Deposit contract

A couple of  legal tips:

Be sure of discuss things through from the very beginning ( deposit contract). I wrote a piece a time ago on this: http://www.costaluzlawyers.es/eng/?p=33

You can never be "forced" to completion if there is a breach of contract ( delay, lack of utilities...) by the other side. Don´t be afraid of requirements to complete under threats of cancelling and/or losing deposits.

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I take your point Maria and I appreciate that the essence and theory of the law is on the purchaser's side in these instances. Nevertheless in practice a great many lawyers in Spain do not appear to stick up for the rights of their clients - there is a strong emphasis in favout of the developer - perhaps these lawyers are scared of upsetting developers as the dvelopers are a lucrative source of business for them. I know that not every lawyer is like that but I have experience with clients (many) who are being told to complete in Marbella even without 1st Licence - the only person who appears to be informing them of their rights and advising against it is me (a mere mortgage broker and not even a Spanish native) - not only is there no licence there is no silencio so how can the lawyer be pressing the client to complete if they are acting in the clients best interests?

I even have a client whose lawyer has stopped returning e mails or phone calls when apparently it clearly states in her contract that she can get a 50% refund of deposits paid if she does not complete. She put down a 50% deposit on a purchase of about 400,000€ and the developer is apparently refusing to honour it. Nonetheless her lawyer apparently does not want to know.

Rgds  

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Smiley, (et al)  it does seem to be a recurring theme in these message boards, that lawyers appointed by or recommended by agents or developers don't have the purchasers interests at heart. I don't think it can be emphasised enough how important it is to find your own genuinely independent lawyer. I think also there are many of our fellow members out there who are not fully aware of the importance (even the existence?) of the First Occupation Licence, especially with (and despite of) what has been going on in Marbella and elsewhere recently. Hopefully EOS and it's members are helping to make people better informed on such things. Well done Julian & the team!

Just one question, Smiley, what is "silencio" in this context? 

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Sorry Roberto thought everyone knew "Silencio de Administrativo" means silence of administration. It is a weird situation but all the same a statute in Spanish law. The 1st occupation licence is applied for. The Town Hall ignore it for three months - I think officially the developer then has to apply again - again another three months elapse. At that point it is deemed the Licence is granted under silence of administration - a certificate is issued confirming that as it has not been declined it must have been granted - crazy place Spain huh? As far as the developer is concerned he has fulfilled his obligations. The licence can only be applied for after the Final de Obra (end of works) and the Horizontal Division (essentially splitting of the land) have been signed off by the Notary.

Ignoring the corruption angle this was the start of the problems in Marbella in that Junta de Andalucia announced that silencio would no longer be considered acceptable in May 2005. However as it is a statute in Law, constitutionally the Junta cannot make that decree. Who is right and who is wrong - who knows - not me!

As the Junta had made the declaration the banks then started to run scared of their legal position advancing mortgage finance on the properties in this position. Many many conflicting views on this, but then they say the law's an ass. There are many people who own property in Spain thinking they have the official licence when in fact they have one granted under this procedure. 

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So silence gives consent? (Or not) I've just learnt something new - which is what we're all visiting this site for after all.
But who issues the certificate confirming that the licence has not been declined? And is such a certificate sufficient to apply for such things as the boletins to get utilities connected, or vado permanentes for garage access?

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Hi Roberto as a statute in law it means the licence is granted because it has not been denied. This is why many lawyers have argued over the last 18 months that clients should still complete even without the official one  - the procedure has been followed in accordance with the law and it is neither the buyer's nor the developers fault that the government closed down the Town Hall and threw Roca and Yague in gaol thus if there was still an administration the silencio would be there - confused yet?  The lawyers also argue the regional government cannot outlaw (or suspend as that is what it is) this procedure as they cannot deem National legislation to be illegal.

What a lot of the banks are saying is that without the official certificate confirming it was applied for but had not been responded to then they cannot possibly consider silencio de administrativo exists - its a rum situation because the appointed administration will not issue said certificates understandably.

I have no idea how many occupancy licences in Spain have been issued this way over the years but I have no doubt it runs into hundreds of thousands - after all it is acceptable law and part of legislation - thus everything that goes with the official licence also goes with the unofficial - at least it always did.

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I am impatiently awaiting the completion of a property for which I paid the deposit 18 months ago and should have been completed by 30th September 2006 (not long I appreciate). However, there has been a major dispute between the developer and the town hall which, rumour has it, has been resolved by the developer agreeing to release 1/3rd of the total development to the authorities for social housing. Now, I'm no snob but I fear the development will be over-run by stray dogs and the like. I see the value of my investment plumeting overnight and fear I'll not find it easy to rent out.

