Monthly Archives: March 2010

Favourable Ruling Obtained on Appeal of a Counter-Claim Won by Santa Maria Green Hills Developer

March 26th, 2010

This is a very interesting Court ruling (and expensive to the developer!) where our client-claimant, who attempted to cancel her contract on a property at Santa Maria Green Hills, was counter-sued by the developer who requested from the Courts that specific performance of the contract was enforced (basically forcing her to complete) and, as it happened, lost her case and was forced to complete. In this case, Courts also awarded costs on the losing party so we had a tough telephone call to make…

Fortunately, though, she trusted our advice and we went for appeal and, as we were predicting (due to similar cases being judged on the matter), the more mature Appeal Court in Malaga overturned the case and awarded cost on the developer.

In this case, our very patient Irish client had approached us seeking contractual rescission on 2 main grounds:

  1. Contractual default as the property had been finished late and
  2. Unenforceability of the License of Occupancy, which in this case was understood by the developer to have been granted by administrative silence (this being a statutory mechanism designed to prevent administrative inefficiency and misfeasance and in the developers opinion, applied even in the case of properties with build licenses issued against regional planning regulations).

The Court of First Instance had determined that the License of Occupancy, based on administrative silence, was fully valid and also there had been no significant delay that would merit a contract cancellation ruling and therefore issued a sentence forcing our clients to complete on the unit. The Court of Appeal in Malaga (Audiencia Provincial), following similar recently passed rulings, dictated that it was not possible to consider the License of Occupancy issued by administrative silence as valid for it was clear that it was issued against planning regulations since the master urban plan or Marbella was never formally approved, adding that it was not the legal duty of the Civil Courts to determine the validity of this license but an Administrative Court.

As a result of the Court, our client saved the cost of the first instance (which happened to be monstrous due to the accumulation of 2 simultaneous cases in one) and was entitled to execute the ruling to get her deposit back, which amounted to over €120,000.

Corvera Group Case: Client Questions Answered 2

March 23rd, 2010

We are answering below a few interesting questions we have received in the past few days from people interested in joining the the Lawbird Corvera Golf and Country Club Group Case. Should you have further questions, feel free to put them forward.

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I have been told I can be interrogated by the defendant’s lawyers during the hearing which means that I would have to fly to Spain. Another lawyer said that I can refuse to attend this since I am in a different country. Can you please advise?

If the defence lawyer requests that you attend the hearing to be interrogated you must certainly comply with this, because otherwise the Courts could determine that you are in agreement with all the questions raised in your absence! This means that you have to be prepared for this possibility although there will sufficient advance notice so that you can book your flights and accommodation, so don’t worry! We will in any case prepare you for this, and go through likely questions to be asked as well as the answers.

 

  

I believe that based on Article 1469, if the area of an off plan property is more than 10% less than the agreed area, you can request termination of the contract and the return of your deposit. This I have been led to believe is also true if the the value of the property is more than 10% less than it should be due the developer failing to fulfil his obligations, in our case the facilities. So the question is would we be able to terminate the contract and get our deposits returned if we can prove that the property was worth more than 10% less than it would be at the time we applied the Resolution of contract in June 09?, compared to what the property would have been worth if the facilities were in place. Or alternatively if the judge decides to compensate us by reducing the purchase price by 10% or more, in so doing he would be effectively stating that the value of the property is now worth more than 10% less as a result of the lack of promised facilities. Could we then ask him to terminate the contract and return the deposits due to this 10% rule?

The interesting point you raise is covered by article 1469 of the Spanish Civil Code (Spanish) according to which, if the sale of property was made on the basis of a price per unit of measure or number the seller will be obliged to give the buyer the full amount agreed on the contract. But if this was not possible the buyer will be entitled to opt for a proportional reduction of the agreed price or the contractual rescission provided that, in the latter case, the shortfall in size is not less than 10% of the size initially attributed to the property.

