BG and The Lawyers Responsibility

I have a question regarding the lawyers responsibility for professional care when they are working for a clent

We read daily about buyers who have nit been issued with a valid BG and now that the developer has either gone into administration, or just stopped building, that the buyers are left high and dry with their only option a expensive legal action

To add insult to injury we now see an increasing trend that these same lawyers are keen to now represent clients in class actions to recover the money they have paid out, of course for a sizeable up front fee

My question is, given that it is a legal requirement in Spain for the developer to provide a BG, and clearly the lawyer has failed to advise or obtain this for their client, is there any action that can be taken against the lawer for their failure to exercise their legal and professional responsibility   

Also why would any client in their right mind use the same lawyer who failed to get them the BG in the first place

Any views

Maria, Lawbird  I am not sure if you are about but I would really appreachiate anybodys views on this as I think that it is a growing issue

Dear  Inspectahomespain.

Your questions: ( answers below in bold green):

My question is, given that it is a legal requirement in Spain for the developer to provide a BG, and clearly the lawyer has failed to advise or obtain this for their client, is there any action that can be taken against the lawer for their failure to exercise their legal and professional responsibility  : of course an action for civil liability for professional negligence exist in the Spanish legal ordere for this type of cases.  Of course there is...how not?  The damages Law in Spain is very strict about proving the damage incured and the cause-effect relationship between action or mis-action and damage.

Also why would any client in their right mind use the same lawyer who failed to get them the BG in the first place. I wonder the same... such a proffessional opportunism, contradiction and hypocrisy !

Thank you Maria and you have only confirmed my view as surely the lawyers should manage the total process, including the documents required by law, the Bank Guarntee

A number of lawyers are simply saying that it is not their fault and denying any responsibility.

On one site the same lawyers has represented more tha 600 buyers wjo all now have to fight, as the developer has pulled the plug on the development, to get their money back, many have paid more than €40k each

Their comment ws that the buolder just forgot to add them to the BG but they will happliy take €2.5k payment in advance against a cost of €5k to take action to recove the deposits

Let´s hope people suffer the less possible and new times are coming.

Best wishes,

Maria

My experience in Spain seems to correspond with the attitude in the UK (and I think many other countries) that lawyers are reluctant to litigate against other lawyers - negligent or not.

This seems to be compounded by the fact that there are also many organisations here that claim to be lawyers who in fact are not and there is no compulsion to be a member of the College of Lawyers (similar to the Law Society)if acting in the capacity of lawyer. Thus you could then be litigating against a company or person that isnt qualified to fulfil the capacity in which they have been acting and effectively it becomes a civil case against an individual or company that goes into liquidation overnight with no recourse to a higher body.

We all have Insurance policies  to cover civil liabilities related to our proffessional exercise as Lawyers. So, there is no need of going against a colleage  but against an Insurance company.

In this particular case they advertise as a firm of Spanish solicitors

In which case they should have professional liability cover.

Maria the point I was trying to make is that there are those that claim to be lawyers that in fact aren't lawyers despite their stationery, marketing literature etc - of course I do not include you in this scenario - so a great deal depends on whether the firm in this case is a bonafide lawyer or whether they are simply marketing themselves as such. One would hope that as they are acting for 600 clients on this development alone (whether correctly or not) that they are bonafide lawyers and have the correct PI cover etc in place.

This is a very interesting subject.  Initially we bought 'off plan' through Ambasun (agent) and we were promptly taken by Ambasun to the lawyer(PSI) who they recommended.   Now we thought we would be taken care off with regards to BG and also thought that Ambasun and PSI would make sure that all things were in place.  (wrong).  The builder went into administration and guess what, no BG, no Ambasun and no PSI.  Surely this cannot be right.  Somebody needs to take responsibility.  Meanwhile we were left high and dry with not a leg to stand on.  We paid what was asked in all good faith.  Can something be done to make these people accountable for what they are doing.

Chrissie

Thus the point I was trying to make. If PSI had liability cover I guess the question is who do you contact to find out?

A very delicate question with what seems to be no answer.  I have been told it is the builders and bank's responsibility to make sure the BG is in place so between the builder, amabsun, PSI and the bank the actuality of a BG gets somewhat lost and it seems to hell with the customer ! Now, all this being said I would have thought our first point of contact which was Ambasun should have at least informed me that one was required.  The lawyer should have surely been looking out for my interest, the bank and the builder should have covered this when my contract was signed and money taken.

So yes who is the point of contact if all of these fail ? Rock and hard place.  Pillar and post.

