The Spanish Supreme Court has declared that a contract signed by an Irish purchaser with the developer Marbella Vista Golf S.L., for a unit in Santa Maria Green Hills, was validly terminated by the purchaser.
The Supreme Court has argued that for a property developer to comply with the contract not only is the unit to be completed, but it needs to have the mandatory license of occupancy.
The Court of First Instance in Marbella deemed that the developer could not be held responsible for not having the licence, as it was up to the Town Hall to grant it and so, it was out of the control of the developer. The Appeal Court reversed this decision on grounds that granting licences of occupancy by administrative silence was not valid, if these violated planning laws and regulations. On appeal, the Supreme Court ratified this conclusion.-
The Court also deemed that foreigners deserved extra protection given that, whilst their understanding of the laws was lower, they trusted the reliability of the Spanish system of protection of property rights.
The building licence came under scrutiny from Marbella Town Hall as the residential complex had been built on land zoned for one family Andalusian style homes and had been challenged by the Junta de Andalucía.
What Marbella Vista Golf SL had built was eleven blocks with 42 separate entrances, with carparks and communal zones, making up the residential complex of Santa María Green Hills.
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:
- Contractual default as the property had been finished late and
- 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.