The first obstacle which I see to this is that rarely off-plan contracts are actually sold on the basis of price per square meter. This means that, in principle, this clause would not apply. However, selling the property “as seen”, that is, after having agreed to the product as a finished one is impossible because it is not built and therefore Consumer Protection Act rules could be invoked to make this sale subject to price per square meter, and effectively apply the clause.

In order for you be able to prepare a case on this basis, access to the properties will be necessary so as to measure the property up. If it is concluded that there is a shortfall of more than 10% of the agreed size, then it is possible to request a contractual rescission, but then again it would be necessary to prove that the sale was made per square meter (which the contract does not mention), by application of Consumer Protection Act provisions.

If the shortfall is less than 10%, then this can be the basis for reducing the price, but careful, because if what you want is to cancel the contract, then this has to be invoked as a secondary petition to the Courts after contract cancellation for lack of promised facilities.

Finally, with regards to the value of the property the law does not have specific provisions about this, although it can certainly be invoked, but has to be proved with at least two reports from registered real estate agents (we have requested reports for our claimants to this effect since it reinforces the issue of lack of facilities).

As a conclusion, if there is a suspicion that the properties are smaller than the promised size by more than 10% this can be invoked together with the lack of facilities, with the observations I have made above. Our firm is cautious in this respect because we don’t want to be seen as looking for every excuse possible to pull out, but for a fundamental and very crucial one, this being the non-built facilities.

 

 

We’ve paid €75,000 as deposits (30% of purchase price, incl. IVA ). Can you please provide me with a breakdwon of costs in the different possible scenarios?

Please find below clarification. On a €75,000 (incl. Vat) deposit, the breakdown of costs would be:

  1. Retainer: €3,500 VAT included (based on a group of 25 claimants)
  2. Lawbird maximum fee (10%): €7,500 VAT included. Balance is paid on recovery of funds (which in principle would include also interest and legal costs. Should legal costs be recovered, a full refund of the retainer would operate and we would be entitled to 10% of total amount obtained for you (liquid funds in bank account).
  3. Counter claim retainer: 65% of €3,500
  4. Appeal retainer: 50% of €3,500 (this retainer is regardless of whether we challenge a ruling or oppose an appeal lodged by the defendant.
  5. Insolvency: No further fees in this instance to join the creditors list.

 

  

What are the costs if you have 2 identical properties. I unfortunately have 2 properties, and I believe quite a number of other people on the forum also do.

We have finally decided to charge the same to claimants who have 2 properties and those who have 1 which means that there will only be one single fee for both cases (equal to claimants with 1 property/case). The reason for doing this is that we can consider both properties to be part of one claimant, within the group action. This however does not mean that it will occur the same if the case is lost as then the Murcia Bar Association Fee Guidelines apply.

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For further information, please visit the Corvera Golf and Country Club Group Legal Action page.

Another Favourable Ruling at La Reserva de Marbella

March 20th, 2010

Lawbird Legal Services has obtained a favourable Court ruling in a Group Legal Action in a first ruling against property developer La Reserva de Marbella S.A., on the 15th March 2010, acting on behalf of a group of British clients.

Our clients had purchased off-plan property from La Reserva de Marbella S.A. for a number of units at the 400-unit development called La Reserva de Marbella, Elviria, Marbella East (Málaga), and invoked contractual rescission on mainly 2 grounds:

  1. The property did not have a valid license of habitation (or first occupation)
  2. The properties had been delivered late.

The defendants lawyer (a former Attorney General’s office solicitor) put up a very qualified defence based on the following:

  1. That the claimants were investors and not end-user buyers.
  2. That lawyers were retained to ensure that the legalities were complied with when contracts were signed.
  3. That since the administrative Court case filed by the Andalusian Government expired, further invoking that as a result the license had been approved by “administrative silence”, the aforementioned license was fully valid.
  4. That the properties had been delivered on time as the 7 month delay was fully attributable to strikes.

