Breach of Contract

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31 Jan 2007 00:00 by gillcefai Star rating. 15 posts Send private message

Hi All

Can anyone advise on the following?

1) At what point does a breach of contract occur by the developer. Our Contract has a deadline date of 31 March 2007. Does this mean that the apartment we are buying must be completed and habitation license in place by this date or does the license not need to be in place by this date?

2)  For the license to be issued does the whole develpment need to be finished e.g swimming pools, roads, all apartments, public lighting etc. or can the license be issued on one phase alone?

3) Our bank guantee  appears to run out 1 month after the deadline date in the developers contract (30 April 2007). Is this the norm and am I right in assumming therefore that if the developer doesn't hit the 31 March deadline we only have a month to get our month back?

4) How do we know if the developer has hit the 31 March deadline? Do we have to physically be there to see for ourselves or is there some sort of sign off that the developer has to provide?

 

Any help on this would be greatly appreciated 

 

Gill C. - Clitheroe




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01 Feb 2007 12:58 by DOC Star rating. 3 posts Send private message

Hi

 

I had a similar experience when I purchased my property we ended up getting the Bank guarantee extended

then completed when the Hab Lic arrived

But sorry not sure about answers to rest

Hope this helps




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01 Feb 2007 16:49 by gillcefai Star rating. 15 posts Send private message

Thanks for the reply.

I hadn't realised that you can get the guatantee extended so knowing that in itself is useful.

I expect I need a legal eagle to help with the rest!

Kind regards

Gill

 

 




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01 Feb 2007 17:50 by mariadecastro Star rating in Algeciras (Cadiz). 8150 posts Send private message

mariadecastro´s avatar

1) At what point does a breach of contract occur by the developer. Our Contract has a deadline date of 31 March 2007. Does this mean that the apartment we are buying must be completed and habitation license in place by this date or does the license not need to be in place by this date? It needs to be completed and habitation license in place

2)  For the license to be issued does the whole develpment need to be finished e.g swimming pools, roads, all apartments, public lighting etc. or can the license be issued on one phase alone? A license can be issued on one phase alone, but it doesn´t mean that you obligatorily need to accept that the contract is fulfilled , thay have met all their obligations and you have to complete. They need to hand over all what is stated not just in the contract but also in the publicity brochures

3) Our bank guantee  appears to run out 1 month after the deadline date in the developers contract (30 April 2007). Is this the norm and am I right in assumming therefore that if the developer doesn't hit the 31 March deadline we only have a month to get our month back? You have got  a right ( if you freely and explicitly  decide to grant an extension to developer) to ask for a renovation/extension of the bank guarantee as well.

4) How do we know if the developer has hit the 31 March deadline? Do we have to physically be there to see for ourselves or is there some sort of sign off that the developer has to provide? Completion needs to be before 31 in March. You need to be appointed to signing of deeds before that date.


_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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01 Feb 2007 21:38 by gillcefai Star rating. 15 posts Send private message

Dear Maria (or should I say Legal Eagle?) 

Thank you so much for your clear answers to my questions.

You have certainly cleared up the points that have been worrying me ( and hopefully help many other people clarify their position at the same time),  I'll sleep a lot easier tonight.

Once again thank you

Kind regards

Gill




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01 Feb 2007 23:51 by KERO Star rating. 8 posts Send private message

I  am in a situation  where my completion date in contract was December 06, however my developer says completion will  be in late Spring 07 due to circumstances outside his control.  On checking with my  Spanish lawyer who has confirmed there has been a breach of contract but advises that the breach is not sufficient to iniate a contract cancellation,as SPANISH COURTS require a delay of at 3 or 4 months time.Has anybody similar experience. 

                                                                         Regards,      JP.

 




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02 Feb 2007 00:25 by miket Star rating in La Mairena, Elviria. 392 posts Send private message

Hi Kero,

All standard spanish purchase contracts generally allow the architect to extend the development contract date by 3 months without having to state any specific reasons? Although after 3 months the developer is technically in breach of contract, if the project is very close to completion it wouldn't be worth beginning a long and expensive process to achieve the cancellation of your contract and return of your deposit. The best you may achieve for a short delay is a small amount of compensation?
My own development is now just over a year late and even then there is no guarantee that we would win in court! It all depends how an individual judge sums up both sides of the arguements presented in court....................



This message was last edited by miket on 2/2/2007.

_______________________

Mike T






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02 Feb 2007 10:46 by gillcefai Star rating. 15 posts Send private message

Hi Maria

The replies following your response to my questions seem to say that things might not be as simple as they sound.

Basically we bought our apartment as an investment and do not want to get involved with serious delays. If the developer doesn't complete by 31 March 2007(contractual finish date)  then we want out. Will it be as simple as you say or does it depend on how good our lawyer is?

 

Kind regards

Gill C.  




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02 Feb 2007 11:32 by miket Star rating in La Mairena, Elviria. 392 posts Send private message

Gill,

If you look at my previous posting you will see that I stated that the develper will be able to claim a 3 month contract  extension  without being in "breach of contract" The practical state of the development at that stage would be crucial has to whether its worth claiming against your bank guarantee? If the developer say claims a "force majure" for any substantial delay, the bank who issued the guarantee would I have no doubt not pay out without you taking them to court!  I would also check asap that your solicitor is holding the original guarantee and for the full amount of your deposit?

Sadly, due to the current state of the Spanish property market , very few developers if any would agree to cancel your contract without you instigating full litigation proceedings against them through the courts? This can be a very lengthy and costly process and any decision to sue must be very carefully considered? ( if you do decide to sue then please use an experienced and independant lawyer who has a provable track record!!) 



