Corvera advise legal proceedings will be taken against purchasers failing to complete

On Friday 13th Feb a call was received from Pablo Buitrago (from the Corvera office) ostensibly to check that the necessary mortgage arrangements have been put in place to proceed with the purchase of the contracted property on Corvera phase 2. Apparently completion is now on target for April/May.

Pablo was told that since the contract was entered into in December 2005 our personal and financial situation has markedly changed and we are no longer in a position to proceed. Our understanding was that under clause 16 of the contract ( Non compliance on the part of the Purchaser) we could in effect breach our obligation to appear at the act of executing the public deed after having been requested to do so by the Vendor and the Vendor would keep the 70000 euro deposit paid as the penalty and that would be the end of our involvement.

Pablo advised that this is not the case. If we fail to complete he said that "the legal dept will take legal action". Having looked at the contract yet again, and cross referenced various terms with information on the internet, it seems that Corvera can indeed do this.

Even trying to assign our contract (ie sell it on) is covered ie Corvera has to approve and authorise the new buyer and the selling on price cannot be for less than the deposit paid to Corvera. I had an idea to offer the 70000 euro deposited contract for sale for a peppercorn in order to attract a buyer and so avoid further liability, but it appears this is not possible .

I know that we are not the only buyers whose circumstances have changed in the intervening three+ years (!) and cannot proceed. In effect it seems that we have three options ie proceed with the purchase (not possible), find a buyer who will proceed with the purchase in our stead (highly unlikely) or default and await legal proceedings. Any ideas on this predicament would be much appreciated!

Many thanks.

Hi

You should first get advice from your independent solicitor - they should explain all the options to you.

There are also many, many postings on this forum referring to similar situations - suggest you start with 'Group meeting in the UK' thread, but there are many more.

Also take a look at the EOS 'General Spain Forums' http://www.eyeonspain.com/Secure/ForumThreads.aspx?&dev=FB35&name=Completing%20on%20a%20Property  where there are a number of threads that you might find of interest.

This message was last edited by mazbaz on 2/16/2009.

Hi Stuart99

YOU ARE NOT ALONE THERE ARE MANY LIKE YOU, AS STATED YOU NEED LEGAL ADVICE, MARIA DE CASTRO

THE LAWYER ON THE EYE OF SPAIN IS FANTASTIC ( SHE WILL GIVE YOU FREE ADVICE AT THE START) IF YOU NEED ANYTHING ELSE PLEASE PM ME WITH YOU DETAILS AND I WILL TRY TO POINT YOU IN THE RIGHT DIRECTION

REGARDS AND THE VERY BEST OF LUCK

BRAD

I got a call from Pablo today as well. Seems that the mortgage- holding bank the developers have must be ringing them up saying they haven't had a bite! I informed him of our situation, but ,as in previous posts, he continued with what must be a well-travelled script. I said that the bank valuation for the property was completely out-of-date but that didn't seem to concern him. Obviously it removes the problem about their buyers not being offered mortgages,thus fulfilling a necessary part of the completion process. But consider this.... One year down the road the bank writes to you and tells you that they have decided they want their money back..(it's happening in the UK now too) You try to find another bank to lend you the money..and lo and behold THEIR valuation of your apartment/villa is 30-40% LOWER than the original one. Unless you come up with the difference you lose the property... Corvera 1, Bank 1, YOU 0 ........

Hi, 

Have been reading the recent posts on this subject and just wanted to ask if anyone knew (based on previous cases ) what the outcome of court proceedings would be.  We bought 2 properties on Corvera and are not able to complete.  Our lawyer has told us that the courts take the view that the large deposit already paid is plenty of compensation.  However I am now feeling that if a large percentage of people go this route and don't complete things may change.

Any views on this?

Trudie

Hi Trudiea

We do seem to be in a similar boat, along with many other people.

An initial deposit on the Corvera property was placed in December 2005 and I was told (verbally) that the property would be complete in 18 months. In total 70000 euros have been paid. In the intervening 3+ years my cirumstances have changed drastically and I am not able to complete. It's not that I don't want to complete, I simply cannot complete. I fully understand that contractually I am at fault here and accept that I must loose the 70000 euros as the penalty.  This is where things start to get confusing. Having read a lot of the relevant threads on this site, a lot of people seem to have been told and are subsequently relaying conflicting legal information.

