Breach of contract?

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17 Mar 2008 00:00 by valeriedixon Star rating. 40 posts Send private message

We are buying an off plan property and our contract states completion will be in the first quarter 2008.  This is clearly not going to happen!  We do have bank guarantees for all the money we have paid to date and understand that in the case of breach of contract we can claim using this guarantees directly from the bank.

We are unsure of what actually consitutes a breach of contract.  We believe that if the developer does not complete the contract with the first licence of occupation and all the facilities of the development in place by the end of the first quarter then he is in breach of contract.  Can anyone tell us if this is correct and if so when should we send a letter to him informing them of their breach of the contract.  Is there a period of time in which this has to be notified as we are under the impression that if we do not contact the developer he can assume we accept the delay by default?

We have noticed in other posts that there seems to be a window of three months that the developer is allowed to go over the contract date.  However in our case there because the contract states completion within the first three months of 2008 then this surely this would be allowed for within this period.  Is this a correct assumption?

We are purchasing a detached villa within a developement of different types of properties and the developer is completing in phases .  The development also consists of various facilities ie communal pools, residents club, sports facilities etc.  When we orginally signed for the villa we were told that these facilities would be completed before our villa was finished as this is not the case, does this also constitute a breach of contract? 

Also we seem to have a unfair clause in our contract regarding breach of contract.  The contract states ' in the event of breach of contract by the buyer the seller shall keep all amounts received from the buyer'.  There is no receiprical clause regarding seller's breach of contract.  Would we have a claim of an equal amount against the seller in the case of his breach ie not completing or does it just void the contract?

When we last visited and spoke with the developer we were assured that our property would be complete and the first licence of occuppation in place in time for completion, however they also stated that the public facilities would be ready in stages over the next 12 - 18 months!  Is our situation affected with relation to the communal facilites due to it being a detatched property on a resort development.?

We have been reading the brilliant posts on this site over several months and made notes of various points and thought we could speak to our lawyer about the situation at least armed with useful informations and questions - she simply shrugged her shoulders and asked did we want the property or not - if we wanted the property then wait!

Any advice offered would be much appreciated.

Thanks

PS sorry this post is so long!

Should also have said a big thank you to all who regularly contribute to this site - there is a wealth of information and for anyone moving/buying in spain it is reassuring to have contact with people who have been there, done that....so as to speak.  Have been quietly watching site but first time contributing.

 




This message was last edited by valeriedixon on 3/17/2008.



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17 Mar 2008 17:13 by spanishsolicitor Star rating in Murcia. 140 posts Send private message

spanishsolicitor´s avatar

valeriedixon said.  "We believe that if the developer does not complete the contract with the first licence of occupation and all the facilities of the development in place by the end of the first quarter then he is in breach of contract".  I think your contract literally does not state anything about  the facilities of the development, so your developer is in breach of contract only because "by the end  of the first quarter" you won´t have your dwelling finished. You should notify this breach of contract to the developer by a  duly attested summons (requerimiento notarial) . When ? There is no period of time but if you really don´t want to wait for ages my advice is to require the developer the performance of the contract the first day after the deadline

valeriedixon said. "We have noticed in other posts that there seems to be a window of three months that the developer is allowed to go over the contract date". It depends. Does your contract specify any agreed delay ?

valeriedixon said "We were told that these facilities would be completed before our villa was finished as this is not the case, does this also constitute a breach of contract?" No, unfortunately Spanish Judges don´t admit this cause of breaching of contract. 

My final advice is:  Don´t wait anymore, instruct your lawyer that you want your money plus interests so she has to do her job. Don´t be afraid to speak clearly. You have the most important thing, you have bank guarantees

 

Felix

www.fljordan.com  Spanish Law Firm



_______________________
www.fljordan.com



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18 Mar 2008 07:48 by mariadecastro Star rating in Algeciras (Cadiz). 9336 posts Send private message

Legal Questions? Speak to Maria Direct
Spanishsolicitor: With all my due respects to you, my colleague,  I would like to add:

Regarding the facilities: if they were part of the publicity or any other information they used to sell the house, it has contract value and you can claim against that too. Spanish Judges and the Supreme Court doctrine admit breaches of contract even because of the the lack of just one swiming pool, and the lack of facilities are considered by Major and Minor Case Law in Spain as a breach on the quality which has been contracted.

Regarding automatic extensions: They are forbidden by the Supreme Court and in every case ( even if announced in the contract), they need to be communicated, justified and approved by the purchaser in every case as those extensions are always  agreed under the conditions of " force majeure": they need to be proved and accepted. Automatic extensions are not legal. So,  I would say, in principle , the extensions even if agreed, do not apply unless a force majeure is proved and accepted as said.

I agree with you on that she needs to execute the Bank Guarantee as soon as the completion deadline arrives and the house is not finished.




