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The Naked Agent Spain

The Naked Agent Spain gives buyers an insight & some insider tips to the property purchase and mortgage process in Spain. Hopefully this will make your buying journey a little more stress-free.

Why are so many developers going bankrupt?
10 August 2008 @ 20:44

Every week we read stories of developers in Spain going into administration or falling into financial difficulty.  This gives little or no confidence for those of us looking to buy in Spain.  Reality shows it is the same story in UK and US -  we just need to look at recent examples of Taylor Wimpey  and their financial difficulty in the UK.

But who is too blame?  Obviously, recent market conditions (high interest rates, high prices, currency exchange rates,tougher lending conditions and Spains rediculous attempt to improve the planning laws) have played their part, resulting in fewer buyers purchasing off-plan or new properties.  As a result, many developers have struggled to maintain a decent enough cash flow to maintain operations - ie: pay the banks back on the mortgage financing they had in place with their banks while paying their contractors to finish off the building works. 

Essentially, during the boom times the banks were all too keen and quick to lend money, and as a result many of the developers are now over-leveraged, and cannot afford to pay back on their loan commitments.  The developers 2 to 5 years ago would have paid a premium for the land, and that in turn got translated into high prices for the buyer. 

Where does this put us as the buyers? In short, given the current market climate, it is best for buyers to look at buying something which is built and established, rather than taking a risk at something which may or not be  finished.  However, for those of you who are not risk averse and are willing to take a punt and long term view, it may be a good time to negotiate a good deal with most developers.  My advice would be stick to what you can touch and see (something that is built with ALL licences in place)...If not walk away!

Essentially the Government and the Banks are to blame for this mess in what we could call a mixture of 'bad' urban planning laws and a lack of regulation coupled with unethical lending.    Spanish banks however continue to post decent results, but I fear the reality will hit home to some of them who have over exposed themselves to developers whose business plans were not thoroughly scrutinised.  

Anyway who likes playing the market, and is willing to research which banks may be over exposed to these problems, may stand to make a profit by shorting the shares. However, I am no stock market investment guru, so we should leave that to the pros.

Hasta pronto



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30 Comments

Kelvyn Price said:
11 August 2008 @ 18:48

Can you tell me whether there are any signs that Polaris World Spain might be in trouble. Based on the above article and reading the articles on eye on spain, it would seem that a large no. of people could be exposed if they continue with their purchase processes and all the facilities promised do not emerge, or if they suddenly go bust. We are in the proces of having to stump up the remaining 100,000 euros for a penthouse appartment on Los Narajos Condhado de Alhama in mid October


Naked Agent Spain said:
11 August 2008 @ 23:52

Kelvyn - I would check your contracts, and ensure you have full bank guarantees in place to cover all of the amounts you plan to pay. I would check which bank these guarantees are drawn up. The Spanish term is an 'aval bancaria'.

Definitely consult your lawyer, and ensure you are 100% protected for the value you plan to pay. Further more, ensure all the licences are in place for the whole development, your apartment and all the services, and ensure there is a completion / break out deadline / clause in the contract for you. I cannot give you specific advice for the promotion you have bought in, but make sure all your finances are in order and how you plan to complete on the property in the future (especially if you need a mortgage). My book has some good tips on this, but really it is best to consult your lawyer, and get any responses officially in writing. You can also ask your lawyer to run background checks on any debts/emabargos the company may have, and apply for their company documents, to ensure they are in good financial health and are not over-leveraged.



Paul Reader said:
15 August 2008 @ 11:54

I have purchased a property which is finished and has the required certificate. I have paid 64000 euros but do not have the balance to complete. The builder has gone into liquidation but I understand the sale can still proceed. I am prepared to take a substantial loss on the 64000 euros. How do you advise I should proceed?


Naked Agent Spain said:
17 August 2008 @ 22:11

First of all you have to decide if you want the property. If you definitely can't complete, then your best bet is to try to recover as much of the money as possible. If you have a bank guarantee in place, all monies paid to date should be secured. However, you need to check your private contract to see exactly what is written in the event you choose not to complete. Make sure you get your lawyer to explain each point so you know exactly where you stand legally.

If the developer is in liquidation, then check to amkesure the development is fully finished, and there are no problems with the construction. Check the property yourself, and ensure all the amenities, facilities etc are inplace and working. Check with other owners and the town hall yourself.

