buying off-plan comes more risky. Law 20/2015 abolishes Law 57/1968 and modifies Law 38/999

I understand your perspective Maria, but sadly it is not enough to say purchasers must seek out independent lawyers when there is not an accompanying effective enforceable regulatory structure in place to act as support.... an essential pre requisite, if you will, to minimise abuse and malpractice.

What appears to be required now is for those good professionals, agents and lawyers alike, to come together and fight as one from within in defence of their professions and standards.
Continue to fight for adequate resources to assist the judiciary and courts upon which you depend, to strive for effective regulation via the Bar Associations, and prove that you all as professionals do have moral authority to care sufficiently  by striving for workable solutions to compromising legal loopholes, instead of allowing those within the professions who continue to undermine your endeavours and by so doing perpetuate developer exploitation and do great harm in that process.

A tall order I know but sadly it is these people who are  leaving all too many with the  the impression that this is purely a " money making venture " with little care for those who pay for their professional service. 

Is it so wrong to have such expectations of change from within Maria?

 Is it achievable?

Or is this so endemic in the current real estate industry in Spain that you see little chance of gaining realistic solutions  to recapture a level of mutual trust and respect and thereby effectively counter developer's attempts to exploit? 

Backdated Interest and costs have been achieved by those who had strong and experienced litigation arguments and pioneered for justice where supportive SC rulings had been achieved. Albeit these were hard and lengthy struggles given the postcode lottery re delays and the like, but justice nevertheless via good case law and accountability was being achieved. But whoever needed all the stress, aggravation, costs, and uncertainty over 10 years? Some never made the winning post and ended up pushing daisies.

To generalise by inference that these were all foolish purchasers does a disservice to those who considered that Bank Guarantees and marketing literature with frequent onsite viewings of existing show apartments ( as should be the norm with new purchase) should be honoured and should not be overlooked. They were sucked in and either naive or bought out of greed to make a fast buck and all badly advised by their legal representative. Especially where great emphasis was placed upon existing law in place to protect. Nobody really knew or understood the law. If a law exists and is consistently used in the marketing process which is subsequently and purposefully challenged in an attempt to deny legal responsibility then rightful questions remain. 
 

Where this stands now places emphasis on not only the legal system but a real estate  system that equally fails  to demonstrate any enforceable regulatory structure or moral authority to the extent that it significantly undermines purchasers'  trust and the endeavours of those within the industry who are genuinely striving for reform . We are in the 21^st century where morals no longer exist.

Perhaps purchasers should ask themselves, why does a builder/developer need a deposit?

1. To fund the project because of lack of funds? High risk of bankruptcy.
2. To prove the purchaser is serious? If so draw up a contract and the purchaser pays the deposit to their Spanish lawyer and it is placed in a client account.

THe role of a good independent lawyer is now much more needed than before. Guarantee needs to be issued according to Law and the contract also needs to be reviewed to cover every angle of what Case Law has been specifying along these years.

The development of Law 57/68 has been a Case Law development so, not just Law 20/2015 but all the doctrines issued by Supreme Court on off plan contracts needs to be well knows by the independent solicitor advising off plan buyers these days.

I was yesterday advising a client who is buying off plan and you can read below all the changes I asked the developer to make to the contract. The developer answered stating that they will change nothing ( despite their contract offer is totally against Law) and that there are other buyers willing to buy. So...seems like same story again.

Of course these abuses can be reported to Consumers Authorities:

The list:

1.POA of legal representative signing the contract

2.Specify that beyond what is established by Law all amounts paid in the Escrow account are treated as per Law 57/68 or 20/15. We need confirmation from the Bank about this and also specify in the contract that it is a second residency contract under rules of 57/68 and 20/15. ( comment: our client was being assured in the contract that amounts paid pre-license were guaranteed--- that is not true till an individual guarantee exist or the depositer bank confirms this expressly and sign it)

3.If the building is finished before the established deadline, a reasonable number of days need to be granted to you for preparation and formalization of your means of payment and necessary documents.( comment: the developer wanted to set the date unilaterally and link the cancellation of the contract to the lack of attendance by the buyer)

4. Changes in the project: Even if these being obligatory by Law, if the modifications are of substantial nature: affecting views, privacy of essential features of the property or involve a size reduction of the inner rooms and/or the solarium or the terrace higher than 10%, the buyer can cancel the purchase. ( Comment: developer wanted to be 100% free-- without any consequences/compensation in favour of the buyer to change features of the development)

5. Force Majeure clause: Communicate them to the client as they occur and agree new dates of delivery. No onbligations for communication/ justifying were included in thar clause in the contract

6. Set a clear date for property delivery: ( at least semester and year) after which the contract can be cancelled/ guarantee exercised.

