El blog de Maria

We are in charge... no one else ... of creating the best year for us and everyone around us

Feliz 2015!

Puerta del Dol, Madrid, Spain

Martinsa Fadesa has until Wednesday December 31 to reach an agreement with its creditor banks in regards to debt of 3,500 million euros to prevent the liquidation of the company. MF overcame the higher creditor´s meeting procedure of history back in 2011.

On  December 31st, Martinsa-Fadesa must pay a percentage of the debt (23%), as established in the creditors' agreement .The default of this debt payment would throw Martinsa Fadesa to liquidation, since it would be the second consecutive breach of  said agreement.

Company is negotiating with its 14 creditor banks the possibility  for the  bank to control  70% of the company and leave the  remaining 30%  in the hands of its president and current prime shareholder, Fernando Martin, and his partner Antonio Martín.

Not to forget much of the business Martinsa Fadesa did was off plan with total breach of guaranteeing obligations according to Law 57/67... so if liquidation came,  route to act against Banks will be open and clear.

Juzcar, Málaga, South east Spain

A client, whose contract was cancelled by the Judge who was governing Alleerton Holdings due to money laundering proceeding (White Whale).

Client who had a favourable cancellation Court decission with no possibility of refund due to liquidation of said company.

Action brought against Insurer Zurich

Zurich tried to deffend itself with both argumenst of  (1)prescription and (2) on the fact that the complex was touristic and not residential; trying to make Law 57/68 not applicable.

Wise La Línea de la Concepción Judge understanding action expiration deadline is of 15 years and not the shorter 2 years of the Insurance Contracts Act. On the basis of special and ultra protective character of Law 57/68.

Again wise La Línea de la Concepción Judge using a beautiful doctrine called " Own acts" by which litteracy cannot take precedence over facts or reality. Despite the complex was touristic, built on touristic land, buyers bought properties on the understanding of its residential character, and with residential prices and conditions: therefore Law 57/68 and all its rights and guarantees are applicable.

La Alcaidesa, Cádiz, South eastern Spain

Arte por Navidad

Flamenco in Christmas time, in Spain

Felices días de Navidad desde CostaLuz Lawyers!

Costa de la Luz typical Christmas songs

 The Street Larios in Malaga,South eastern Spain, in Christmas Time

Zurich Insurance PLC plus Nadalsol condemned jointly and severally to refund our clients in Medina Golf Residencial all  off plan advanced amounts plus legal interests plus legal fees.

Congrats again to Judges, clients and CostaLuz-DeCastro legal teams!

María

Granada, South east of Spain

PROMOCIONES EUROHOUSE 2010 S.L. - BANK ACTION WON AGAINST CAJA RURAL CENTRAL FOR BUYERS AT FORTUNA GOLF RESORT & PUEBLO LA SAL (SAN PEDRO DEL PINATAR)

Notification sent today to a group of our clients who had reserved off-plan properties from the developer, PROMOCIONES EUROHOUSE 2010 S.L. at FORTUNA GOLF RESORT & PUEBLO LA SAL in San Pedro del Pinatar, informing them that their group action against CAJA RURAL CENTRAL had been won in the First Instance Court in Orihuela.

Please find attached Sentence number xxx/2014 from the First Instance Court No.3 in Orihuela.

Your case against CAJA RURAL CENTRAL has been won.

The final paragraph of the First Instance Sentence delivered on 10 December 2014 and notified on 17 December 2014 states:

“Substantially estimating the Lawsuit filed on behalf of xxxxx 16 BUYERS xxxxx against CAJA RURAL CENTRAL SOCIEDAD COOPERATIVA DE CREDITO, and must condemn the defendant to the repayment of the amounts paid on account of the purchase price of homes deposited in the account of the defendant CAJA RURAL in the name of the Promotor PROMOCIONES EUROHOUSE 2010 S.L., allocated as per the second article of this Sentence, amounting to a total of 406,385.52 Euro, plus legal interest from the date of payment to the developer until full payment & legal costs”.


So CAJA RURAL is liable to refund the total amount of 406,385.52€ plus legal interest from the date each amount was paid to the Promociones Eurohouse account at CAJA RURAL until full payment to the Court.  Legal costs are also imposed on CAJA RURAL.

The Sentence explains in great detail the liability of CAJA RURAL according to its obligations under LEY 57/1968 for the off-plan deposits paid to accounts opened by the developer, PROMOCIONES EUROHOUSE 2010 S.L. in CAJA RURAL.

Particular points of interest stated by the Judge in the Sentence are:


“The main defence argument from the Bank is that the buyers have no contractual relationship with the Bank and that the Bank had not given an individual guarantee to those buyers for the Promotor PROMOCIONES EUROHOUSE 2010 S.L.