This message was last edited by miket on 2/2/2007.

_______________________

Mike T






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02 Feb 2007 18:11 by gillcefai Star rating. 15 posts Send private message

Hi Miket

It's all very confusing this isn't it?

How have you come to know so much or has it been through painful experience?

So many people say different things and we just want to make the right decision.

Thanks for clarifying a few points, if you know any more pitfalls then please let me know.

 

Kind regards

Gill

 




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02 Feb 2007 18:47 by Smiley Star rating in San Pedro de Alcanta.... 2437 posts Send private message

Smiley´s avatar

Hi Gill while Maria seems to make it sound so simple Mike will tell you that this type of situation is anything but. Litigation here is a very costly procedure and I have no doubt most lawyers will want a war chest in advance - even then there is no guarantee of success. Spanish Law can at the best of times have vagaries to it that would seem illogical in the UK. You need to take time to consider your situation carefully and be sure that any suit would be successful. With the backlog of cases in the Spanish courts (not just real estate) it will be a very time consuming process also as Mike will attest to.

Rgds 


_______________________

Smiley - patrick@marbellamortgages.com  www.marbellamortgages.com   www.comparetravelcash.co.uk




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02 Feb 2007 19:37 by miket Star rating in La Mairena, Elviria. 392 posts Send private message

Hi gill,

Sadly, I,ve gained my knowledge the hard way!! Its just over three years since I invested my hard earned cash and my development is only just coming up for completion! If you have any specific questions please feel free to send me a PM and I'll try to help?


_______________________

Mike T






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03 Feb 2007 09:03 by gillcefai Star rating. 15 posts Send private message

Hi Miket

I'm relatively new to the site, how do I send you a PM?

Fortunately we do have the bank guarantees for all the deposit monies paid and I went through an independant solicitor not linked to the developer. We are having a copy of the contract sent through next week to see if there are any anomolies that we need to know about.

Kind regards

Gill




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03 Feb 2007 15:39 by Smiley Star rating in San Pedro de Alcanta.... 2437 posts Send private message

Smiley´s avatar
HI Gill have you not noticed the blue writing that says "send private message" under your name and the date?

_______________________

Smiley - patrick@marbellamortgages.com  www.marbellamortgages.com   www.comparetravelcash.co.uk




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05 Feb 2007 17:48 by mariadecastro Star rating in Algeciras (Cadiz). 8150 posts Send private message

mariadecastro´s avatar
Dear Gill:

If you haven´t been notified for completion on the date the contract states,  they are in breach of contract and you can ask for cancellation. Of course, they can oppose that it is due to force majeure that they are not completing, but this, according to what the Supreme Courts´law of precedent   states needs to be both expressly notified in anticipation to the other party  and  also expressly accepted by you. A different thing it is that the commun practice doesn´t follow this and consumers are unde abusive practices. ALso it will of course depend on how firm and strong you and your lawyer fight for your rights. I am compeltely sure ( by theory and practice) on what I am saying.

Best regards,

Maria L. de Castro

_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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05 Feb 2007 18:17 by 1600E Star rating. 44 posts Send private message

If the property is complete but the builder does not have the Habitation License, does this mean they are in breach of contracr?



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05 Feb 2007 18:56 by Smiley Star rating in San Pedro de Alcanta.... 2437 posts Send private message

Smiley´s avatar
Depends on what you mean. It takes time once the property/development is finished to issue the Habitation Licence. There is a procedure to follow before the Licence is issued and if the developer has complied with everything they were supposed to just because the Licence is not available yet does not mean they are in breach.

_______________________

Smiley - patrick@marbellamortgages.com  www.marbellamortgages.com   www.comparetravelcash.co.uk




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05 Feb 2007 19:11 by 1600E Star rating. 44 posts Send private message

The apartments have been ready since Oct 06, some are occupied and we were promised that the license would be issued in Jan 07. The completion contract was until the end of Dec06.  The main services are now reliant on the builder and , if required, we cannot sell the property. Are we in a no win situation?

This message was last edited by 1600E on 2/5/2007.



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05 Feb 2007 23:48 by Smiley Star rating in San Pedro de Alcanta.... 2437 posts Send private message

Smiley´s avatar
My reading of it is that the developer has three months margin of error to deliver the goods on time and if they were ready in October 06 then he has effectively fulfilled his obligation. If the property was completed on time there is argument that issuance of the habitation licence is beyond his control but the exact legal position needs to be clarified by a lawyer. Speak to your lawyer or PM one of the legal eagles on this site. Without a habitation licence it would prove extremely difficult to sell if a potential buyer was getting good advice from his/her lawyer but you need to check where you stand with the developer. HOwever he cannot force you to complete without the habitation licence.

_______________________

Smiley - patrick@marbellamortgages.com  www.marbellamortgages.com   www.comparetravelcash.co.uk




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06 Feb 2007 13:55 by mariadecastro Star rating in Algeciras (Cadiz). 8150 posts Send private message

mariadecastro´s avatar
That  three months authomatic extension is not legal. Again, it needs to be justified, notified, accepted... You can ask for cancellation once the specific  contractual deadline arrives and if you are willing to, I very much advise you to do it as soon as the completion deadline stated in the contract arrives. Therefore developers will be formally forced to justify, communicate and you can be opossing or accepting any of their " reasons". Go ahead first. There are some practices of developers by which they mention in the contract a period of just 15 days after the completion deadline of the contract for you to ask for cancellation, once it has passed they understand that you, implicity, agrees on extending the contract as much as they need. Abusive= illegal.

_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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