Is the current economic climate a reason for non completion.

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14 Jan 2009 00:00 by raff Star rating in Belfast. 144 posts Send private message

Although I will be completing on my apartment by the end of January  I must say that the current exchange rate is hurting like hell. My question however is this, a friend who has paid some 60,000 euros in deposit and stage payments has been hit not only by the double whammy of the stock market crash and the current euro rate but recently has been put on notice that his job in under threat. Up to this point he was happy enough to complete and currently is only waiting on the habitation certificate for is property.

Now I advised him to speak to his solcitor to get some legal perspective on the matter. From the e-mail reply I've seen It appears that non completion is not an option and unless he can get a buyer to take over his contract he will have to honour his commitments. His solicitor hints that under the current financial climate that spanish developers are more likely to persue a buyer for full monies outstanding.

The reason I posted this thread is that there must be others in the same boat and I was wondering what advice /strategies, if any,  are available to him.





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14 Jan 2009 23:00 by EOS Team Star rating in In Spain of course!. 4353 posts Send private message

EOS Team´s avatar

 The first thing to check is does he have a bank guarantee?  If he does, even if it appears to be out of date, then that's a good start.

Now, in his contract there should be a clause stating the expected completion date.  If the build has been delayed by more than 3 months then normally he should, theoretically, be able to get his money back.  

This is certainly easier said than done but it is possible.

But, this really is only valid if the build is overdue.  If it's within schedule (which is surely unlikely) then he will have to complete or try and just walk away from it and count his losses.

Hope that helps

Justin



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15 Jan 2009 14:34 by mariadecastro Star rating in Algeciras (Cadiz). 7925 posts Send private message

mariadecastro´s avatar

Bank Guarantee is a very important aspect and also it is interesting to know of he is being denied financiation as, clause 3.3 paragraph second of the official model for off-plan purchases, by the National Institute for Consumers states:

Provision 3.3 second paragraph of Standard Consumer contract by the National Institute for Consumers.

Failure to obtain anticipated funding

(...)

However, the buyer may choose to cancel the contract  once he knows on the failure of the promoter´s mortgage subrogation or  own mortgage request and will be entitled to recover all amounts paid
 
Interesting??


 



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Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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15 Jan 2009 15:32 by raff Star rating in Belfast. 144 posts Send private message

I have checked back with him and it appears that:      1. He has never received a bank guarantee though he knows its in his contract that he should have done so.                                                                                                        ( Come to think about it neither have I )

                                                                                               2. The contract,18mth construction period, is up at end Jan 09 and he knows that the developer is waiting on the H C.

                                                                                               3. He intended buying the property on the sale of some shares and from life savings, so a mortgage was not needed. 

                                                                                               4. Termination states all monies paid may be retained as a civil penalty and to cover indemnity for damages or

                                                                                                    loss incurred by the seller.

As I write this reply it appears to me that he is in a tight spot.  When we were out in November he was looking foward to completion, funny how  life has a habit of kicking you up the backside just when you think things are on the up and up.





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25 Jan 2009 23:41 by telba Star rating. 1 posts Send private message

hi raff, i sympathise with you. i was only in spain in nov for a final inspection before completion on property on polaris world hacienda riquelme. all looked good and i was really excited but when i got home things gradually got worse with the economy making it very hard for me to complete. i have decided to pull out and will definatly try and get some of my deposit back. i have waited four years for property so well overdue. i started buying a property on alhama then that was changed to la torre then to hacienda riquelme, each time the fault of pw and each time slightly more expensive. it all makes sense now that pw after being so not bothered about my completion or the long wait i have had suddenly wanted my completion and money as they prob knew this ecconomic crisis was coming. will let u know if i have any luck and would appreciate any help if u find any. terry...





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26 Jan 2009 10:10 by raff Star rating in Belfast. 144 posts Send private message

Telba, I would hope that with your history your chances of a refund appear good (at least from what I've read in this forum and in particular from Maria), however when it comes to spanish property and its legal system so much appears clouded. I wish you good luck in your endeavour.

Due to my own lax behaviour I have failed to follow the sound advice offered by this forum in relation to ensuring you obtain bank guarantees for deposits & instalments paid  and currently am chasing this matter up in case of a delay to my apartment or worse the devloper going bankrupt.

I don't think its easy for anyone who has still to complete on a property under such adverse economic conditions,  from my point of view the exchange rate is murdering me and to be honest if I had to do it over again I would have given greater care as to location and my decision to buy off plan. Nevertheless I'm kinda looking foward to my tiny concrete box overlooking the fairway. While over in Nov I came across a gem of a town that  I'm looking foward to exploring and enjoying with my family this summer.

My friend however had shares which today are hardly worth the paper they're printed on. And with the prospect of unemployment looming his savings ( reduced by some 60.000 Euros on deposits paid ) will be needed to help him through the lean years ahead. I spoke to him last night and he told me his completion date was actualy the 19th Dec 08 and he has made enquiries concerning the developers failure to provide him with his bank guarantees, but wasn't hopeful they would arrive anytime soon. I guess whatever decision he makes will be the right one for him and I wish him the best of luck also.





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29 Jan 2009 20:10 by coleen Star rating. 67 posts Send private message

You say that the completion date was Dec 08 so I assume your friend has been advised that he is required to complete.

 

But does the property have the certificate of habitation yet, which the local town hall grant.  If not, then he doesn't have to complete.  That would give him time, which may or may not be useful.





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30 Jan 2009 16:44 by raff Star rating in Belfast. 144 posts Send private message

Thanks Coleen for your reply,

In answer to your questions a habitation certificate has not been granted yet, also his solicitor informed him that he could delay the final transaction for up to a max of 20days after the issue of the certificate. 

He is aware he must complete or accept the consequences of breach of contract.

I feel kind of responsible as I raised the initial idea for the purchase with him, but who then would have guesed the current economic happenings.





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31 Jan 2009 16:46 by coleen Star rating. 67 posts Send private message

 Sometimes we get ourselves into these things simply because of optimism and good faith.  Your idea of off-plan was a good one, and only aimed to help your friend.  But yes, if only we knew or had at least asked ourselves 'what if ... '

An elderly Polish gentleman I knew used to say to me, 'If we knew we were going to fall over luvvy, we would put a mattress there.'





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