7. Within 15 days from date of completion:  15 days: a new fixed date can be agreed with the extension of the Guarantee. (comment: developer wanted to leave the extension open, wihout fixing new date and the obligation to extend the guarantee)

8. Granting of a Bank Guarantee/ Insurance Policy directly enforceable without a need to judicial battle. ( Comment: developer was not offering a Guarantee but a penalty clause of 20%: which would result in a discrepancy regarding breach and a long judicial battle against a possibly bankrupt developer: no way!

9. Expenses to be paid according to Law ( Comment: developer wanted all expenses to be paid by the buyer)

10. Submission to Courts where property is located: ( Comemnt: developer wanted to submitt the contract to Courts of their Commercial address

And it is a reknown developer in Costa de la Luz!!!!

Amazing

 ( despite their contract offer is totally against Law)

I presume the developer's Spanish lawyers wrote the contract. That says it all. What chance does the consumer have in Spain?

Kavanagh:

Buyers have in Spain all the chance of a solid system of Consumer Law and of good independent lawyers around ;)

Brilliant Maria. Thank you for your educative posting and expose!

Well there we have it ...the open developer abuse with purposeful non adherence to law, with dependence on those who either refuse to accept forewarnings or are prepared to forgo their monies in the event of insolvency or willing to accept any changes, no matter how compromising! It would appear here is a developer with a free hand to do whatever he likes. 
For those that proceed under this circumstance these would be the purchasers that fit into Kavanagh's description! 
Foolish or naive in the extreme, or investors perhaps hoping to make subsequent monies on a risky product that might hide all manner of cost cutting endeavours.

The question then becomes how many conveyancing lawyers would be willing to allow clients to proceed in full knowledge of all of the above and thereby perpetuate developer abuse?

Re reporting to consumers authorities....are these authorities effective and to your knowledge have they made  developers accountable where appropriate? Are these instances effectively monitored at a local or National level? Do they realistically offer effective disincentives to continuing abuse?

So many questions Maria but thank you sincerely once again for your educative postings based on first hand experiences. 

Ads, in my opinion, an honest and diligent lawyer in Spain is in the minority, the bar association is useless and turns a blind eye to everything and has no accountability. Where is the bar association website showing disclosure of disciplinary action? It seems the whole justice system is little more than a mafia. Is it any wonder this breeds corruption everywhere, especially those involved in the property and construction industry, including banks?

Having said that, Spanish culture accepts it for what it is and seems to accept it as normality. Why I do not know.

The main problem here is when foreigner Billy Brit arrives with his Brit head-on, he innocently believes the standards of British consumer protection and the British justice system are worldwide; he is in fact a lamb to the slaughter.

The whole subject is the responsibility of whatever government is in power.

Yes I am aware of that Kavanagh but given accountability has been achieved for those who believed that it could,be achieved and placed thier faith in " the few" as you put it ( and yes hit many obstacles along the way) only serves to prove how determined you have to be against those who abuse, and how you should never say never, but engage and try to support those " few" who have sufficient self belief and moral authority and good intellectual litigation skills, at times putting even their own futures on the line, in their genuine attempts to succeed.
IMHO these are not " ambulance chasers" but quite the opposite, battling hard against many of the odds, they are perhaps yes in the minority but to them I say stay strong for all of our sakes.... and please keep educating us all. 

Billy Brit........innocently believes the standards of British consumer protection and the British justice system are worldwide..

https://www.telegraph.co.uk/property/commercial/fear-savers-cash-60m-property-scheme-goes-bust/

Ads, I fully agree with what you say. But in the past and still, currently, the average honest innocent man in the street still lacks any genuine consumer protection from all the abusers already mentioned. This is an incentive to those abusers, and in Spain, no authority with the power to make change seems to care. Perhaps Spanish nationals gave up the cause many years ago.

On a personal note, I never purchased off-plan but was as naive as the rest when I arrived in Spain.

Spain is not all bad and corrupt. The casual lifestyle, climate, and national health system are far superior to the UK.

Dear all:

I understand my words may be difficult to believe but I assure you that the levels of Consumers Protection conscience both in society and in judicial/legal fields are constantly increasing in Spain.

It is part of the European Union agenda... no way around ;)

Sorry to advise Maria but the European Union Commissioners have been turning blind eyes to all manner of compromising issues relating to protection of purchasers rights in Spain for years, and previous instances that were brought to the attention of the European Parliament via MEPs and forwarded to a previous Vice President no less, were met with the conclusive statement that the responsibility lies with the individual member state to address the purchase issues brought to their attention, which effectively means that they washed their hands of these disgraceful instances.

How can this possibly be considered adequate consumer protection with regard to purchasers'rights? Plus there was some mention of confusion between consumer law and purchase law! Has this been properly explored?

In other words we are back to Spanish self regulation which has not proved sufficiently effective to prevent continuing developer abuse and potential conveyancing abuse as we are discussing within this thread.
 

