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Spanish Property Developers in Crisis

Many British people have bought properties from Spanish developers who are now suffering as a result of the financial crisis. This blog will provide updates on the current situation and useful information about the problems British buyers are facing in respect to their Spanish properties.

Spanish Coastal Act - the beginning of the end?
01 March 2011 @ 13:05

Ever since the Spanish Coastal Law was enacted back in 1988, Spain has been in a constant struggle to balance the rights of owners who have legally acquired a coastal property on the beachfront and the right of every other Spanish citizen to have the coastline free of concrete and large buildings blocking the sea view and its direct access. The question is – How to strike a balance?

The debate is not a new one. However, this topic has gained more momentum and strength in the last couple of months after the European Parliament opened an investigation to inquire whether European citizens – especially British and German – are being discriminated against in their application of what is already a rather arbitrary Law. This is because, together with the Germans, expats account for a large percentage of the purchasers that are affected by the Act.

The 1988 Coastal Act was initially drafted for the purpose of protecting specific coastal areas which have undergone a soaring urban and industrial development during the last six decades. Vague and outdated, the Act defines the coast as a public property in need of protection and restricts the private use of its neighbouring land.

The current legislation allows the Government to declare rights over private property in cases where pedestrian and vehicle access to the shore is required, or even remove architectural barriers that have a negative effect on the landscape.

Many property owners have been asked for legal documentation which if they fail to produce could result in an order to pull back their boundaries. A number of high profile buildings are involved in this dispute, including the home of Cayetane Fitz-James Stuart, the Duchess of Alba, whose garden wall appears to encroach 32 square meters of public land.

It is cases such as these that has brought huge amounts of media attention and political debate especially since 2004 onwards when socialist government, presided by Mr. Rodriguez Zapatero, began applying the Coastal Act more stringently than ever before. Figures released by the Spanish newspaper “El Pais”, showed that while during the years running from 1988 to 2003, administrative procedures affected 4.569 kilometres of shore, a similar figure was detected for just the first six years of Mr. Zapatero’s presidency.

Furthermore the Spanish law known as “Procedimiento de Deslinde”, allows the government to declare any plot and private property as belonging to the public provided these are found within a certain distance from the sea line. As a result, the affected owner looses any property rights he had over the affected area and, at most, he is granted a grace period to use the property ranging between 30 to 60 years, depending on each case.

It is of course not hard to sympathise with the large number of bona fide purchasers who have acquired a property without being warned by the notary, the banks or anyone else that their home could in fact be on public soil, only to find this out one decade later together with the bitter news that they neither can sell. It is therefore not surprising that these measures have been widely criticised, internally and externally, by different pressure groups, affected buyers, the United Kingdom, Germany and even the European Parliament.

Notwithstanding the above, not all is lost for these home owners as the pressure on the government has (ironically) eroded the strength of the Coastal Act pressing for an urgent reform of the legislation.

Environmentalist groups and NGOs such as Greenpeace and WWF have firmly opposed to any modifications of the Act or even a more lenient application of the same. In their opinion, 1.500 affected individuals in all of Spain is a small number when compared to the rights of the majority of the population. As stated by one of WWF’s activists, “the figures simply do not warrant the modification of the Coastal Act.

The Law aims to repair the damage caused by the privatisation of the coastline as well as to prevent future consequences. A plot that is available, free of construction and well located is highly valued and worth fighting for but this does not mean that the Government should succumb to the pressure. Individuals often complain when something that is theirs is taken away, however, hardly anyone ever objects to defend property that belongs to the general public”.

It is unknown where this debate will lead, but the last trends offer encouraging news to those affected by the coastal zone protection measures. On March 2010, the European Parliament has held different meetings with affected owners who might lose real estate properties purchased in good faith.

Different experts at Brussels are monitoring the alleged abusive application of the Spanish law in relation to property rights to see whether any discrimination on grounds of nationality has been perpetrated. The European Commission has contacted the Spanish authorities accordingly and many envisage a prompt modification of the Law.

In these situations professional advice is essential to try and safeguard the money and the rights of those who have acquired a property. Irwin Mitchell is currently assisting clients who are facing similar scenarios. If you are an affected owner, please do not hesitate to contact us for preliminary advice, free of charge. We will notify you of any potential claims that may become available.

To avoid potential pitfalls; always seek legal advice.

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For further information please contact Marcelo Masri on (+34) 902 150 105 or email marcelo.masri@irwinmitchell.es. Alternatively you can contact Alex Radford on (+34) 902 150 105 or email alex.radford@irwinmitchell.es.

For more information on coastal property law, please click here.

www.irwinmitchell.es



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2 Comments


Guy said:
01 March 2011 @ 16:13

I doubt that many affected homeowners are that bothered at losing their home as much as getting fair compensation for having been misled. I would think that most would be happy to settle for cash enabling them to buy a similar property elsewhere. Good luck to Irwin Mitchell!


Anne said:
29 June 2011 @ 16:05

The Spanish Government should have provided a compensation structure for those innocent victims caught up in this scenario. It's all well and good for the Spanish Government to "clean up their act" with regard to coastal issues like this, but to do so at innocent people's expense and use them as pawns within their political wranglings, without any compensation structure in place, is legally unacceptable and morally indefensible.


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