Cajasol has been ordered to pay €180,000, plus costs and legal interest, to 2 claimants who had bought 2 properties in Jardines de Manilva (Gardens of Manilva) some years back, through Ocean View Properties.
In spite of the properties being finished, it was established by the Courts that the unattained licenses of occupancy on the completed projected were a fundamental breach of contract that hampered the legitimate aspirations of property purchasers, following undisputed case law on the matter.
With regards to Cajasol, who was found jointly liable to repay the deposits as they had offered a collective bank guarantee to protect advance deposits (no individual bank guarantees had been issued) the Judge dismissed the allegation that the collective bank guarantee was capped at €2,500,000 and that it had already been fully used up to repay other claimants.
Quoting the Judge in charge of Court number 3 in Estepona, article 1 of the 57/1968 Act on Guarantees on Off-Plan Property Deposits states that the bank is responsible of ensuring, under its own responsibility, compliance with the conditions of the guarantee as well as the above cited Act for which reason, it is not acceptable that the bank now tries to excuse its obligation by invoking a quantum limitation established on the collective bank guarantee to now pay.
Cajasol should be paying out the sums ordered by the Court within the next 3 weeks.
As usual with cases dealt with by Lawbird Legal Services, a copy of the ruling is available for review.
Within a space of time of less than 2 weeks, Huma Mediterraneo S.L. and Promociones Inroal S.L. have filed for voluntary insolvency (CVA) due to the adverse current economic climate.
Huma Mediterraneo’s flagship development, “Cuevas de Almanzora”, was never built in spite of which approximately 400 buyers paid their deposits.
Promociones Inroal S.L. has taken money from a large group of investors and equally, has left them stranded, “Azahar Villas” and “Los Olivos” being some of the unfinished developments.
Customers who had bought off-plan property from them and have not received their properties, or money, are now requested by the Courts to register their rights with administrators.
Experience tells us that whilst registering the credit (paid deposit) is convenient, adhering to a future creditors proposal would be counterproductive to the investor’s interests for legal technicality: banks will use this to stop payment under a “Bank Guarantee Action” arguing that they are bound by the investor’s adhesion to the agreement in respect of delayed and reduced debt repayment terms.
The advice we can provide is that investors study the options offered by different firms against bank(s) that should have guaranteed the deposits, in the first, or the lawyers whom, in spite of their statutory obligations, failed to obtain a bank guarantee to secure the investment.
A recent Court judicial pronouncement by Court of First Instance 17 in Malaga tightens the noose on La Reserva de Marbella. Although the reading of the ruling can be tedious, save for if you are the claimant , the acting lawyers (us) or an avid reader of boring Court rulings, it is remarkable in that when typing up his conclusions the Judge, Mr. Antonio Valero González, has managed to extend the length of one sentence, with no full-stops, to…5 full pages (please help me find one (PDF))!! The findings of the Court can be summed up as follows:
- Older case law where a party was to be found deliberately obstructing fulfillment is now replaced by a less severe breach of contract: the standard now in off-plan property construction is one where the breach frustrates the legitimate aspirations of the buyers, preventing them from reaching the economical aims pursued.
- La Reserva de Marbella S.A. obtained the license of occupancy on the 1st of June 2010, and on the 28th of October 2011 the Administrative Court 2 in Malaga ratified the right of the developer to retain the license, a ruling that is not firm. Mr. Valero points to the irrelevance of this item, given that termination was instigated well before.
- High litigation activity on this development has meant that La Reserva de Marbella S.A. has created case law of its own, in the Malaga Courts. The judging magistrate concludes that an almost identical court case ruled on the 14.10.10 already deals with the issues surrounding the delay: lack of proper or legitimate planning compliance. Quoting the cited ruling, the magistrate delivers a fatal blow: it is clear that the defendant and seller is obliged to deliver a property in an able condition, to be used and lived in, being obliged to adapt the construction to current planning regulations to the extent that, if this is not in place, the property is not susceptible of being occupied and in fact, could even be demolished.
- The sale of a property without an occupancy license represents a serious breach of contract, and property buyers are notforced to sustain the vicissitudes of an administrative nature i.e. build license, that was only achieved 5 years after completion was agreed to.
- Counsel for La Reserva de Marbella S.A. argued, not without reason, that obtaning the license of occupancy was not instrumental in attaining full legal compliance, an allegation based on two Supreme Court rulings of the 10 of October of 1987 and 1989. Luckily, Magistrates at this very High Court in Madrid also get replaced and antiquated viewpoints also get replaced by more modern opinion (Supreme Court 24th of May 1991, 16th of March 1995, 28th of May 1996 and 23rd of October 1997).
Now straight on to the tricky stage of enforcing the ruling!