Our solicitors successfully challenged each of the lines of defence put up by the defendants’ lawyers, and obtained a favourable ruling based on the following legal grounds:

  1. That the license of occupancy had not been granted at the time of cancellation of the contract, and if fact it is still not been granted, even though the judges stresses the fact that it is not for him to decide if the license if valid or not but the administrative Courts, which have exclusive jurisdiction over this matter.
  2. That although the properties had been finished only few months after the designated time, these properties were not able to be legally transferred until the license of occupancy was validly granted, which was not the case as the Town Hall in Marbella had rejected it.
  3. That as a result of the lack of licence, the properties could not be delivered with the necessary conditions of habitability, security and salubrity, which is a mandatory pre-requisite to handing over a finished property.

Having accepted our claim in full, the judge ordered the defendant to:

  1. Refund the principal amount, this being the deposits paid on account of the price.
  2. Pay legal interest since the time the deposits were paid and not when the contracts were cancelled, increased in 2 points from the time of issuing of the ruling.
  3. Pay the legal costs (which effectively means that our clients would have the legal fees reimbursed).

It is important to note that, in this particular case, our clients were requested to attend the Court hearing on petition of the defendants, which we could not refuse, and therefore they had to fly to Spain for this matter. They were duly cross-examined by the defendant’s lawyer by means of a qualified translator. Unfortunately for the defendants, we had a two-hour meeting with our clients where we went through the probable questions La Reserva de Marbella legal defence team would throw at them and prepared the answers carefully.

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Corvera Golf and Country Club Group Case: Registration is Open

March 19th, 2010

If you are interested in pursuing a legal claim against Calidona, at their development Corvera Golf and Country Club, for contractual rescission and refund of deposit paid, plus interest and legal fees you can submit the following form. The purpose of this is to know how many buyers in this development would consider joining our Group Claim against Calidona in the understanding that it does not commit them to take up services should they eventually retain a different firm or decide to not act (note that buyers in Phase IV are not included here as legal grounds to litigate are different from the rest of phases and therefore form part of a separate claim ).

Contact Details:






Information on the case is being added to the Corvera Case Home Page.

Thank you

Antonio Flores

Successful Group Action vs. Manilva Costa, S.A.

March 4th, 2010

Development: Jardines de Manilva

Lawbird lawyers have won a Group Action Law suit in a First ruling against developer Manilva Costa, S.A. on the 25th February 2010 acting on behalf of a group of British clients, who had purchased off-plan property from Manilva Costa, S.A. in well-known development Jardines de Manilva (Manilva Gardens), located in the municipality of Manilva. They all purchased off-plan units through British Real Estate Agency Ocean View Properties (OVP) which has now been legally wounded up in the UK. The judge dismissed claims from Manilva Costa alleging it was only OVP which had received the funds and that they had at no time received any funds from our clients nor were they a party to the Private Purchase Contract (PPC) (!) as they had at no time signed any of the purchase contracts. The developer’s claims were overturned one by one in view of the substantial evidence collated by our legal team whereby the commercial relationship and the roles assigned to each were irrefutably established as well as Manilva Costa’s acknowledgement of having received our client’s stage payments. The judge concluded all the PPC were valid and binding despite not being signed or even acknowledged by the Spanish developer.

The judge went on to rule the Spanish developer had breached the Private Purchase Contract on four different accounts:

  1. Late delivery in handing over the property.
  2. Lack in attaining the mandatory Licence of First Occupation (LFO) which is required to occupy and live in a dwelling.
  3. Lack of promised communal facilities which enhanced the resort’s value (Social Club) as promised in the developer’s glossy brochures.
  4. Non-performance of promised features included within the Private Purchase Contract which resulted in a significant decrease of value of the new build properties (i.e. the built size of units was considerably less, reduced number of bathrooms etc).

Estepona’s lower court has now sentenced the developer Manilva Costa, S.A. to:

  1. Refund our clients their deposits in full amounting to over 400,000€
  2. Pay the legal interests accrued on the said amounts.
  3. Award the legal fees to our clients, meaning the developer will pay for them.

Documents