Contracts, Lawyers and Compensation

We signed contract to purchase on 6 October 2006 - the contract states completion in 24 months and that 6 stage payments would be required.

We have made 3 stage payments - the next payment would be payable when "Enclosement" was completed but no request has been received from the builder since our last payment in March 2006.

The house is complete, kitchen and sanitary units fitted and water connected, except that the basement floods when there is heavy rain. We drew the builders attention to this in March 2006 and we have repeatedly asked for information as to how they propose to rectify the problem. We had a structural engineer look at the property who concluded that the site had obviously not been properly surveyed before construction began otherwise a basement would not have been constructed. Our engineer proposed a French drain around the house connected to a soakaway and that the internal surfaces of the basement should be "tanked" and a sump pump installed as a back-up.

The builders commissioned a local technical architect to review the property who concluded that what was required was (i) drainage around the house connected to the sewer system (is this legal/) and (ii) "asphaltic" material applied to the external walls: asphalt is biodegradable. We understand that Spanish Building Regulations require all underground structures to be "tanked", but this is not recommended.

We have difficulty with our solicitor who does not seem to wish to challenge the builder and who will not give a categorical opinion as to whether the builder now is in breach of contract due to the over-run on the contract and many broken promises about completion dates. Solicitor says that we could be in breach of contract as we have not made additional payments - we have made payments as requested and no further payments have been requested by the builder. Solicitor says the house is finished ... but it is not habitable due to flooding.

It has been suggested that we employ a spanish technical architect to oversea the remedial work (who pays?) and that we send a notarial request to the builder with our technical architects report and stating that we would not complete until the house is in perfect confition to be lived in.

Can we seek compensation from the builder for the delay in completion and are there guidelines as to levels of compensation.

Property is near Mojacar and solicitor is in Mojacar and we have Bank Guarantees for monies paid.

Any thoughts on how to proceed.

In frustration!

Harry & Mary (aka molar)

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Delays are both compensable ( if you decide to complete) and a cause for contract cancellation. If you search you can see many posts and discussions regarding that topic in this EyeonSpain Forum.

 

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Many thanks for that information - that is very helpful.

We have read through many threads on this site and thought that the delay would be a reason for compensation or for cancellation.

We have gathered much useful information from your postings and from other's postings.

It would seem that our lawyer is not giving us appropriate advice or support .

Should we find another lawyer or is there any way we could get our solicitor to act in our name?

Many thanks

Harry & Mary (aka molar)

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 Requisites of a recommendable Lawyer for contract cancellation:

- Not being recommended by developers or estate agent.

- Litigation expertise or good litigation department attached.

- Good and updated knowledge of consumers, real estate and contract law.

 

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Dear Molar,

regarding the drainage problem, I am interested to acquire a copy of any Spanish Building Regulations that are available, but in English if possible.

As to a solution, tanking is the application of a waterproofing material to the external face of a basement below ground level. This material is itself protected against damage during backfilling by a block or brick wall. In addition land drains are installed at the lowest level with granular fill above and up tp ground level. The water thus collected is then carried away to a drain or ditch where suitable, to the lowest point on the site with a shallow fall on the drain pipe. If there is no possibility of a fall away, then catchpits and pumps have to be installed. The floor of the basement should of course sit on a membrane, preventing damp from below. A protected ashpalt based tanking is permanent.

If tanking is no longer possible because of access difficulties then an internal lining may be applied and a battened false wall created with a raised floor also to provide a damp free room under normal circumstances. This will need to have a sump dug in the floor to house an automatic pump and pipework to carry away the flood water to drain, as before. If dampness is acceptable in a basement that is not used for habitation then it is just the sump and pump that is required. With this solution, the basement will still flood in times of heavy rain coinciding with loss of electricity.

The discharge of surface water into the sewer will depend on whether the drainage is combined or not. If not, then they should be kept separate.

Regards

Norman

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Sorry ... can't help you with Spanish Building Regulations in English. Earlier this year we commissioned a Structural Surveyor to inspect the property who told us that "tanking" was a requirement for below surface builds in Spain.

Thank you for your thoughts re "tanking" - that confirmed our own findings.

We are changing solicitors!

Molar

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who else is in the same situation ?

we came to murcia to buy a property and had initially intended to buy a resale, but we liked a small development we viewed so much we decided to buy off plan here and wait a year until it was completed. this was feb 06. we paid our 40% by april 06 and our property was to be completed by feb 07. fine so far...

right from the outset we had been on at our solicitor to make sure all the paperwork was in order as like many we had heard some horror stories about buying in spain. we were assured verbally and by email from him, that all paperwork was in place and the builder had a very good reputation locally and we shouldn't worry about anything. still fine so far...

around oct/nov last year whilst reading posts on eyeonspain someone dropped a bomb shell by asked the question,  " whats this habitation licence all about ? "  well like many people we had not come across this before so we immediately asked our solicitor who explained, it was issued by the council and it might take a few months to get granted. we were really angry about this since he had failed to discuss this at anytime up until we broached the subject with him. since that point he has told us that in our region it can take a long long time to be granted and there's nothing anyone can do to speed it up. brilliant ! 