_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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18 Mar 2008 10:19 by spanishsolicitor Star rating in Murcia. 140 posts Send private message

spanishsolicitor´s avatar
María. I agree with you undoubtedly "the lack of facilities are considered by Major and Minor Case Law in Spain as a breach on the quality which has been contracted"
but now, Dear Colleague, we are just talking about the delay in this facilities, therefore we can´t claim breach of a purchase sale agreement  if you have your house with FLO granted but without the communal pool. The failure to hand over the facilities before the deadline specified for the delivery of the house is not a valid argument at Court for discharge a contract. You only can bring a case against developer in this case for damages or asking for the performance of the  thoroughly duty .
 
I said

valeriedixon said. "We have noticed in other posts that there seems to be a window of three months that the developer is allowed to go over the contract date". It depends. Does your contract specify any agreed delay ?"

 I didn't say anything about the legality of the automatic extensions or about force majeure,  I do know that they are considered unfair terms. I just want to ask valerie what exactly specified her contract in that issue,  I just want to add that  it is possible to include a clause in the agreement in order to allow the buyer  to extend a new term to the developer  for handover the dwelling.

Felix

www.fljordan.com  Spanish Law Firm



_______________________
www.fljordan.com



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18 Mar 2008 13:46 by valeriedixon Star rating. 40 posts Send private message

Thank you both for your answers.

The contract makes no mention of the facilities only the villa.  There is no provision or mention in the contract relating to delay only that completion with the FOL shall be in the first quarter of 2008 and that the escritura must be completed within 30 days of notification that the FOL has been issued. 

We, therefore, assume that they have until March 31st to inform us that the FOL has been obtained - is this correct? 

What happens if they manage to complete the property (unlikely) by 31st March but have not obtained the FOL?

How would we go about calling in the bank guarantee - am assuming you can't just go into bank and say villa not finished can I have my money please?

How long would this take to organise and to get a good result?

Can the developer or the bank contest this action if they complete the property and have applied for the FOL but are waiting for the Town Hall to issue it?

Your input is very much appreciated - thank you





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18 Mar 2008 15:08 by mariadecastro Star rating in Algeciras (Cadiz). 9336 posts Send private message

Legal Questions? Speak to Maria Direct

Dear Valeriedixon:


 

Please have answers below in bold green ( same tet of your message):



Thank you both for your answers.

The contract makes no mention of the facilities only the villa.  There is no provision or mention in the contract relating to delay only that completion with the FOL shall be in the first quarter of 2008 and that the escritura must be completed within 30 days of notification that the FOL has been issued. 

We, therefore, assume that they have until March 31st to inform us that the FOL has been obtained - is this correct?  They have got  till 31st in March to request you to complete with full licenses in place, also with licenses of facilities if they were offered in publicity.

What happens if they manage to complete the property (unlikely) by 31st March but have not obtained the FOL? Breach of contract.

How would we go about calling in the bank guarantee - am assuming you can't just go into bank and say villa not finished can I have my money please? Just that is enough.

How long would this take to organise and to get a good result? Difficult to answer: a month I would say.

Can the developer or the bank contest this action if they complete the property and have applied for the FOL but are waiting for the Town Hall to issue it? They can, but Law which regulates Bank Guarantees clearly state that the FOL needs to be in place for the completion deadline.

Your input is very much appreciated - thank you

Our opinion is that the delay of the facilities ( if they were advertised as part of the product) is also a breach of contract for refund. I appreciate and respect Spanishsolicitor´s opinion though.

_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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19 Mar 2008 15:38 by valeriedixon Star rating. 40 posts Send private message

Thank you so much for your advice.

I am going to fax my lawyer later today to get her reponse to our intention to action the bank guarantees on 31st march.  I will update you once we have heard back from her and let you know how things progress on this situation. 

We have learned so much from evesdropping on this site and no doubt there will be others that can benefit from our experience too.

Take care.





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19 Mar 2008 17:42 by suziew Star rating. 24 posts Send private message

Hello,

Sorry to hi-jack this thread but we are in a similar situation.

Our apartment should have completed in the last trimester of 2007 - obviously this has past. However our contract states that 'the buyer accepts that the vendor will have an additional six months grace in which to deliver the keys." -  does this mean that we will have to wait till June or can we try at the end of March?

This site is so helpful

Thanx in advance

Sue





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19 Mar 2008 17:57 by spanishsolicitor Star rating in Murcia. 140 posts Send private message

spanishsolicitor´s avatar

Hi suziew

 

In my opinion you have to wait till June

 

 

Felix

www.fljordan.com    Spanish Law Firm



_______________________
www.fljordan.com



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19 Mar 2008 19:07 by mariadecastro Star rating in Algeciras (Cadiz). 9336 posts Send private message

Legal Questions? Speak to Maria Direct
In my opinion those clauses are abusive,: illegal: null and void. The Supreme Court has stated that extensions need to be communicated, justified and APPROVED by the buyer.

Do you have a Bank Guarantee? If not, ask for it too.  If you do not have it and are not granted with one after specific request, the non delivery of that would add to your refund claim too.

_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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19 Mar 2008 20:07 by suziew Star rating. 24 posts Send private message

Thank you so much for your advice.