Just how bad does this have to become before effective and TIMELY action is taken to protect those purchasers who sadly remain in ignorant bliss to the fact that conveyancing lawyers in Spain are NOT sufficiently regulated to prevent from the outset  the issuance of offplan contracts that subsequently compromise thier clients, as per the detailed examples that Maria has rightly exposed ( born from YEARS of litigation and case law following  SC supportive rulings).

it is no longer acceptable to suggest that innocents should be exposed to the issuance of such abusive contracts no matter whether the risks have been identified to the client or not, as all this does is perpetuate continuing developer abuse where they arrogantly ignore the requirement to issue building licence and legal Bank Guarantees and all necessary protective contract clauses prior to purchasers depositing any monies.
 

Plus it could be argued that those conveyancers who are not acting with all due diligence in protection of their clients best interests, by proceeding with such contracts from the outset, could ironically financially benefit from subsequent litigation to belatedly try to protect their clients, ( as witnessed in the past where those non independent lawyers who failed to protect from Banking abuse from the outset, subsequently litigated against the Banks!) 

It might even be suggested that this scenario could be perceived by some as even incentivising litigation! 

This is a disgrace, and sadly needs exposing before we all witness a repeat of what happened during this last decade and beyond, which effectively paralysed the justice system with thousands upon thousands of offplan claims against developers and financial institutions.
 

But worse now, as in this instance with changed law it would require making claims against the original conveyancers who failed in their due diligence, or for others the impossibility to make claims and suffer the complete loss of unsecured monies ( which would not concern developers in the slightest as demonstrated by their manipulative asset stripping in the interim!). But then we hear the suggestion that this too would be become an impossibility given there is little appetite for one lawyer in Spain to take action against another. Catch 22.

Perhaps the  statement BUYER BEWARE is no longer applicable but the statement via the media should suggest UNDER NO CIRCUMSTANCE SHOULD OFF PLAN PURCHASE BE CONSIDERED until such time as ALL conveyancers are required to demonstrate that their offplan purchase contracts are proven to be sufficiently protective and legally robust to prohibit abusive manipulation by the developer or bank and provision of legal building licence and legal Bank Guarantees are in place prior to ANY MONIES being deposited. 
 

It saddens me to suggest that perhaps the only time that this will be effectively addressed by the powers that be is when the offplan market in Spain is significanfly challenged and negatively impacted, by exposing the uncomfortable ongoing realities. But how ironic when a previous law Ley 57/68 intended to protect from such abuse actually achieved supportive case law which took years to achieve but has now been overridden in this way.!
 

It doesn't bear thinking about but some might even suggest that this overriding of law following significant lobbying, was as a consequence of this previous law becoming finally so effective to make developers and Banks fully accountable..... 

Returning to the detail....I wonder if it has yet been established who the conveyancers were in this Bynok developer expose that has opened up this highly compromising scenario?

Maria and Lucas, 

Been thinking about the wider consequences to this.

Are these developers who are refusing to accept fair and protective contracts now effectively significantly compromising  all the good legal conveyancers by implying that you all either accept their abusive contracts or lose ALL opportunities to sell any offplan properties on their developments, as they already have their own abusive conveyancers lined up to sell properties on these new developments, and thereby expose innocent purchasers to major injustices in contravention of " intended" law, or expose purchasers to what can only be interpreted as purposeful failure to honour any of their marketing/ advertising  "promises" ?

If this is the case then surely all of the good legal conveyancers need to work as one to expose this disgraceful continuing abusive practice and speedily bring this to the attention of Governent and your own Bar Associations before this gets completely out of hand.

I would be grateful if you could advise and realistically make known if in your experience good conveyancers are ALREADY taking action to this obvious threat and have ALREADY brought this to the attention of those in power? If so, what exact responses have you received to act as reassurance going forward? Or is this already out of control and requires major publicity and media coverage, in which case have you considered this option to protect your client base going forward?
 

It needs stressing that this has the potential to do great damage to the reputation of the Spanish real estate industry. 

Way ahead is a report to Consumers Authorities. The shame is that some clients finally sign this type of contracts against our advise....and as a consequence of pressure of developers...

These developers are toxic Maria and are undermining the justice system and the rule of law in Spain.

The moment that conveyancers " allow" this to continue by hiding behind forewarnings to clients but still generating contracts that they must know full well have abusive loopholes or even illegal clauses in place, without building licence or bank guarantee in place, and taking fees in that process without any form of  regulatory restriction within the legal profession as a whole to act as effective disincentive, is the moment that trust and respect is lost and it completely undermines the whole system of legal conveyancing.

The good trusted legal conveyancers deserve far better from their professional bodies supposedly in place to retain good civilised legal order and compliance with their codes of practice. Isn't this what binds the civilised rule of law and control over those who threaten via  corrupt malpractices in their business and financial dealings, and in so doing undermine fair consumer protection that has taken years to achieve?

