Contract Law in Spain

Dear All,

I for one am deeply concerned at the argument over property completion in Spain.

Goodstitch has said elsewhere that forced completions on substandard properties is "wrongheaded".

Roy has said that defects must be major and not just snagging items that can easily be rectified.

Maria has said that all that is promised must be provided.

Techno says no, no, no, contracts must be completed.

Many have said that they were forced to complete by their Spanish lawyers.

Completion is surely an acceptance that the contract has been fulfilled in ALL major respects

Surely then any attempts to change things afterwards cannot succeed unless there is some major undisclosed/unforeseen defect

Roy says that 10% variations are allowed.

Surely again natural justice must be involved in International contracts and Spain must abide by that.

I am probably way out of my depth and hope that Ads will take over and perhaps even Maria.

Regards

Norman

Norman correction to the comments I made as they were actually you can refuse to complete if there is a significant defect or if the property does not meet the agreed contractual specification, so please don´t generalise

Out of the many thousands of properties that I have checked there have been 11 occassions where the buyer was able to refuse to complete on the grounds that it could be proven that the property did not meet the specifications and, after sometime and yes legal cases, ALL of these people were able to re-claim their deposits, costs, compensation plus interest

There is also a test of reasonble behavour in the Courts, if you have not given the developer the opportunity to rectify anything how can you then claim gounds based on the initial defects

They key point was that they were able to prove that the property and plot dimensions were more than 10% under the contract details plus 2 where itnes were not fitted, electric blinds, a kitchen, white goods and other items and the builder refused to do anything

The problem is that what normally happens is that the client just says I am not completing without providing any proof and under these circumstances they may loose a Court case

The area where any promised facilities are not deivered, or where the property may now not be worth the contract price is a whole different arguement but nobody forced any buyer to sign a contract and a lawyer should have been advising you

With respect as I understand it , contracts have been drawn up with abusive clauses that have now been challenged and perhaps Maria can advise if these cases have been won.

Non deliverance of the product as per the marketing literature have also been challenged and won.

Thank you Roy,

but we are not talking here of a single dwelling on a residential estate.

we are talking of a luxury penthouse on a closed holiday complex with every possible holiday facility on site.

there was supposed to be gyms, indoor pool, etc plus a commercial centre.

the number of blocks plus outdoor pools was all fixed.

what was provided was an open public urbanisation with one extra block (above 10%) no sauna, indoor pool, gym, commercial centre, reduced open air pools, reduced apartment sizes (above 10%) etc.

the locals were dumping their scrap cars on site and using the open air pools, the tropical gardens non existent.

the build quality very bad with no acoustic insulation at all, damp penetration everywhere.

those that completed have done their best to provide garden improvement and to fence the locals out of the pools, but it is still an open through site.

the contract was signed by the lawyer in his native language and no translation was provided.

as has been stated here the shoe box property with all faults rectified did not approach the 425,000 asking price even at the height of the boom and of course to provide sound insulation would require demolition and rebuild. My own estimate of value to anyone wanting such accommodation was £70,000 at the time, but of course such a thing was worthless to me.

I understand that chartered building surveyors are not normal in Spain but my surveyor condemned the property immediately.

I do not know what the site representative was told at the time and the lawyer was no longer contactable.

Does that clarify things.

Regards

Norman

In this particular case I do not believe that the grounds are in anyway related to an abusive contract clause and recently I have seen cases go both ways in The Courts

Same on the facilities as yes I believe cases have been one but also lost on the basis that the developer simply enter a defence that they will, EVENTUALLY, build te facilities

We all know how corrupt the system is and unfortunatley on too many occassions it is simply the case that the as the clause was not abusive whe nthe contract was witten, then it is not abusive now and this is happening all th time with the 18 month completion clauses

Lawyers will take your money as they win win, the process takes forever, is very expensive and many developers are happy to delay cases while the markets change

One question is why when these lawyers all guarntee that you will win is there not a single lawyer willing to work on a no win no fee basis