 if he had mentioned this back at the beginning we would have walked away from this site and bought elsewhere. he would still have had our business on another property so we can't understand why he said nothing ? he's surely there to guide us and to answer the questions that we don't know to ask. anyway we sat tight hoping it wouldn't take long. our house was ready by jan 07 but our mortgage lender won't lend without this licence. the weeks became months and still no sign of it being granted. we have been told it may not be granted until sometime after the whole development is completed at the end of 08. but how long after this point could it take ? no one knows ?

the wife and i made a decision in july that we weren't prepared to wait  so we approached our solicitor to have our bank guarantee cashed in and get our money back from the builder. our plan is to go back over in oct and look for a resale which is what we had originally planned. i wish we had!  what ever we buy we'll make sure this time that ALL the paperworks correct.  unfortunately the builder is reluctant to allow us to cancel as they believe they have fulfilled their part of the contract. our solicitor whom we blame entirely for this situation has said they are in a strong position. even more brilliant !

so this is where we are right now. here is a couple of questions for anyone with a bit of knowledge in this area. is the builder entitled to force us to wait until this licence is granted, even if that is a couple of years away, for example, when the builder offered the property to us for completion in january 07 they hadn't even applied for the habitation licence at this point. it took them until april 07 before they did this. can they do this? can they offer it as ready before applying for this ?   if we did complete, there are no facilities on site yet. they haven't started the pool, tennis courts, gardens etc.. which was in our contract and on their brochures.  how can we complete if the builder hasn't completed what on the contract ?   plus can we put any pressure in anyway on our solicitor about his conduct here ? we even have emails from him telling us that all the paperwork is in place for our property. it clearly isn't. 

some people on our site don't see the lack of this licence as a problem and have gone ahead and completed. that's there decision. we have no problem with that, but surely we should have had the right to decide for ourselves if this was something we didn't want to get invovled in . we believe we were kept in the dark at the beginning of the buying process by the builder, agent and our solicitor and suspect this was no accident ? can anyone suggest a way forward for us, or are we just to sit back and fume, for as long as it takes. we know from many other posts on this forum that we are not alone in our frustrations over this issue. in saying all of the above, if this licence is granted suddenly we would be happy to complete as we still like the our house and the development, but i doubt it will.

regards

ken..    

 

 

 

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The refusal of the mortage bank says it all

If there is no Habitation Licence then do not complete

It is possible that it will not be issued until all the facilities of the development are in place

On new property in the UK the local authority have to issue a completion notice so that you know it has been built to Building Regs 

it is very similar

As regards cancellation

Your contract will have a completion date and there is normally an extension clause of 3/6 months to allow for unexpected delays

When this has expired you should be able to cancel the contract and call in the bank guarantee if you have to  

If you Spanish lawyer will not help then you just have to go elswhere

Also ask you agent to help  #

Takes time but if the contarct has expired then you should get your money back

I suspect that any contract which does not have a ' completion date ' may be unlawfull in Spain and can be cancelled

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 Quoting Rowland: "I suspect that any contract which does not have a ' completion date ' may be unlawfull in Spain and can be cancelled"

Yes, according to Consumers Law the clause is abusive, therefore illegal, and needs to be implemented by the Judge. It means the Judge will ascertain a date by which the building should have been finished.

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Thanks for the replies we have had in relation to our post.

looking at our english version of our contract we have detailed under a paragraph " beginning and completion of works " the following.

  quote:  - - - - - S.A.U. undertakes to start the construction works refered to in paragraph 3 ( our property ) herein within a time limit of 120 days after the planing permission has been obtained and such works shall be completed within a period of 24 months after the beginning of the same.

The house shall be put at the disposal of the Purchaser within the time limit of a month after receiving the administrative authorisation for its occupation, except when there is fair consideration,  unquote.

 we have asked our lawyer to confirm to us the exact date that the original planning permission for our development was granted. are we correct in thinking that the 24 month period from this date incorporates the 120 day period or should we be adding this on?

Another question is, does the phrase " administrative authorisation " refer to the LFO/ habitation licence and can anyone  clarify what could be construed as " fair consideration "?

Any help appreciated.

regards

ken .

This message was last edited by kennym on 9/12/2007.

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Dear Ken:

 

Please find answers below in blue:

The way the completion deadline is reflected in the contract is not according to what the Consumers regulations prescribe, as semester and year needs to be specified. Any interpretation needs to be in your favour as consumer.

Thanks for the replies we have had in relation to our post.

looking at our english version of our contract we have detailed under a paragraph " beginning and completion of works " the following.

  quote:  - - - - - S.A.U. undertakes to start the construction works refered to in paragraph 3 ( our property ) herein within a time limit of 120 days after the planing permission has been obtained and such works shall be completed within a period of 24 months after the beginning of the same.

The house shall be put at the disposal of the Purchaser within the time limit of a month after receiving the administrative authorisation for its occupation, except when there is fair consideration,  unquote.

 we have asked our lawyer to confirm to us the exact date that the original planning permission for our development was granted.  are we correct in thinking that the 24 month period from this date incorporates the 120 day period or should we be adding this on? Ask for the works license and count 24 months since  the date it was granted.