With investment properties, we win some and we lose some. In some cases it is a question of losing some of your money, and focusing on the next opportunity. IN this case, it is your decision, but check your contract first. If the developer is bankrupt, then your only bet is strike a deal with the lending bank, or try to recoup your money from the bank guarantee

The Naked Agent Spain
www.nakedagentspain.com
Author of "Your Stripped Down Guide to Buying a Properrty and Getting a Mortgage in Spain"


moll said:
23 August 2008 @ 21:54

I have bought in corvera golf and country club I have a bank guarantee for my deposits could you tell me is there an expiry date on the guarentee and should I check the guarantee with the layer .I am paying for this apartment with my savings and do not need a loan.


cheeeky said:
12 September 2008 @ 21:07

are properties deamed complete when build but have no habitation licience.how do purchases stand if they want to claim deposits back because they are tired of waiting for the habitation licience to be issued.can they go ahead and execute thier bank or builders gaurantee's.with out fear of losing al of thier hard earned money.



Naked Agent Spain said:
14 September 2008 @ 07:58

To Cheeky & Moll

On separate issues, but you should both consult your lawyers to check
a) For Moll - your bank guarantee - check the amount that is covered and the process in the event you have to execute it.
b) Cheeky - Check your private contract to see how long you can wait before completion, and if there is a penalty/opt out clause. If the license is taking along there check with the townhall that the developer has indeed finished the development and has paid his taxes (Ask for a Certificado Fin de Obra, and then ask for proof that they have a least applied for the Habitation License (Solicitud de Primera Ocupacion). If they haven't, find out why. If they have consult the townhall as to why it is taking so long. Ensure what has been built is what is legally being built in line with PGOU in your area.
Sorry for taking a while to get back to you both



edward said:
25 September 2008 @ 19:57

Re polaris world. we are midway through purchase on condado alahama, does anyone have any cast iron assurances from Polaris that all the amenities / golf courses/ village /spa. etc etc will get built to their advertised degree.
If not then surely the effective value of all the properties is reduced.
Would we have a case under law to get reduction of price,or deposit back if they break their contracted .advertised obligation.
regrds
edward



roger wiggings said:
08 October 2008 @ 14:26

I am an ex sales worker for Polarisworld they will have great difficulty in building the amenities you promised but your contract does not cover the amenities only the property. There are protests about Haciende Ricquelme on the site www.polarisworldforum.net and terrazas will be the same. When i worked for them i was forced to mention the facilities and now i feel ashamed i did this (Not my fault as i waas told what you were told.


Ramon said:
09 October 2008 @ 15:43

I back up the comment, I work for Polarisworld and it,s difficult to explain to customers why we promised them things we could not deliver. Most of the European offices have closed and i have problems motivating myself to sell properties guess i may be the next!


mel said:
10 October 2008 @ 17:52

i heard that they were having problems with bank guarantees. This is a legal requirement
but on the forum site for customers a lot of
people seem to be contacting their sollicitors because thety have not received them after many months of delays.


rog the dodger said:
15 October 2008 @ 17:59

It seems that no one tells the truth nowadays ref spanish property its crazy, All the golf developers should be ashamed with themselves after reading the above comments, send the tv companies in to investigate i say!!


rog the dodger said:
15 October 2008 @ 18:01

It seems that no one tells the truth nowadays ref spanish property its crazy, All the golf developers should be ashamed with themselves after reading the above comments, send the tv companies in to investigate i say!!


mike said:
22 October 2008 @ 10:53

Looks like mosa trajectum are having probs as well from what i heard from a source today.


Kelly said:
27 October 2008 @ 13:01

OMG, I can not believe what I am reading! I am due to complete on 3rd Nov 2008 at Los Naranjos, Condado de Alhama and cannot believe that the facilities may not be built as plan. Ppl buy into the lifestyle. Will the golf courses still be built or will we literally be in the middle of a building site? The habitation license has still not been received and at this stage we are unsure whether to delay completion AGAIN... We await further instructions from our lawyer. I must admit I have all of my bank guarantees from Polaris and they are not placing pressure on me to complete. Although I mainly worry about the mortgage acceptance, I don't want another bank to go under and the acceptance be pulled from under our feet, as they are only valid for 2 months.....Who would have thought that buying into a relaxed lifestyle would be so stressful? I also find the Manana Spanish attitude very frustrating when wanting a definitive answer and prompt responce.


ray said:
31 October 2008 @ 20:58

go to google check out "polarisworld refunds" on eye on spain this forum site is very alarming!!!


suzanne said:
31 October 2008 @ 21:01

it is apparent that the facilities at some resorts were promised but were just not delivered i,ve heard of golfers freezing at a makeshift bar at one of their resorts Hacienda they were promised a huge shopping centre it seems now with the credit crisis what hope is there


john said:
05 November 2008 @ 20:23

kelly if you have any problems look at "eye on spain" I JUST FOUND THIS ARTICLE 'HAS ANYONE HEARD OF THIS POLARISWORLD LAWSUIT" SCROLL DOWN LAST MESSAGE GIVES YOU INFO THEY MUST BUILD ALL THAT WAS PROMISED IN BROCHURES ETC. (YOU CAN ALSO GET VIA GOOGLE)


Donna said:
18 November 2008 @ 21:24

I am seeing many bad comments about Polarisworld on forum sites and Blogs not good at all.


jenny said:
24 November 2008 @ 15:27

kelly how did it go, good or bad? i,m interested to know.