However, despite the fact that financial institutions are not party to the Purchase Contracts between the Promotor and the Purchasers, the truth is that they are not alien to their content or the performance of the obligations arising thereof and must therefore ensure compliance with the guarantees established by LEY 57/1968.  The possibility of controlling the contracts of sale of the promotion in question reveals its obligation to monitor compliance with the obligations derived from LEY 57/1968.

So in this case, since it is an account linked to an off-plan promotion, there rests the responsibility of the financial institution for such security and failing to ensure compliance with all legal obligations relating to consumer protection results in the lack of incorporation of the Guarantee derived from an improper attitude to meet the statutory duty to secure all amounts paid in advance.  Therefore, buyers of a house in an off-plan promotion acquires a condition of security from the moment of signing the contract with the promotor, without that security being affected by the breaches of the developer in the constitution of the guarantee.

The plaintiff argues in the Lawsuit that the account should have been a ‘Special Account’ as per the requirements of LEY 57/1968.  However, in the interrogation of the Caja Rural employee, Mr XXXXX XXXXX XXXXXXX (Director from 2005 until today of the branch in which the account was held and where the buyers payments were made), he said that although he acknowledged that he knew EUROHOUSE was a company selling off-plan projects he had not checked the millions of Euros of income being paid into the account from OLE MEDITERRANEA S.L. to EUROHOUSE, because that was not his job, adding that he was unaware if EUROHOUSE used the account opened in his branch for off-plan promotions, confirming that he did not know the purpose of the account, which was a normal current account,  because he only checks accounts that have incidences.

From the interrogation of the defendant regarding the revenues in the account opened by EUROHOUSE in the CAJA RURAL branch in Orihuela, without a credible and consistent argument regarding the large amount of income paid to the accounted opened with that entity, knowing that it was a dedicated property development client, we must remember that the legal mandate is clear, stating that the Bank that receives the amounts paid by the purchasers of homes must deposit them in a Special Account; these amounts can only be used for the purposes of the housing promotion and must ensure, under its responsibility, that they are guaranteed.  Therefore, there is a clear responsibility which originates from the obligations derived from Article 1.2 of LEY 57/1968 and if the Bank violates the legal obligation to require the sufficient security then the breach of the law falls under its responsibility.

In this case and in view of the interrogation of the defendant, although they knew that EUROHOUSE was engaged in real estate activities, without offering a strong argument for their ignorance of the source of millions of Euros of income received into the account, not opened as a special account for the receipt of amounts paid in advance by purchasers, so it became the legal duty of the Bank to ensure the funds paid into the account were secured by insurance or guarantee.  Having breached its legal duty the liability of that entity is generated.

Consider that Article 1 of LEY 57/1968 in its effort to protect purchasers of off-plan homes, also involves financial entities in which the accounts are opened, establishing an obligation for them, which is simply to demand “under its responsibility, the guarantee referred to in the above condition”, so under its responsibility, it must ensure that the developer has guaranteed the amounts paid into the account.  This does not mean that it is the financial entity in which the account is held that must guarantee the repayment of the amounts, as the guarantor may be another entity.  But the term ‘under its responsibility’ cannot be interpreted without the sense of making it liable for damages arising to buyers for accepting the advance payments without guarantees, since the buyers could not then obtain repayment of the amounts paid in the event that the promotor failed to deliver the housing.

In other words, the bank should not allow the opening of accounts or the placing of funds in the account without previously confirming that the promotor has assumed the legal obligation of guaranteeing the amounts paid into the account and if it fails in this legal duty then it is liable for the damage that failure has on the buyers who then cannot obtain a refund of amounts paid in advance.

For all the above legal reasoning, the defendant bank is responsible for the amounts of money that was spent on the construction of the houses for the buyers, and the lack of guarantee, and so must be respond to the breach of the developer in the cancelled purchase contracts.

In this case we know that the promotion was not finished, so the frustration of the purpose of the contract is clear, as are the amounts that were entered by the buyers into the account of the defendant bank.

Thus it shall order the defendant, CAJA RURAL CENTRAL, to also pay legal interest on the amounts claimed and such interest shall be calculated from the date the amounts were paid to the developer’s account”.

Orihuela, Alicante, Eastern Spain

From 2015 on, residents in Spain are exempt of capital gains if- as always- they sell their first residency and reinvest in first residency within two years or...) and this is NEW!