My lawyer, who has been near to useless throughout, has now said that the houses affected (presumably the 1/3rd above) are not social housing but rather viviendas de proteccion oficial (VPO) which is something totally different. Has anyone come across this term before? What does it mean? Apparently a certain percentage of the development has to be given over to VPO but does anyone know how much? Finally, if the actual percentage of VPO granted exceeds what is required, do I have any recourse for the return of my deposit without a penalty (which will be levied despite the over-run on the works if I pull out now)

Here's hoping for news

Keith

This message was last edited by Frustratedkeith on 2/13/2007.

This message was last edited by Frustratedkeith on 2/13/2007.

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VPO is essentially affordable government housing. I guess the closest parallel you can make to the UK is Housing Association. A VPO order on a property has a pre designated life span - 20 to 25 years. My understanding of it is that a property with a VPO can only be sold or purchased between Spanish residents of a certain income level (however some historically have slipped through the net). As such it is sold at reduced price and also it will have a reduced bank value during the life of the VPO because it cannot be sold on the open market. For example I had a client who decided to buy a VPO property in Fuengirola approx 2 years ago. The VPO had in fact expired but nobody had bothered to register it as such with both the regional government or the Land Registry - this process has taken nearly 20 months. The vendor should in fact not have been able to buy the property in the first place when purchased 10 years ago (as they were non resident) but clearly something happened at the Notary at that time that nobody is aware of now we are in 2007. The purchaser was paying 190,000€ for the apartment but the official assessment for value given was 66,000€. The vendor had to pay a "fine" (administration charge) to have it released from the VPO although the VPO had expired. The 2005/7 vendor had in fact paid cash when they bought the property in 1995 and had not used a lawyer so goodness only knows what was done.

Hope that answers your question but if you are not happy with your lawyer you should perhaps be considering other courses if action.

Rgds   

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Thanks Smiley - very helpful indeed. Do you know how much of a development is generally given over to VPO?

Re changing lawyers - I used a different lawyer recently for the purchase of my main residence. This guy was absolutley fantastic. Only problem is that he is not interested in acting for me on this particular development because (I believe) he has a very close working relationship with the local Unicaja branch manger. Unicaja have financed the project and offer the subrogated mortgages. I have recently (yesterday) been put into contact with another lawyer who is acting for a number of other buyers in this development. According to him, we have a case for the contract being illegal. We have no right to the return of our deposit unless we sue and prove the contract is illegal. This, I am told, we have to pay the costs of and could take 3 years. Somewhere between a rock and a hard place springs to mind.

Still, summer is on its way!

 

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Hi Justin,

I noticed your posting on the other message board that Maria Castro had recovered many deposits for her clients including some from the eyeonspain membership. You are probably aware that I have been working with a group of investors to recover our deposits for our development that has been delayed now for over a year plus other issues relating to; lack of bank guarantees, build quality and orientation.

Having spent many months working with our lawyer to build our case against our developer I also instructed him to find ANY Jurisprudence available for cases successfully taken to court on the CDS or Costa Blanca in the last 2 years? To date he couldn't find any that had gone through the full hearing process successfully? The only successful cases appear to be ones where either the development was never built, illegally developed or through serious breaches of Contract! I wonder who has been successful in cases similar to ours since the market downturn in 2004? Prior to 2004 many developers would have refunded deposits for delays knowing that they could sell on for more profit. This is NO longer the case for a typical 2 bed 2 bathroom apartment!!

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Mike, we get A LOT of emails from people who are anxiously trying to get deposits back.  To date we have not had any where the actual case has gone to court.  The cases we know about have all been settled out of court.

I would be interested to know too if developers would be less willing to give deposits back seeing as the market is much quieter now.

Anyone any experience of this?

Justin

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Hi Justin,

I raised this point has I believe the majority of Investors who have bought into off plan apartments since early 2004 are now facing some very difficult decisions about their investments! In most cases they had never intended to complete, their sole intention was to sell on their contracts for profit? ...........having spent the best part of 18 months learning who to listen to, who to trust and who to ignore! I seem to have gathered a vast amount of information about the legal process associated with recovering deposits! I've received many comments from different lawyers and even on these message boards  clearly stating that a short period of delay in contracted completion constitutes a valid reason for cancelling their contract, I DISAGREE WITH THESE COMMENTS STRONGLY"" My own research compiled over nearly 2 years clearly identifies that any litigation taken against developers should not begin until at least 6 months after the contractual completion date or it will probably fail? At best the courts will offer a small amount of compensation.

I'm sure many of you who read these message boards will agree that the The larger Promoters on the CDS, Developers and their so called recommended solicitors have grown very fat these past 7/8 years and now it appears it is now the time for THE LAWYERS to take their share!!

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Mike, it seems one of the buyers at La Condesa de Mijas Golf development has just managed to get her deposit back through the courts.  Thought you might want to contact her for for your research.

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