Maria

Ps.- Click here to find the dictionary.

Kite. Tarifa by Lady Annderground at Flickr.com

 Before adolescence asks for  sourer tests from us, sweet parenthood brings with it a little of a quit every time one of our small  ones demands, at  intemperate times,  the extraordinary service of bringing to him a bit of water,  to release a physiological need or to scare – what do they think  we parents are! - the monsters who have taken over the room. When they shout my name in the quiet hours of the night and I walk to their aid shaken by the clouds of sleep,  it  beats inside me that Gospel´s aphorism when Jesus himself makes it possible for even the worst father to offer a bit of bread to his instead of a snake. Fatherhood, motherhood, drink directly from the divine to become good  all men and women who  are not good already. 

 As you all know now, Real Estate companies, Banks and Saving Banks offer price reductions of  even 30% on the initial prices in order to get rid of  houses in stock.

Of course mortgages for this Bank-owned-houses are always ready to go and at very reasonable conditions...

These above together with a claim against the Bank you may had, which can be used as a compensation and price reduction...may lead you to get that dream in Spain at a very reasonable price.

Again, Finantial actors´ weaknesses for your benefit!

Have a great weekend!

Maria

Alcazar Palace in Sevilla by SteelskyBlue at Flickr.com

More and more professional women are occupying top positions within companies.

In today´s Cinco Dias Journal , Cecilia Taieb Walch, associate principal of Michael Page Executive Search, estimates that in "this year there has been a 45% increase in the hiring of women executives”.

Ariadna Cambronero, managing partner of the Barcelona  Law Firm  Uria Menendez, Law Proffessor, also states in the same Journal today that the  70% of her students are female.

This is the same experience that  I had when I last attended a course organized by the Chamber of Commerce of the Campo de Gibraltar which were mainly attended by Law students of the area.  I entered the auditorium, rose my head to see where to get a seat and suddenly it came to my mind a picture of the female elementary school I attended as a child: all women, only women. I was so surprised that I asked the girl sitting next to me in low voice on this and she, without the slightest hint of surprise whispered back to me that: “ In  Law School  almost all are girls… the boys do Training Courses".

It is true that once these students reach proffessional maturity , the profession will be mainly carried by women, in ten years ... I reckon.

The important thing is that women, in our professional field do not give up what is proper for us and our particular way of looking at problems and reality: integration, flexibility, cooperation ...

Have a great Wednesday!

Maria

Taken close to Ibón de Piedrafita, Spanish Pyrenees by Tochis at Flickr.com.

Good news for the strengthening of the balance in the financial system. Yes: Spain has a nice history on community orientation of a special type of finantial actors: the Saving Banks.

Its origin is linked to a type of charitable institutions: Montes de Piedad ( Monte de Pietá in italian), which were created in Italy in XVth century by Franciscans as a way to fight usury and which lended money  without interests to cover primary needs.

While earnings of these institutions in Spain fell 27% during January-September of 2009, the fund for community services was increased a 1,5 % up to 3672 million euros.

Oh yeah! Keep it coming!

Maria

www.costaluzlawyers.es

Winter survivors by Tochis at Flickr.com

I am just making a translation of article one of Law 57/68. Green additions are by me:

Article 1.

The individuals and companies which  promote housing construction which are not protected by the State and are intended for home or family residence, whether permanent or seasonal ,accidental or incidental character and which will be receiving sums of money from buyers before they start or during the construction must meet the following conditions:

  
First. Secure repayment of the amounts paid plus 6% annual interest, by  Insurance contract awarded  with an insurer registered and licensed in the Register of the General Department of Insurance or joint Guarantee provided by entity listed in the Register of Banks,  Bankers or saving Banks, in the event that construction is not commenced or not finished for any reason at the agreed deadline.
   

Second. Perceive  the sums advanced by purchasers through a Bank or savings Bank, [Here liabilities of the Bank start]:  which will be deposited in special accounts separated from any other kind of funds belonging to the promoter and which always be used for the building of the development. For the opening of  these accounts or deposits,  the bank or savings Bank, under its responsibility, will require the guarantee explained in paragraph First.

