I would say so if we take a look at how they have indemnified their clients for not building Lar Sol Estepona. Not only have their insurers repaid 100% of their deposits plus interest, but now an out of court settlement has been reached with Grupo Lar so that a group of investors that never got their homes also get, additionally, compensation valued at almost 50% of the original deposit they paid.
Admittedly, this penalty clause was not imposed by us back in 2005-6, when exchange of contracts took place, but was offered by Grupo Lar to prove their commitment to the project and boost their sales.
This is probably the best outcome any investor could have had as not only was the deposit returned, with interest, but also an additional payment received at a time where the exchange rate will allow them to buy 20% more sterling than they had to disburse to buy the Euros and…, they did not have to complete on a property that would have been worth, in the best of cases, 30% less.
It may not be worth mentioning, given it was a bit of a no-brainer, but Larsol’s obstinacy in challenging the validity of a penalty clause has merited an otherwise underserved publication.
The particular clause was a classic client-pitching enticement to lure fresh money into their accounts. It stipulated, on the Larsol-Estepona contracts, that if the development was not built, a 50% penalty refund (calculated on the deposit paid) was inmediately available to clients.
Larsol fought back stating that the works had not been completed due to delays attributable to “third parties”, even if these were not identified nor proof put forward to substantiate the claim.
The judge stipulated that the clause was fully valid insofar as the works had not been finished on time, irrespective of whether those third parties were at fault.
Zurich had already repaid the capital previously, via enforcement of the developer’s insurance policies, and this was further used as proof of Larsol’s contractual default.
Mr Luis Fernando Gonzalez Ordoñez from Lawbird secured successfully the deposits of seventeen clients who had purchased in the Estepona development named Santa María, by developer Lar Sol, after initiating the bank guarantees execution procedure.
Prior to retaining Lawbird’s legal services these clients had been waiting for over a year to be refunded due to a breach on late delivery of the property. In less than three months Mr Gonzalez assisted by Mr Raymundo Larrain Nesbitt managed to recover their full deposits with the legal interests accrued. In total over €700,000 recovered which have already been safely transferred to our clients.
About half our clients have decided to carry on with the court procedures to demand from Lar Sol a compensation of 50% of their deposits. The developer, by means of a clause in the private purchase contract, agreed to compensate purchasers with this amount if they could not deliver the properties on time.