My understanding is that once the Housing Unit occupation licence has been received by the developer, there is no option but to proceed with the purchase within 30 days. If this does not happen, the Vendor keeps the deposit and (as has been advised by Pablo) will at some point institute legal proceedings to recover the balance, as (seemingly) is their contractual right. This though would seem unfair since, in theory, the developer could keep the substantial deposit, recover the balance through legal action and keep the property to sell 'again'. It's interesting to note therefore, that it is your lawyer's 'view' that the large deposit paid is considered sufficient compensation...a view that I share, but one obviously not shared by Corvera!  I have also been told that the purchaser becomes responsible for all expenses, fees and local taxes attributable to the property from the date set for the execution of the public deed of sale (even if that does not actually take place because the buyer does not present him/herself) plus continuing interest on the outstanding balance.

Definitive guidance on this seems to be in short supply. Perhaps since the Spanish legal system is not based on precedent as is ours, every case is different. Difficult to know what to do other than accept that large fees will have to be paid to a Spanish lawyer to deal with the case to its conclusion, and (as I have been advised by my UK solicitor) seek insolvency advice to limit forfeiture of assets if the worst happens ie Corvera can and do recover the full balance (or substantial part thereof) contractually due to them....plus interest etc!

Ironically, in my case,  if Corvera had handed over the property within the timeframe originally given, then completion would have proceeded.

If as you fear (and are probably correct ) a significant number of people do default, then I would think that Corvera have little choice but to take legal action to get cash moving into their acounts...I would doubt that they are generating many new sales (and hence income) in this climate. And in that case would a Spanish court look more favourably on assisting a Spanish firm get the money it is contractually owed by defaulting British residents, or assist British residents in not paying a Spanish firm the money they owe? I think you're right to say the situation will change!

This message was last edited by Stuart99 on 2/18/2009.

This message was last edited by Stuart99 on 2/18/2009.

Hi

We are in the same postion and would be interested in getting in touch with others in a similar situation. We have 2 properties in Phase 2.  I feel that in the current financial crisis we might be able to pool resourses and work together to find some solution to fight this.

Out of interest how many of your are using Matinez- Eschevarria as solicitors?

Louise

Yes. we still have the same solicitors acting on our behalf.

Rav

I also have the same solicitor.

Harry

I have the same solicitor too!

Have you all bought through MRI if so have you any contact details for Sean weatherburn. He seems to have disappeared!

i certainly did and yourright sean seems to have disappeared

We are with MartinezEcheverria too, but they saw Calidona for me today and seem as confused as me about their very aggressive and unreasonable attitude. They want completions on ALL properties.We are in the same situation as Stuart99, Bought 2 on phase 2 Dec05.

I am going to get some legal advice from a UK solicitor, but this is edging towards a massive court case in my opinion.

i would suggest calidona are taking this stance due to the current market conditions , if you guys dont complete it is very unlikely they will be able to resell the units .

We are in a similar position to many people making these posts in that we too will struggle to complete. I notice people are taking or looking to take legal advice, we would be happy to join others and pool resources giving us strength in numbers.

Is anybody else interested in getting together to share knowledge?

Searay, I agree, and it's ironic that, had Calidona completed phases 1 and 2 in 2007, which was the original date that those signing up in 2005 were given, then most of us would have paid up and neither they nor us would be in this position now!

At the end of the day the main reason people cannot complete is they physically can't due to the current financial market through no fault of their own so Calidona can throw their teddy and fight all they want they will not get anything as most people have not got two pennies to rub together after losing their deposits so people don't stress over it, there is that many people not completing by the time Calidona go through the courts to fight them all they will be Bankrupt!!

We are also in a similar position, and beleive it is a good idea to group our resources. Maybe if corvera see how many cases they actually have to fight before hand they will consider bowing out.

is anybody collating members details for the above??

fil

Fil,

When you say "bowing out", I presume you mean bow out of chasing purchasers who have outstanding payments and not from the development?

I'm refering to bowing out from chasing the purchaser and settling with the purchaser forfitting the deposit, but I would not be overly disappointed if calidona bowed out of the project thus maybe giving us a chance of claiming via the bank garantee.

fil