This message was last edited by ads on 1/21/2022.

This message was last edited by ads on 1/21/2022.

These practises can be reported to  regional Consumers Authorities and are fined with sanctions of even 25% of the value of amounts that should have been guaranteed.

Maria, sorry more questions I'm afrad!.

Do you have any first hand experience in this route to reporting to regional Consumer Authorities and if so have there been any successful outcomes? If so how long and how much time and effort has this taken to effect? Presumably this is all evidence based?

To your knowledge are law firms following through on this route to additional accountability on behalf of their clients, and does this relate to developers or banks or conveyancing lawyers or all relevant parties ?

Just out of interest who is to say that a developer will devise a mechanism to circumvent this by setting up a headquarters in a region not appertaining to the area of build? 

How is the fine distributed? Who benefits from the fine? Does this go to the purchaser or elsewhere?

If this is regional as opposed to national, is there a reticence to follow this route to accountability due to the impact on local employment and economy if that developer becomes insolvent in this process?

This again appears to be dealing with instances after the legally compromising event,  so this route should not detract away from the need for a robust regulatory conveyancing system to prevent problems at source i.e. at point of issuance of contract.

The most sensible rational solution would appear to be for all conveyancers to delay the issuance of contract until the developer provides the building licence and BG and pays adherence to all necessary contract clauses that comply with existing case law as you presumably have done Maria.

What I fail to understand is what is standing in the way of this logic. Why are conveyancers allowing themselves to be bullied by developers in this way when this is directly in contradiction with the rule of law? Could you please explain.

Your views and honest opinion would be much appreciated.

P.S.

Back in December 2020 you observed

"Also, I was thinking some days ago: lawyers who intervned in conveyancing processes: stronger sanctions are needed. A big deal of the problem falls into the lack of independence of them. It is true that punishing the banks have been a healthy medicine for the off plan system in the future but.... that work in regards to lawyers is still to be done. We, lawyers in Spain--- I dare  to say--- are too comfortable in the lack of control and sanctions by our regulatory bodies. An individual certificate of Guarantee would have refurned moeny back to clients since day one."

And yet one year on we appear to be  STILL witnessing conveyancing lawyers who are compromising their clients by lack of due diligence relating to issuance of contract in line with good case law ( that as we keep referring to has taken years to achieve) and provision of legal building licence and bank guarantee.

So just how long is this going to take for the relevant regulatory bodies to take action and not only ensure effective protection for clients rights according to good case law but also restore confidence and trust in the regulatory aspects of the Spanish conveyancing system? 

This message was last edited by ads on 1/21/2022.

This message was last edited by ads on 1/21/2022.

Dear Maria,

As the aspect of distrust and protectionism has been brought up on another thread, would you be able to advise why lawyers voices are not being heard with regard to feedback and enforcement of professional standards to counter legal malpractice, to the various Bar Associations?

Is it that this feedback is not occuring?

Is it that they have little faith that their feedback will be taken seriously?

Is it that the process is not user friendly, I.e. onerous and time consuming?

Is it that they fail to perceive the wider implications of such malpractice on the rule of law and the need to safeguard professional standards?

Is it that they are not sufficiently knowledgeable of new law that requires Bank Guarantee and building licence and inclusion of all relevant case law in their contracts prior to any handover of monies, to act as due diligence in protection of their clients best interests?

Do they not see how this failure to consistently use their voices in this process of feedback and enforcement of standards by the Bar Associations is exacerbating distrust and sadly increasing the perception that all legal professionals in Spain are complicit in protectionism?

Why are good legal professionals not coming together to swiftly bring this to the attention of the Bar Associations and place their concerns on open record? 

Is it not true that until this is done in any organised manner that any trust in the Spanish Justice and conveyancing system will be eradicated?

Dear Ads:

In my opinion and from personal experience, Bar Association in Spain are still too self-protective: this needs to be reviewed and reformed

M

Dear Maria,

Thank you for your honest observations.

How can reform be achieved?

Who oversees the Bar Associations? Is it the Spanish General Council of the Legal Profession (Consejo General de la Abogacía Española)?

Does purposeful non adherence to this new law by conveyancers, (such as ignoring the requirement for building licence and BG to be in place, plus compliance with case law etc, when formulating contracts), constitute a contravention to the rule of law by their act of non compliance?

As a practical solution should these instances therefore be consistently reported not only to the Bar Associations but also copied in to the Spanish General Council to act as formal record?

To your knowledge has the Spanish General Council been made aware of instances of conveyancer malpractice or non compliance with law, and are they taking seriously the failings of the Bar Associations to act and safeguard the prestige of the legal profession and require that the bars and their registered lawyers meet their respective obligations?