You are over 65 years old and:

a) Sell your first residency even if you do not reinvest in first residency again.

b) Sell any real estate asset and invest these funds in a life annuity as a complement of your pension, with a maximum limit of 240.000 euros

You can find further tax advise at Costaluz Lawyers ;)

A nice street in a village of Andalusia

 Barcelona Appeal Court has declared the liability of a Notary due to lack of information to the client of dangers involved to the transaction he was authorizing.

The statement is dated February 19, 2014 (appeal number 526/2012 and speaker Mrs. Sanahuja Buenaventura).

Buyer-plaintiff believed the property she was buying was fully paid. The notary, in breach of his obligations, allowed the plaintiff to pay the full price without applying any withholding to respond to the charge, and without warning her of the risk involved in such action; which was his obligation according to the Notaries Act.

The seller did not allocate money from the sale to pay off the loan and cancel the charge, so Foreclosure proceedings were started.

Therefore, the plaintiff filed an ordinary lawsuit against the seller requesting payment of the mortgage loan and the cancellation of the mortgage, obtaining a favorable Court decision which could not be enforced against the defendant as it became insolvent-

The plaintiff then claimed against the Notary for all damages caused by that negligence

The judgment of the AP Barcelona

Barcelona Appeal Court  declared the responsibility for the provision of services, as provided by a Notary as in this case, is regulated by art. 26 of Consumers Act: "The actions or omissions of those who produce, import, provide or provide products or services to consumers or users, determinants of damages to these, give rise to the responsibility of those, unless it is established or certified that statutory requirements have been duly fulfilled and any other care and diligence required by the nature of the product, service or activity.”

System applied by the Barcelona Appeal Court is a system of subjective responsibility or guilt, where burden of proof is reversed, so, it is the service provider who has to prove that he acted diligently.

Both Barcelona Appeal Court and Notary Association agree it is a very important breach as a Notary due to " insufficient performance" as it is stablished in provisions 147 and 194 of Notary Act.

"Sagrada familia" in Barcelona, Northeast Spain

HUMA MEDITERRANEO - BANK ACTION WON IN PROVINCIAL APPEAL COURT AGAINST BANCO POPULAR

Notification sent today to one of our clients, a buyer of a property from Huma Mediterraneo, informing them that the Appeal filed by Banco Popular against the First Instance Sentence has been dismissed by the Provincial Appeal Court.


Please find attached Sentence number xxx/14 from the Provincial Appeal Court Section 1 in Murcia.

The Appeal filed by BANCO POPULAR ESPAÑOL S.A. has been dismissed and the First Instance Sentence has been confirmed.

The final paragraph of the Provincial Appeal Court Sentence delivered on 24 November 2014 states:

“That in dismissing the Appeal filed on behalf of BANCO POPULAR ESPAÑOL S.A. against the Sentence dated 29 April 2014 from the First Instance Court No. 4 of Murcia in Ordinary Trial number xxx/xxxx, we confirm that Sentence and impose upon the appellant Bank the costs of this Appeal”.

In the First Instance Sentence the Purchase Contract was terminated and HUMA MEDITERRANEO S.L. was sentenced to refund the amount of xx,xxx€ plus legal interest.  HUMA MEDITERRANEO S.L. did not Appeal.

BANCO POPULAR ESPAÑOL S.A. was sentenced jointly to refund the amount of XX,XXX€ plus legal interest on that amount from the date of filing of the Lawsuit (April 2012). BANCO POPULAR ESPAÑOL S.A. appealed and its Appeal has now been dismissed and the First Instance Sentence has been confirmed.

The Costs of the Appeal have been imposed on BANCO POPULAR ESPAÑOL S.A.

The Banks Appeal was based on 3 main arguments:

1.  The Bank said that the off-plan deposit was paid via a Conveyancing Lawyer and that the Bank issued Guarantees whenever it was asked by Huma.  The Appeal Court Sentence dismissed this argument because it says that:

“the Buyer proved with documents provided to the Court that the off-plan payments were made to an account in the name of Huma Mediterraneo at Banco Popular and that account must be regarded as a Special Account under the terms established and required by Article 1.2 of LEY 57/1968.  The Bank in which the account was opened and off-plan funds received, must according to the Law, under its responsibility, demand the issuing of the corresponding Guarantee.  The consequences of the Bank failing in this responsibility will harm the buyer who acts on trust according to the provisions of the Law, which grants rights of an inalienable nature according to Article 7 of LEY 57/1968.  The fact that the buyers hired the services of a conveyancing lawyer and paid the off-plan deposits to the developer’s Banco Popular account via the lawyer, in no way detracts from what is explained above”.