I am sorry Norman but a structural surveyor cannot condem a property and if he has you will have a complete survey report and he would have to submit this Notarised to the Town Hall and this would give you LEGAL grounds not to complete, do have anything therefore notice wise in writing that you could mail me to look at, is he qualified to report in Spain

Have you done a snagging inspection or a FULL structural survey on the property because you seem unclear what has been submitted formally to the developer

Have you formally complained and requested infomation on the lack of facilities

The european regulations stand for acoustic instullation however you would have to remove sections of wall to prove this and have photographic evidence, do you have this from the surveyor

If you signed a contract in a native language and did not insist on a translation then this is your fault, I would expect everything explained and certainly would not sign the contract

Did the contract include a drawing with the square meterage for each room which will explain exactly what you would be getting

What are the number of blocks approved by the Town Hall. have they broken the terms of the building licence by building more blocks and, CAN YOU PROVE THIS IN LAW

The consideration for the 10% is on the actual build footprint of the property, not the communal areas, gradens pools etc

Are you qualified to value the property, have you had anybody independant value the property, have you had a bank valuation, it seems that the developer has lots of faults here but the crash of the property valuations in Spain is not his fault

Chartered surveyors are available in Spain, I use them all the time for legal cases but i trying to provide a balanced view here and apart from not wanting to complete after claiming various grounds I do not believe that you have followed any formal process and of course my comments are based on years of practical experience in this area

Dear Roy,

thank you for that,

you have put me on the spot and I need to do some digging but since the dispute with the lawyer over his signing of the contract without completion finance being in place, I have had no contact so do not know what he did further.

Without the language there is little you can do except go to another lawyer who speaks english.

This just seem to fizzle out some time ago with emails not answered.

Jerry posted..............

I completed in CDS. Build quality is fair, the apartment is small and the initial site finish was poor. However, we completed because because we realised that the off plan contract was not detailed enough to sustaina legal challenge and we did not wish to lose our deposit. .............................................................. Neither side should have been in that position, but the consumer has little protection and the Developers default is compounded by the general market collapse. We have chosen to accept what we have and make the best of it.

At the time some sort of group action was contemplated but seems to have come to nothing. Most take the view that it is an impossible fight to enforce a contract in Spain. Lets hope it works both ways.

I don't even know whether Jerry was sold through Mediterranean Luxury homes, it seems that more than one agent marketed with different brochures and different prices. Possibly he may not have been expecting a holiday complex at all?

Your own analysis is pretty bleak.

Regards

Norman

Other questions to ask:

Was a Bank Guarantee provided, intended to protect executive rights for refund? Was this requested by your lawyer?

Were you advised in writing or verbally by the developer or legal representative of any reason(s) for delay or request for an extension of time to complete?

Can you discount any force majeure claims by the developer?

Was the marketing literature not adhered to (this forms part of the contract)?

Were any planning consent for the sports facilities etc approved or even applied for as advertised in the literature?

Were there any abusive clauses in the contract (for eg 100% retention of deposit etc)?

Just some of the questions to ask in addition to any build quality issues that you can identify and prove.

Cases have been won against this developer but as Roy has observed it would be interesting to establish why Spanish lawyers do not appear to offer no win no fee as an option. Might it be because timescales are so hideously long (and abusive) that they too would have to wait indefinitely for return of monies under the present system?

Sorry there is still one question that you have not answered, you stated that your surveyor condemmed the  property, which is a very emotive word, and it suggests that you have had the property professionally checked

Has the property been checked by a qualified surveyor and a report done

I also don´t understand your comments about the signing of a contract, what contract the original sales contract, completion contract, lawyers cannot sign on behalf of a client unless you have given them your Notarised POA and you cannot complete without having finance in place at The Notary

What is relivent here is not what other people have done or are doing just what the particulars are of your case, they may have had poor legal advice form a not to independant lawyer, you need to retain the service of your own lawyer

Given the situation that you are in, and the lack of your understanding on specifically what has been done, and without formally registering the dispute with the developer you are at risk of being taken to Court and loosing

Dear Roy,

thank you again and how true...........

