Spanish Property Developers in Crisis

IF I HAVE ISSUED LEGAL PROCEEDINGS, CAN I SETTLE?
Tuesday, May 18, 2010

Yes. If you have issued legal proceedings against a Spanish developer for breach of contract, you can settle at any time. So long as the defendant, the person you are suing, also agrees to settle.

Usually a document can be signed by the lawyers representing both parties and presented to the court dealing with the matter which will halt the legal proceedings.

If your matter is part of a class action and you settle after the defendant has been notified, then you could be subject to the other side's legal costs, subject to the discretion of the Judge. At any time individual members of a class action can settle their matter and the remaining members´ claim continues.

If your matter is part of a class action and you settle before the defendant has been notified, then you are unlikely to be subject to the other side's legal costs.

If you do settle, it is important that you halt the legal proceedings and sign your agreement with the developer at the same time. There have been cases of developers offering certain benefits in exchange for the withdrawal of legal proceedings, after which they do not complete their side of the bargain or the property they did offer you has suddenly been sold!

In the event of settling a matter with a Spanish developer, usually each party will pay their own legal costs for the proceedings issued to date.

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HOW ARE LEGAL COSTS IN PROCEEDINGS CALCULATED? WILL I RECOVER ALL OF THESE?
Friday, May 14, 2010

Legal costs are generally calculated using the local college of lawyers' tariffs, however these are non binding. This booklet, published by the college of lawyers in the court and province where the matter is being handled, sets out the legal costs that a lawyer could charge you for the many types of legal services and actions carried out on your behalf.

The tariff booklet is only a guide for lawyers when setting out their fees. Actual legal fees could be higher or lower depending on the firm acting or defending the matter, the expertise and experience of the particular lawyers handling the matter. The courts usually rely on these tariffs when assessing how much as far as legal costs should be awarded.

So, will you recover all of your legal costs if your claim is 100% successful?(*)

Well you could be faced with the scenario that you instructed a firm with a dedicated and specialist litigation department whose legal fees are higher than those of the local college. Under these circumstances you may recover the fees set by the college of lawyers for the matter in question and in the province where the matter is being heard. However the difference between these costs and your lawyers costs (if any), would be payable by you. Of course, the reverse position could also apply. You instruct a firm and the claim is successful and their costs are lower then those set by the local college of lawyers, you could receive the positive difference from.

If you are considering issuing legal proceedings, it is important to consider that you will only be able to sue once for the same matter. So when instructing lawyers, regardless of who you instruct, ensure that they are specialists in their area, communication is not an issue and their fee structure is transparent!

(*) See earlier post on legal costs and recoverability.

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IF MY CLAIM IS SUCCESSFUL, WILL I RECOVER ALL MY LEGAL COSTS?
Tuesday, May 4, 2010

Not necessarily as legal costs in Spain are awarded at the discretion of the judge. Unfortunately legal costs here are treated differently compared to other European countries. Below we set out the various scenarios that you could be facing.

A) If you issued legal proceedings for say 100,000 euros and your claim was successful and the sentence awarded you the same figure set out in your claim, then you should recover all your legal costs.

B) If you issued legal proceedings and you recovered part of the amount set out in your claim, then it is likely that you would not recover all of your legal costs but you may recover some of these, subject to the discretion of the judge.

C) If you settle out of court then unless legal costs are specifically part of the settlement, then it is likely that each party will pay their own costs.

D) If your claim is unsuccessful, then you will be obliged to pay your lawyer's and procurator's costs and those of the other side.

IM Abogados

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