2. The Bank argued that the various Case Law examples of the Supreme Court cited in the First Instance Sentence relate to Insurers and not a Financial Institution such as a Bank and seeks to rely on the Supreme Court Sentence dated 5 February 2013.  The Appeal Court Sentence dismissed this argument as follows:

“Already discussed above are the reasons why the bank should secure the amounts deposited in the account which has been opened by the developer and the legally established responsibility of demanding the corresponding guarantees”.

3.  Finally the Bank argues that the obligation to provide the Guarantees is that of the Developer and not the Bank, as the buyers have no direct relationship with the Bank.  The Appeal Court Magistrates state in the Sentence:

“This plea must also be dismissed because the guarantees must be required by the Bank opening the account, under its responsibility.  The buyer paying amounts before or during construction in good faith must do so in a confident manner, which is the reason why LEY 57/1968 stated in its preamble that the standards are mandatory to ensure the actual return of money paid by purchasers and prospective owners of housing under construction in the event that the building does not take effect”. 

Alcantarilla, Murcia, East of Spain

It is eight years that we started our fight against all consequences of what it was essentially a problem of lack of regulation and discipline in several professional fields all related to Spain´s Real Estate Boom and Crush.

Our times´mentality makes difficult and unpopular to talk about discipline and regulations but it is just natural order. All in life has its features, principles and rules: we are under parameters and order. Punishments then comes from nature inmperative or from human´s agreement, but,  what is clear is that (1) if there are no rules, there is disorder and/or (2) if they exist but are breached, there are also fight and discontent so... why not to naturally accept them and live them out  thinking that they are for our joy an benefit?

So...: going to the off plan circus and disaster  of late years in Spain, some EOS members were very rightly  commenting today in one of my posts,

My two.cents:  four pillars which were weak and need, reinforcement and life:

- Lawyers regulations and discipline

- Banks regulations -- specifically on off plan buildings

 -Estate agents regulations

- Land Registry control over these rights.

Just to name possibly the main ones, some of you can come out with other ones...

Possibly, as Keith Rule has been demanding through his petition , the route is to make a new new Law 57/68. No big deal. This, will also makes a great contribution for Spain not to fall again in a false ecomomic growth (and subsequent thwack) based on lack of guarantees for many but for Banks IN CONTROL of just their own benefit.

New times: collaboration: all inspired by this natural principle of coexistence. If not followed: ruin and more ruin...

Cheers!

Granada, Southeast Spain

Paying a mortgage on a property which has no license?

A topic quite unexplored yet but interesting enough

I would certianly go against Valuators in those deals. They should have never given to those properties the high value they did.

Finances Department in Spain made obligatory in 2003 the checking on licenses for these valuations:

Article 7 Minimum Checks

1. To determine the  value, it is necessary to know the characteristics and actual situation of the asset being valued , and the contents of the documents referred to in Article 8 of this Order shall be used.

2. Checks that the preceeding paragraph refers to, shall include at least the following:

a) Physical identification of the property, by its location and visual inspection by a competent technician, checking if its surface and other characteristics match the description recorded in the documentation used for valuation, as well as the existence of visible easements  and its apparent state of construction or preservation.
b) State of occupancy of the property and use or exploitation to which it is intended.
c) In case of housing, public protection status or regime.
d) Architectural heritage protection system.
e) Adequacy of  property to enforceable urban planning  and, where applicable, the existence of the right to urban use whioch is being valued.

A street of Algodonales, Cádiz, Sierra of Grazalema, South of Spain

New group of solutions when in lacking resources to pay your mortgage in Spain are straight negotiations with the Bank to change the terms of the mortgage and reduce payments so they will adapt to your current financial conditions. At the end of the day, that needs to be the soul of financial institutions, to provide finances (real finances based on real lifes)

The two options to modify mortgage terms to reduce mortgage repayments are: (1) novation and (2) subrogation.

Novation involves talking with our own mortgage bank and subrogation means to change your mortgage to a new financial institution.

Novation

Technical legal definition of novation is “the modification of an obligation by another one which will extinguish or amends the First" Novation can implies: 

*Interest rate change

*Changing the benchmark.

*Making capital increases.

*Implementation of reductions or increases in the amortization period.

Subrogation

Mortgage subrogation is the operation of changing mortgage contract from one financial institution to another.

Cordoba, South of Spain

There is no other marketing but that which has the person and his benefit at the center of it

Real contact with clients

Listening to their wishes and expectations

Taking their advise

Sharing with them the most we can

Taking them as our auditors

Have made our path along the last 8 years...

( A Monday reflection...)

Cheers!

María

Zorita de los Canes, Guadalajara, Northeast Madrid, Spain, at facebook.com