I did have had poor legal advice form a not to independant lawyer, you need to retain the service of your own lawyer

The surveyor was fully qualified but not registered in Spain or used to the formalities there, he rejected the property out of hand without a formal report since it was only a badly built apartment with no facilities as described to him from the brochure. There was just no point in pursuing the matter further, he reported to me obviously before leaving and I agreed with him, it just wasn't anything like that I had agreed to buy, yes I was persuaded by the first lawyer, a nice young english solicitor to give the firm POA.

That being for the sales contract, when I was contacted by the mortgage people and advised the terms all was revealed. I needed to falsify both my age and income.

Regards

Norman

Then I am afraid that the survey that you have had done has no validity in law and if you have failed to formally reject the property and notify the developers of the defects you are wide open to be taken to Court

You cannot check a property without producing a detailed report either structurial or snagging report, why was he there if he didn´t produce any report and how can you make any claim that the property was badly constructed

Dod anybody measure the rooms and acurately calculate the meterage as compared to the contract

The only obligation that a professional inspector has is to check the property to ensure that it meets the agreed speifiction in the exhibits of the contract

The surveyor cannot reject or condem the property as you stated in a previous mail ans possibltdoes not have specfic knowledge on the local planning regulations

Again Norman you are ckearly being badly advised here by  variety of people and you need to get some professional advice NOW

If you as you stated lied about your income etc you have also committed fraud but I am asuming that you refused to do this however you been talking abiout a €425kproperty so presumably a large mortgage

How much deposit have you paid

I am sorry Norman but as these posts progress there are a number of things that don´t quite make sense form my knowledge of the systems  

Dear Roy,

the deposit was 30% and I am afraid that the scam is more to get the 30% than it is to genuinely sell you the property. It is my view that the agent and lawyer (who were together at Excel) would tell any lie to get that deposit and the POA.

Of course I refused to have anything to do with mortgage fraud.

My surveyor was an english friend who does not practice in Spain, he was accompanied by a site representative to whom he made his views plain as best as possible, the representative was Spanish but english spoken. By this time the lawyer had retreated in response to my objection to the exchange of contracts without completion finance in place. So he had no copy contract with him.

MY daughter and son-in-law did the same thing with brochure in hand and refused the property with the representative, meanwhile my survyor had visited the local authority and discovered that the developer owned no further land for the golf course and facilities and there was no planning consent for these items or to have a closed complex. It could only be an open public through site.

This of course can all be confirmed in writing by all the parties, including myself as I also visited to see for myself later.

There was supposed to be an agent's office on site to deal with resales and lets but I don't believe there ever was. I am not sure there is anything else to tell.

Regards

Norman

Often when we have to deal with disputes there can be two sides ti every story and yes I can see that in this case the developer is clearly as fault, like many hundreds of corrupt scum bags out there are but you are not doing anything to resove this 

So can I please get things is perspective perhaps they have over €100k of your money and although you have made lots of comments on this forum including asking a variety of people what they are doing legally  you really don´t know what is happening with this purchase

Legally in Spain it is often not possible to have a closed site that is not open to the public as the local authorities own the roads

You have no idea what is actually in the contract as it is in Spanish, if you actually have a copy so you are not really sure what you actually signed for

You have no real documentary proof that the property, not the grounds and pools etc,  does not meet the specification, as per the sales contract because if you can prove it gives you grounds to cancel the contract

You have no documented list of defects

Can I then perhaps suggest that discussing things on here will not get you anywhere and that you need to obtain some qualified local legal support to help you and as interesting as the comments are, and of course I will try to help, this is going nowhere fast

Well done Roy for finally extracting from Norman the true facts regarding his problems in Spain

He is obviously the victim of a scam but I will leave others to judge how much he contributed

to his own down fall as the forum has become a little overheated of late .