Mike said:
26 November 2008 @ 08:54

Just found this on the polarisworld forum site today under "La torre" this is extremely worrying!!!!!!

[quote][i]Originally posted by GoingforGold[/i]
[br]The following may be a rumour but no smoke without fire..... I received the following email from a good source who lives over in Balsicas.... '' (I was told yesterday that between La Torre, El Valle and Requelme 10 people per day are handing in their keys as they can no longer afford their properties. Intercontinental are apparently selling and pulling out of La Torre and, of course, they never started on El Valle. Peraleja have gone bust. Peraleja are a family and the family haven't paid the builders so they've gone bust. Big hotel group near Mar Menor II have closed their doors as have Serena Golf )''. Worrying times, very worrying times can anyone shed any light on this ??????????



paul said:
05 March 2009 @ 03:35

we would like to hear from people who are nearing completion with polaris world - we have had many problems which they refuse to aknowledge - we have offered solutions which they have ignored - the only sure thing is demands for payments or you lose money already laid down - for a property you probably cannot rent in the near future. they have never shown any support to their customers or the respect that investors deserve when the chips are down - to top it all up the global financial crisis is not helping - the exchange rate makes it worse -
we have asked for extension periods for completion payment - we have asked to have the money we have paid for two apartments to be tranferred to one apartment which we can afford to top up and complete leaving the second apartment for completion sometime in the future when we are in a better financial situation - it this failed polaris could take the second apartment back and re-sell it - they refused this also - this is only the tip of the iceberg of what we have been through - not just with polaris and parador properties -who we also lost money to when they went bust - but also with lawyers and the spanish system - enabling all these companies to do as they please with no repercussions - we are due to go to spain next week to see what is going on - during one conversation with polaris where we mentioned that we would like to view the development and its progress to date - we were denied access - why? what the hell are these people on - are they for real.

there is alot more to this story - it any one has any further comments or similar experiences please share your experience with us.



Mr g mowatt said:
10 March 2009 @ 09:30

Due to the fact we have not received bank guarantees
from pw for payments made last year we are asking to have a refund on this money 39000 euros they have had many emails but no guarantees trust has disappeared
and i want my money back everybody can read the comments
on problems with pw beware.


Paul Collis said:
24 April 2009 @ 16:11

Hello to all Polaris World and Spanish Investors.

My name is Paul Collis of Pure Cyprus Invest. Please contact me on UK telephone number 01923 804488 or my email p.collis@purecyprusinvest.com.

I have an option and a possible solution for you.

Look forward to hearing from you all

Paul Collis


Pitson Jones said:
23 June 2009 @ 21:18

We have purchased on Mosa Trajectum and paid our deposit back in September 2006. The build has not been completed or even started and the developer mar y casas is now in breach of contract. We have now found out that our purchase was supposed to be protected by a guarantee but this was never provided. In fact there was only ever a line guarantee produced, not individual guarantees as promised and the line guarantee has now expired. We have been told that we have to go to court and are trying to decide between two different firms of solicitors -either ag2 asesores or fontanals. Any comments would be much appreciated.


Trudge said:
12 September 2009 @ 22:00

Hi we were in the same possition as you we bought on almanzora country club from Huma in 2005 the property was due to be finshed 2006 and has not been started.We have no bank gaurentee.We have a sloicitor who is working for us.We have been to court they have been told to pay up this was several months ago, and now we have to place embargos on their assets.It has been a nightmare to say the least.


Hondon Valley Man said:
20 October 2009 @ 16:09

Well it's a year since this post started and things aren;t any better. Here in the Hondon Valley (Nieves, Frailes, Aspe, Romana) it is very quiet and building hasn't resumed yet, even though there are lots of free plots and unsold houses / villas for sale.

I guess we just have to ride this rough sea, along with the rest of Europe ? In the meantime it's struggle for many on UK incomes (poor exchange rate).


victoria said:
05 January 2010 @ 16:58

I am an estate agent based in Estepona, Malaga and a few years ago went to view Polaris World complexes for myself - happily we refused to offer them to our clients - it was obvious that they would not be able to offer the services promised, the location was in our opinion wrong and although we missed out on a lot of potential sale we kept our clients and investors out of a lot of problems. I am really sorry but not surprised that this has come to this sorry state. Spain is great, but caution is the word!


Moraira Property said:
08 January 2010 @ 00:14

Sorry to hear all of these difficulties. We do feel it is fair to say that Polaris focused heavily on lifestyle in their sales material, not just the property


max said:
18 June 2010 @ 22:50

what would a two bedroom apartment cost at the moment in estepona? and the general housing market


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