Chrissie

Indeed the lawyer should have been looking out for your interests in this delicate matter. However it should be said that this supposed obligation of BG encumbent on developers and banks finacing the constructor have often been "overlooked" for want of a better expression and I would have to say that frequently lawyers (whether by design or mistake) have not ensured that this vital instrument was in place. BGs are essentially to the cost of the developer and I guess unless someone was ensuring the premium was paid then many developers will try to avoid this expense. In a strong economic climate, which results in a bouyant, rising property market many developers considered this a risk worth taking - perhaps the view was that insurance is only essential when you need it - at all other times it is a luxury. Personal view better to have it and not need it than need it and not have it.

Rock and hard place seems to be where many people in your situation find themselves I am afraid.

I appreciate your comments but I did have a lawyer (PSI) who was in place and who failed to look after my interests with regards to a BG, so where does that leave me and the hundreds of other innocent people ? PSI and Ambasun have got away with it and more to the point they will be able to do this again and again. 

If a property is 'off plan' why would a builder want to pay a bank for BG's if the property is not even there yet.  I didnt know anything about this side of spain and it pains me to think this is going to happen time and time again unless someone steps up to the plate.  So, no wonder lawyers and courts are over worked, they always will be if spain continues to treat people in this manner.

Sorry for this but I think if the boot was on the other foot and I failed them the story would be very very different  I have no dobut of that. Thanks for listening and replying it is appreciated, think i will put the kettle on and get off my soap box now,  I really dont like feeling like this but as you have no doubt guessed today is one of those days when I find it hard to think I wanted to live in spain.

Chrissie

I know you had a lawyer who was in place but no doubt you were introduced to them by the agent that sold you the property in conjunction with the developer. There are a great many lawyers that are reluctant (I exclude those in this forum) to assert themselves with developers owing to the fact they will lose the introduction of business if they dont toe the party line. Where that leaves you I know will be of no satisfaction and it is no good dealing in hindsight - if that were the case we would all be millionaires. It may be worth talking to your MP with a view to having the situation discussed in Brussels - I really dont know the answer unless someone can tell you how to establish whether PSI had PI cover or who it was with - then assuming they did, whether the premiums would cover your situation. I guess the only answer would be to discuss with another lawyer in Spain whether there is a means to finding this out.

Hi Smiley

I am very grateful for your replies.  I somehow think that spain will be actually seeing the bigger picture very soon infact its already started.  In the UK big serious questions are now being recognised like never before.

Regards Chrissie

If you hired a lawyer, it is his risponsability to produce a 100% safe purchase ( that include Bank Guarantees in off plan contracts), EVERY LAWYER has, by belonging to the Bar Association, civil liability insurance.

Liability of developer for not providing to you the Bank Guarantee or Insurance Contrat can be ( since 1999) up to 25% of the money that should have been guaranteed.

Yes, it is an important topic. Specially because respecting the independence principle, and the evasion of conflict of interests, you will fight utter and passionately to protect your clients´interests as if they were yours.  That is our mission and the values our profession is based on.

Having spoken at length to a number of clients I am glad that I raised this as an issue and I believe that there will be some INTERESTING cases coming up

I actually have seen statements from lawyers where in writing they state that it is not their responsibility to chase the BG, only to ask for it and if it is not forthcoming that it is nt their fault and again in writing that the buyer should pursue the developer not the lawyer. In the same response they are of course happy act for the buyer in a case against the developer

So what happens when the developer files for administration as I note with interest that the San Jose action seems to have gone very quiet

After finding out that we should have had a BG we asked the developer on a number of occasions (someone called Pilar & Tomaz)  to provide us with one.  We were promised that we would be given one but this never materialised.  We would like to know firstly why we were not informed by PSI or the lawyer or the builder and secondly why these people were allowed to go ahead and take our money and then go into administration with not a word from PSI or Ambasun.  We had an e:mail eventually from PSI to ask for money again to fight the builder and when we telephoned Ambasun to try to find out what  was happening they did not even answer our calls.

I think it is truly very bad to have been left in such a cold hearted way to find out that our developer was in administration.  I know and understand that the credit crunch has a lot to do with the situation globally but what actually hurts the most is the way we have been treated by the spanish infrastructure or lack of.  Now multiply this feeling by hundreds of people and then ask yourself why spain is going to suffer.

Regards Chrissie. 

I suspect mulitply the feeling by thousands as opposed to hundreds. I think you need to establish how you can find out if PSI did in fact have civil liability cover and if so were the premiums paid up to date when they went into administration and therefore how you make a claim against their policy. This of course assumes they were official lawyers and members of the Bar Association.