Norman I think you should engage a good lawyer and pursue your case.

In all sincerity I wish you luck. 

Dear Roy,

thank you once again, I appreciate your help and advice.

you are of course correct but I like to keep things open as much as possible in the hope that it will aid others.

I think that information gives the forum most value, even if I sometimes have to suffer a little abuse.

Thanks again

Norman

Dear All,

thank you for your interest and before you judge please ask yourselves what you would have done in the circumstances.

I was faced with what I considered to be a small badly built apartment which I valued at the time at £70,000 say for arguments sake 100,000 euros, I had already paid 127,500 euros as a deposit. I was then being asked for a further 297,500 euros to complete by way of fraudulent mortgage to pass on to my children.

I just do not understand how anyone could do this but Jerry and others have done this (maybe without a large mortgage) and are "making the best of things" though the figures may be slightly or even significantly different if bought later "key ready".

He does say that his apartment is now worth a fraction of what he paid. A penthouse has not been able to sell recently fully furnished at 99,000 euros.

As far as I judge it was a monumental fraud.

Regards

Norman

I am sorry but when you purchased the property, off plan, you must, having done your own research, decided that the property was worth the contract value, you must have agreed the price and allowed and calculated how you were going to pay for the property

You also would have been given a contract which gives you the overall meterage for the property and room sizes so again if the property is small then this woudn´t have been hidden from you

One tip that we give buyers when helping furnishing is to mark out using tape each room and then use the measurements for furniture to get a real perspective on space   

The developer is potentially far from blameless however not responsible for the worlwide crash in property prices, if the price of the properties had risen would you have been happy to pay more than the contract value and you need actual proof here, you need a bank valuation as your valuation carries no validity, or does the value of another property being sold by a distressed seller

If there is a fraud again you have to prove it and then start the expensive lengthy process to recover your money and I must remind you that you have not yet paid anything apart from the deposit

Norman any amount of debate on this forum isn´t going to change your situation, get some help

This thread is realistic in setting out the position. We have a 2-bed with which we are now happy on the basis of the work done by our excellent Management Committee which has resulted in secure closed site, lovely gardens and pool areas and we have an apartment which we can enjoy. Time will tell whether court action will recover the costs. However, we must also accept that prices in the area are now 40% of what they were when we first bought. No contract arguments can alter that unfortunately. So many people got caught and of course the banks pulled away from Mortgage offers on the basis of lower valuations. As resession deepened, the rental market is weak with oversupply of apartments undermining income expectations. Thankfully, we love our holidays in CDS. We enjoy excellent golf at better prices and restaurant value is also improving. No doubt in time the touristd will come back and new buyers will return to pick up value. The boom and burst isnt unique to Spain - we had it in Ireland too with poor quality build thrown in at inflated prices.

Has the developer paid his management contributions to date, is he in debt to the community and if so how does this impact on the ongoing owners contributions? Has any group claim against the developer for return of costs been compromised by the developer asset stripping? What likelihood for return of costs on your additional expenditure to put good the landscaping and security etc if the developer goes into administration?  Are you claiming for lack of promised facilities (as per marketing literature) that were supposed to extend the rental season and provide owners' with onsite sporting and spa options? Have the flooding issues been resolved? How do you make good the sound insulation? Just a few realistic queries.

Dear All,

the fraud was total even including the promised guaranteed already in place mortgage, it was supposed to be at special favourable rates, in fact it was the opposite, open market rates were substantially better but if anyone went for those better rates the contract applied a penalty sum against you.

What lawyer acting for the client would agree to that in any language.

I must once again stress that my valuations were done at the time not current, it was just a case of "the emperors new clothes".

What Jerry has done at his own expense is to fence off individual blocks to try to keep the public out.

There is nothing he can do to retrieve what was in my brochure.

I assumed that a considerable part of the price was for the complex facilities not just for the substandard building.

Regards

Norman