Gaspar Lino issues threat of legal action to ALL purchasers to bully them into completion

This is a copy of an email being sent out by Gaspar Lino today to purchasers of Medina Elvira 23 who have not yet completed. Anybody who is purchasing in a Peninsula development should be fully aware of the level Peninsula are willing to take this in what could well be a desperate attempt to remain in business:

First of two replies posted on the general forum regarding a post made by Lurker.

Hi,

the threat  you are referring - as it stands - is not only legal, but actual as well.

It is essential to have a look at your purchase contract in order to check the contents and see what the clauses say to be sure, anyway I will try to answer your question in general terms.

In the purchase contract for a property off plan, the purchaser's main obligation is to pay the price and the developer's main obligation is to deliver the property with all the necessary permissions and documents. The delivered property should also be according to the contract in general terms.

Under Spanish Law the party who complies with the contract and fulfils his obligation is entitled to EITHER FORCE COMPLIANCE OR CANCEL THE CONTRACT. It is an OPTION, unless expressly estated in the contract that the developer waives one of these options, both stand. 

In this case, it seems that the Developer has got the First Occupancy Permission and we could also assume that the development is already finished and according to the contract. In this case, we can say that the developer has complied with the contract and therefore he can effectively OPT for the so-called "forced completion", which means that he can sue you at the Spanish courts seeking payment of the outstanding price plus costs, OR to cancel the contract. 

The fact that you are living abroad in the UK poses an additional difficulty because they will very possibly have to notify you the writ abroad in order to ensure the executin of the ruling afterwards, but I would like to warn you that there are effective mechanisms to enable enforcement in your country. It will take a little bit longer for the Developer, and probably they will have to spend their moneys in executing the ruling in the UK through a British law firm, but it is perfectly possible. In fact, did you know that the UK government deparments are chasing through the courts property owned by British people in Spain in order to get debts made in the UK paid? it also works the other way.

The process would be in general terms as follows:

- 1st step, the developer sends you a formal request to complete, with an appointment for completion.

- 2nd step, then the developer goes to the Spanish courts and files a writ, stating that you are in breach of contract and requesting forced compliance.

- 3rd step: the court sends the notification abroad through special mechanisms in order for you to be notified. Since you receive the notifcation, you have 20 working days to appear at the spanish court and defence yourself. IF YOU DO NOT DO IT, YOU WILL BE IN A SPECIAL SITUATION AND CALLED "REBEL", which means that no more notifications shall be sent until the ruling and you won't know what's going on until the end. It goes without saying that THE DEVELOPER WILL VERY PROBABLY ACHIEVE A FAVOURABLE RULING VERY QUICKLY, AS THEIR ALLEGATIONS AND PROOFS WILL BE THE ONLY ONES THEY SHALL TAKE INTO ACCOUNT.  for instance, if they had requested more than they were entitled to, you would not be able to discuss that.

- 4th step:   Once there is a ruling and you have been nofified thereof, then there is a time to appeal; if no appeal is submitted then the ruling is firm and definitive, which means you cannot fight it anymore;

- 5th Step: The developer shall contact a British law firm to have the ruling executed by the UK courts.This may lead to the seize of bank account saldos and other unpleasant consequences.

Consequently, it would be wise to consider that the developer can actually do this. Another question is if he is really interested in doing it or not, or if they have money to do it or not - it could be a bluff!. Please note that court action implies paying money in advance to start the process, and if this is applied to many purchasers the initial costs are going to be high. As an alternative, it is possible to approach the developer and try to reach a friendly agreement which would settle this situation.

Finally, the threats are considered  illegal under Spanish law when they refer to harms that they will cause in things like the phisical integrity, the honor, etc, such us "if you do not complete we're gonna kill you" and that sort of things. Reading the letter, I personally think that it is a warning of what could happen - and from what you have seen, it is for real - and also a reminder of obligations, and as such it is perfectly legal. Consumers laws shall not protect you to this extent.     

I hope the above helps. My suggestion would be to check the contract and your personal situation and decide then if there is a chance to reach an agreement with the developer. For that, we stay at your disposal.

2nd reply:-

This is a very real threat lurker of which few off plan purchasers are aware. This is yet another reason on why a Licence of First Occupation is so important.

We've gone over the matter of forced completion on this thread.

As from the time a developer attains the Licence of First Occupation as per art 1504 of the Spanish Civil Code he will communicate with the purchaser by means of a registered letter to inform him of a day and time of completion before a certain Notary public.

Failure to comply may result in the developer either witholding part or all the stage payments or else filing a lawsuit against the off plan purchaser demanding contractual fulfilment i.e. that he closes on the property. The latter would be a forced completion. 

As highlighted in our article on 10 reasons why your court case against a Spanish developer may be thrown out of Court, it is not recommendable at all to sue a developer once the LFO has been attained by them as the chances in general are very slim.

Which is why a LFO is a major milestone in the conveyance procedure and often marks the inflection point. A LFO means the property has been delivered legally according to our national laws.

As our colleague Fairway lawyers rightly points out Spanish judges are unsympathetic with speculators whove got their fingers burnt (property flippers). Which is why a lawyer will always try to portray his client as a consumer subject to Consumer Law protection. i.e. is unable to complete because of the change in financial circumstances brought about by the credit crunch and cannot raise a mortgage loan any longer or not enough to cover completion.

As the developer rightly points out, this matter is to be taken very seriously and there's little point in ducking one's head into the sand hoping the problem will go away by itself. Some developers may sue you, some won't; that's a gamble you take if you decide to remain silent.

A Private Purchase Contract binds both parties. This is a delicate issue on which one should take professional advice from a Spanish lawyer.