Maria,

I would like to ask you if you have any experience of a lawyer being taken to court, for failing to secure a bank guarantee for his client, and the client successfully recovering his deposit from the lawyers insurance.

I have been told that Spanish judges are likely to protect the Spanish lawyer, and not the foreiner, regardless of what the law may dictate.

Spanish Law has different parameters for damages Law as those of the  Commun Law.

In the Spanish system it is very important to prove a clear and specific damage and an unqustionable cause-effect relationship between action/default  and damage.

Judges need to apply Damage Law according to Law and Case Law obviously.

Maria reading your quote is it fair to then state the following

In the case that I have mentioned the develper is still trading and failed to deliver the properties so the buyers can still take action against them so the buyers have not yet lost their money

We all know that it can take years to get the developer to Court so are you saying that until this has happened the lawyer, even though they failed to get the required BG, as there has not yet been any financial loss, has to case to answer

Hi Roy:

Please have answers below in bold green ( same text of your email):

Maria reading your quote is it fair to then state the following

In the case that I have mentioned the develper is still trading and failed to deliver the properties so the buyers can still take action against them so the buyers have not yet lost their money

We all know that it can take years to get the developer to Court so are you saying that until this has happened the lawyer, even though they failed to get the required BG, as there has not yet been any financial loss, has to case to answer

A Judge would be able to possibly state this. I see the financial loss of not producing/requesting the  bank Guarantee very clear but... I also know a bit of how Damages Law work in Spain.

In my opinion, it would better to try a declarative procedure for breach of contract against the developer first and if failed, then to act for civil liability against the Lawyer with the Court decission in place.

Need to add that declarative decissions  for delay  are being more and more in favour of Consumers in the Spanish Courts  and that the lack  of  Bank Guarantee is also being increasingly  recognised as a cause for contract cancellation by our Courts.

Anyhow... it all depends on proffessional criterion. Of course you always have the Lawyers Insurance company to repond for lawyer´s proffessional negligency.

Hi Maria

Is there a time limit to take action against the solicitor.  My original solicitor did not get a BG for me (despite it being in my contract) - the develpoer did not have full planning permission and the building work has been stopped.  I am suinig the developer for my moneis back but am wooried that they may not have sufficient assets to return my money.  If this is the case then I would like to take action against my original solicitor but I am worried there may be a time limit to me starting my action.  I signed my contract in July 2005.

Nigel

15 years. No problem. 

Good luck with the declarative procedure. Fight  hard.

Hi

I have read how quick it it be should be to have your case against the Banks or a Developer heard in court.

What about how long it can take . 1 Month .  6 Months. 1Year.. 5 Years. 10 Years?

Simon

Hi Maria

I purhased a property on The Almanzora Country Club in June 2005.  My contract stated that I should have a bank guarantee (pointed out to me by my agent that because of this if everthing went wrong for some reason I could get my money back).  In October 2005 building work was stopped due to lack of planning.  My solicitor had paid over my  65,000 euros to the developer without obtaining a bank guarantee.  They also had failed to advise me that the building  licenses were not all in place. 

I changed my solicitors who have taken HUMA (the developer) to court - won and have placed embargos on 3 properties and 4 bank accounts.  Unfortunately 2 of the bank accounts have come back as having no money in (we are waiting details on the other 2) and of the 3 properties 2 have been mortgaged and the other have earlier embargos on (my solicitor said this happened between the court hearing and the embargo being placed.   They are looking to place an embargo on other properties but to be honest I doubt whether there are any assets to place an embargo on. 

My question is assuming my solicitor can not find any further properties what should I do.

1) Sue my original  solicitor - the firm are called AG2 Asesores - (somone said Asessores are not proper solicitors and wont have insurance cover - but the information I have from them states Solicitors & Lawyers)

2) Take further action against the directors of HUMA?  Can they be made personally liable as they did not give me a bank guarantee and I believe that was a legal requirement. 

3) Anything else I could do?

Nigel

If they are registered Lawyers, they have insurance liability. It is a requirement to be a member of the Law Society.

Best,

Maria

Thank you Maria.  Do you think suing the solicitor is the best ideas or is there any further action I should take against HUMA.  Also if I were to take action against the solicitor would it be better to take a joint action with other people in the same position as me who used the same solicitor.

Also if we were to use you as the solicitor to sue how much would you charge (and how much up front) and what sort of timescale would be talking about. 

Nigel