Another question is, does the phrase " administrative authorisation " refer to the LFO/ habitation licence correct and can anyone  clarify what could be construed as " fair consideration "? That is a very ambiguous terminology forbidden by Consumers Law. So,  do not take it as written there.

Any help appreciated.

regards

ken .

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 I bought an apartment off plan last year (initial reservation paid 5/06, 30% deposit paid 9/06). A bank guarantee was promised (and a big selling point) and is mentioned in the contract (supposedly secured within 40 days of exchange). Contracts were exchanged at the end of 2006 but there is still no bank guarantee.  The original completion date in the contract is July 2007 with a 6-month grace period. The developer (Rushcliffe) has had problems with the main contractor and work did stop for a few months earlier this year although, apparently, these issues are now resolved. I found it almost impossible to get any information from them about what was going on and I still haven’t got a completion date.  Other buyers in the same development have had issues and I’ve subsequently discovered complaints about other developments.  I have no trust or confidence in Rushcliffe anymore and they are in breach of contract re the bank guarantee.  Any similar experiences and/or views about the possibility of withdrawing from the contract would be greatly appreciated.

Thanks

Gary

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Contact the agent who sold you the property and your lawyer and get proper advice about getting out and you bank guarantee

if you get your guarantee then you have to 'consider' staying in whilst the problems are sorted

If you lawyer does not deal with the issue quickly....say within in no more than  7 days of your contact get another lawyer asap

Perhaps join with other buyers to save costs

From what you say in your post, now is the time for action

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Please have comments below in green:

I bought an apartment off plan last year (initial reservation paid 5/06, 30% deposit paid 9/06). A bank guarantee was promised (and a big selling point) and is mentioned in the contract (supposedly secured within 40 days of exchange). Contracts were exchanged at the end of 2006 but there is still no bank guarantee. You can report that to Consumers Authorities.   The original completion date in the contract is July 2007 with a 6-month grace period.  The 6 month grace period needs to be justified, communicated and allowed by you. The developer (Rushcliffe) has had problems with the main contractor and work did stop for a few months earlier this year although, apparently, these issues are now resolved. I found it almost impossible to get any information from them about what was going on and I still haven’t got a completion date.  Other buyers in the same development have had issues and I’ve subsequently discovered complaints about other developments.  I have no trust or confidence in Rushcliffe anymore and they are in breach of contract re the bank guarantee.  Any similar experiences and/or views about the possibility of withdrawing from the contract would be greatly appreciated.

Thanks

Gary

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Further to our posting 14 August 2007 - Contracts, Lawyers and Compensation.

From the advice we received from this board, TRG and others, we commissioned a Technical Architect from Marbella and also moved our solicitor to a firm in Marbella.

Our basement has now been tanked externally and is dry: the house is essentially complete except for minor finishes and snagging.

We have had an email from our solicitor informing us that the First Occupation License was issued to the promotor on 12 March 2008 and that she is awaiting sight of the document ...  it looks as if we are all now ready to proceed to completion.

However, one final hurdle remains ..... compensation for the contract over run from 6 October 2006 (contract completion date) to April 2008 or whenever the completion date will be.

We have suggested that compensation 'in kind' would be acceptable,  eg pool, walls etc, as this would maintain the purchase price of the property against future Capital Gains calculations. This method has been used by the promotor to compensate other purchasers or as inducements not to withdraw from the purchase.

Our solicitor writes that it would be unlikely that a figure of €18000  would be exceeded for a delay of one year. As the over-run on the contract is now 1.5 years, does this mean that compensation is would be increased pro-rata?

We have had no communication from the promotor explaining the cause of the delays or requesting a contract extension and have not formally agreed to this contract over-run. We have accepted it rather than taking the litigious route for refund.

Is there a formula re compensation over a given over-run period?

Can anyone advise how compensation could be calculated?

Hopefully

Harry & Mary (aka molar)

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You need to prove effective financial losses. There is no formula.

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Under UK construction law effective financial loss would be shown by say loss of anticipated rental income or by cancellation losses for canceling removals companies and things of that nature. It is not easy to do in UK so I do not think that it would be any easier in Spain.

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It is not easy here neither..... It is good to hear as I thought it was easy in the UK !
Maria

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I understand that the assessment for compensation is predicated on a need to prove effective financial loss, there is no formula and that effective financial loss would be, for example, loss of anticipated rental income or by cancellation losses for cancelling removals companies and things of that nature?

If we had purchased in October 2006, as per contract, the final payment to the promotor would have been £162,000 (£1 = €1.47) against £185,187 (£1 = €1.28) now  .... a difference of £23,187 ... and a not inconsiderable sum!

Can this financial loss be included for for compensation as the loss is a consequence of the delay in completion due to contract over-run by the promotor?

Harry

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If the pound now stood at 1.60 to the £ would you have offered to give the contractor more than he asked for? I think currency risk is something you have to bear unless it is a specific contract term that the risk is carried by the contractor.

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