So there are liabilities for Banks which did not perform due diligency by depositing funds in special, controled accounts and which did not check on the existence of Insurance Policies or Bank Guarantees. It is quite plain and clear.. is not? What do you think?

By Maria L. de Castro

www.costaluzlawyers.es

 Palacio de Cristal (Parque del Retiro, Madrid), By Felipe Gabaldón at Flickr.com

Since assuming its role as a public park the late 19th century, the "Parque del Retiro" ( in Madrid)  has been used as a venue for various international exhibitions. Several emblematic buildings have remained as testimony to such events, including ... the Palacio de Cristal ("Crystal Palace"), a glass pavilion inspired by The Crystal Palace in London, undoubtedly the gardens' most extraordinary building. Built along with its artificial pond in 1887 by architect Ricardo Velázquez Bosco for the Philippine Islands Exhibitions, it was first used to display flower species indigenous to the islands (see Wikipedia).

Now that Banks and Saving Banks in Spain are starting to think they would better be in the mood of selling properties at a real price, they are putting balance to the market they, mostly them, unbalanced during the boom. Nature is wise. After the storm, clean and balanced  air always comes: that is what we need to be looking for, in terms of financial strategies for the correct development of society. Even in Spain when recovery still has a long and tough run to do.

Law also needs to make the effort to stablish some healthy frames for the future of this XXI century which, being the century of globalisation, need to look to the future of our brothers still under developed, for the benefit of all. Win-win schemes, cooperation, generosity. Globalisation for individual ultra-benfits has already proved to be a disastrous approach, so... let´s turn globalisation to this other way.

Again, some philosohpy... I am sorry! Now: a practical tip:

For you, property claimers without Bank Guarantees in Spain: if you are still interested on buying in Spain in the future, a  tip for the 2010 to take today:  

Contact the Bank which financed the development you put deposits on, that Bank which was under Law 57/68 article 1.2 obligation to secure on the existence of Bank Guarantees, and try to deal for a property at a real, real good price. If they refused, that petition may at least be the start for the judicial application for liabilities under the said article.

Have a great weekend!

Maria

 Snow in Madrid by Natalia Romay at Flickr.com

Of course our government and several finantial institutions are working hard for the revitalization of the sick  economy we have in Spain these days. I do hope that people´s spirits are also up for entrepeneur and invesment. Any resident in Spain can benefit from this aids so... now all is almost desert it may be the right time to start and get positions in the market.

This is the new I have been reading today in my legal daily journal:

The ICO ( Instituto de Crédito Oficial- Offical Credit Institute) will support the financing of self-employed and businesses in 2010

Several finantial instituions such as Banco Santander, BBVA, Banco Popular, Banco Sabadell, La Caixa, Caja Madrid, Bancaja, Banesto, Caja del Mediterráneo and Ibercaja, will make the company of the Institute of official credit under an agreement which was signed on the last 21st of December. The agreement  is intended to finance the needs of self-employed and small-medium companies, and larger projects related to Sustainable Economy for 2010.

Among the major developments for 2010,  ICO will grant financiation for the IVA ( VAT) and second hand assets and extending the repayment period for loans up to 12 years.

The agreement provides, inter alia, the implementation of major funding lines ICO 2010, the launch of the figure of the financial facilitator and the next launch of the Fund of  Sustainable Economy.  The Five Main funding lines are for 2010:

- National Investment

- International Investment

- Entrepreneurship

- Liquidity and

- Housing.

These lines are intended principally for self employed and companies to get an adequate financing framework to enable them to undertake their investment projects and meet their financial needs and corporate liquidity.

In order to facilitate access to funding, the staffing of the lines shall conform with the demands of enterprises. Also, improvements have been incorporated in the conditions of the lines and the characteristics of repayment and lack deadlines have been homogenized , in response to requests from employers and financial institutions.