We have certainly never approved any estension to the completion date - the last email I had from our lawyer seemed to think they would complete after the second week of february - very vague! - They never asked if we approved of this situation.

If this is the case can we action a refund immediately? 

We do have a bank guarantee - but how do we know which bank this is with?

Is this something that you could help us with?

I don't feel that the lawyers we currently use are always working in our best interests - they were recommended by the sales company we bought the property through and seem very uninterested in contact with us.

Regards

Sue

 





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19 Mar 2008 23:00 by mariadecastro Star rating in Algeciras (Cadiz). 9336 posts Send private message

Legal Questions? Speak to Maria Direct

again... far away from lawyers recommended by Estate Agents or developers, they are not avoiding a conflict of interests as per our ethical code  required and doing a tremendous damage to the proffession.

Any good independent lawyer witha good knowledge of contract and consumers law is enough for fighting these cases.

Of course, we would be able to help you.

Best of wishes,

Maria

 



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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20 Mar 2008 09:20 by valeriedixon Star rating. 40 posts Send private message

Hey folks

Me back again - now worries with anyone 'hyjacking' postings - it's just means we all get more information that we might not otherwise have known.

Anyway I have another question - if we intend to execute the bank guarantee do we have to notify the Developer that we intend to do so?  We have sent numerous e-mails to our Developer requesting various dates and information and have not had any replies!  The closer we have got to completion the quieter the developer has gone!

Thanks





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20 Mar 2008 11:20 by spanishsolicitor Star rating in Murcia. 140 posts Send private message

spanishsolicitor´s avatar

Hi Valerie

 

Yes, you should notify this breach of contract to the developer by a  duly attested summons (requerimiento notarial) before executing the guarantee. It is not compulsory but it is convenient

 

Felix  

www.fljordan.com  Spanish Law Firm



_______________________
www.fljordan.com



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20 Mar 2008 12:53 by valeriedixon Star rating. 40 posts Send private message

Hi

I assume that the summons has to be issued by our lawyer - how long does this take to arrange usually?

Do we have to be present in spain when the summons is served and is it adequate to present it to the local representative office in the resort to their management team or does it have to be served to their registered head office?

Do we have to physically go into the bank to execute the bank guarantee or can this be done by our lawyer submitting it to the bank on our behalf?

In other words can all this be done on our behalf by our lawyer?

Thanking you in anticipation.





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20 Mar 2008 14:18 by spanishsolicitor Star rating in Murcia. 140 posts Send private message

spanishsolicitor´s avatar

Hi Valerie

 

If your lawyer has POA, he or she could do everything. The "requerimiento notarial" take usually a couple of days

 

Felix 



_______________________
www.fljordan.com



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20 Mar 2008 14:41 by valeriedixon Star rating. 40 posts Send private message

Thank you - will post update soon.



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21 Mar 2008 21:54 by miket Star rating in La Mairena, Elviria. 372 posts Send private message

Hi Valerie,

Having had the experience of going through this process with others you need to be aware that getting your money back from Bankers or Developers for Breach of Contract for delays etc in the current climate can prove very difficult in reality?

Maria, I understand is a very knowledgeable solicitor and not only understands all aspects of Spanish Property law but can express it in excellent English too!

My advice Valerie would be to wait until the end of the 3 month extention period before claiming against the Bank Guarantee? I would suggest it would be very easy for the Developers Architect to justify an extension on any number of grounds and Banks are well aware of this ploy and may use it to reject any claim! In the meantime have your Contract and Guarantee scrutinised in fine detail by an independant lawyer experienced in successfully recovering Investors deposits particularly in the past year or so! If you have a copy of your purchase contract in English check the detailed clauses about what is and isn't stated about: Completion Dates - When development facilities will be completed, Extension periods and Penalty Clauses. Do the same with your Bank Guarantee and check the cessation date which should be in line with any completion date. Its crucial that you have the best advice at the beginning of any procedure and if you don't have confidence in the ability or commitment of your existing lawyers that get rid of them asap and take time to find the right one as close as possible to where your development is?



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Mike T






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21 Mar 2008 23:23 by Poppyseed Star rating. 898 posts Send private message

Our urbanizacion (marketed thorugh Parador) was meant to have all sorts of facilities in phase 3. These included another pool, tennis courts, restaurant, bowling alley. These facilities were shown on plans of the development in the marketing brochure. 6 years later phase 3 hasn't even started and the developer is no longer developing, not bankrupt just no longer in construction. Phase 1 & 2 are all sold,  (although whether we have FLO is a bit dubious, still tryhing to establish this) do we have a case against the developer for not completing the development as advertised? 

Many thanks



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Poppyseed




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22 Mar 2008 10:47 by mariadecastro Star rating in Algeciras (Cadiz). 9336 posts Send private message

Legal Questions? Speak to Maria Direct

Dear Poppyseed:

Yes you do have a case against dvelopers for not handing advertised facilities.

Best,

Maria



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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