Innovations affecting the lines of National Investment, International, Entrepreneurship and Liquidity are:

    * Includes the option of financing the VAT.
    * Includes  as eligibles  second hand goods  and restrictions by accounting groups are removed.
    * Introduces the possibility of financing vehicles up to an amount of € 24,000 plus VAT.
    * It facilitates the financing of  company acquisitions.
    * Repayment term is extended up to 12 years..
    * There are two business segments based on the number of employees with two maximum funding limits:

  Section I.  Self-employed, micro and small enterprises with up to 49 people. They can access loans of up to 2 million euros.
  Section II. Medium and other companies. Eligible for loans up to EUR 10 million.

So.... make your numbers and yes! it might be the right time to start a small iniciative.

If you are interested on information to open a business in Spain, please contact us here

 Siguenza, Guadalajara, Spain. Siguenza's Castle, now a Parador (state-run luxury hotel) by Manuel Delgado Tenorio at Flickr.com

 http://www.oecd.org/document/9/0,3343,en_2649_34109_44083593_1_1_1_37443,00.html

There are lots and lots of information about this on Eyeonspain, but still I see people who seem not to know what to do if their developer is granted the insolvency protection by a Commercial judge:

A reminder today:

The main aim of an insolvency protection is to try to keep the life of the company. So initially nothing needs to make you think that the apartment will not be finally built or that all to come is disaster. Anyhow...

There are some things you can and you must do:

I) If you have decided to want to cancel your off-plan purchase and have rights to do so, according to Law 57/68, Contract and Consumers Law and related Case Law. You might be under two different circumnstances:

a) You have a Bank Guarantee/ Insurance policy according to Law 57/68. The good new is that: If the premises for its execution exist, you can  execute it  for the refund of deposit plus legal interests from the Bank or Insurer. No expiration deadlines which may be contained in the Guarantees documents count. Interests are always included, regarding the text of the document. The bad new is that in most of the cases a litigation is needed. Even if you decide to execute the Bank Guarantee, it is also advisable to register the credit before the Judge.

b) You do not have a  Bank Guarantee: First step is to register your credit before the Commercial judge governing the insolvency situation. There is a deadline of 30 days from last publication of the insolvency granting. You also need to direct a cancellation notice against the developer under administration.

Under this b) situation, if you obtained a favourable Court decission but you were not able to cash your Court decission against the company due to its insolvency, our proposal is to use compensation of damages actions against those who had to secure on the existence of Bank Guarantees/ Insurance Policies and did nothing about it: Civil liability action agsinst the solicitors´ Insurance company and action out of 1.2 of Law 57/68 agsinst the Bank which received deposits. 

II) If, on the contrary, you want to keep the contract alive. Once completion deadline arrives, you can start asking the administrator of the company for price reductions due to the delay and stablish a new completion deadline in order to have a new , extended contract. Otherwise, they may claim you are allowing extension for ever. I would also ask for a Bank Guarantee now too if you do not have it. At least you will have this written petition which mat be useful in the future.

Please email us if you have further questions regarding this.

Maria.

www.costaluzlawyers.es

Tres Reyes Magos by Miss Killer at Flickr.com

 A total of 11,796 families have  formalized in 2009, the deferral of 50% of their mortgage loan through the Line of Official Credit Institute (ICO) Mortgage Moratorium.

According to the ICO, the total amount of deferrals entered into by these families amounts to 72.9 million  of Euros. The maximum amount that each beneficiary can defer is 12,000 euros.

The moratorium was implemented on March, the 1st. The line is aimed at the partial and temporary reprieve for unemployed  people. It reduces in a 50% mortgage payments due in the period from March 1, 2009 and 28 February 2011, with a maximum of 500 euros per month.

The postponement of the quota is implemented through a contract between the customer and the credit institution with which the mortgage is formalized, maintaining the validity and conditions of the initial loan.

New from "El Economista", 4th of January 2010.

Maria

www.costaluzlawyers.es

 Three Wise Men. Carved and Painted wood attributed to Hipolito Marte Martínez. Picture by Cliff1066 at Flickr.com

Costaluzlawyers is paying someone to bring culture to our EOS forums ( actually, a brother of mine who has lost his job). He is starting a serie of British history in Spain and hopefully will keep up with some other series more...

Some interests, suggestions? Please.

Best regards,

Maria