07 Feb 2009 12:00 AM:

 Does anybody know if there are legal limits to the commissions that agents can charge on top of developer off-plan prices when selling to buyers? I have found out that a certain agent added €32,000 commission to properties priced by the developer at €83,000, giving a total price of €115,000. This is approx 40%!!

There must be laws against this sort of abuse to protect off-plan buyers?

Anybody know what consumer law says in Spain on the matter? Any success stories in getting compensation for such price inflation either through the courts or directly with the agent? Or getting the developer to reduce the agreed purchase price on completion?

Thanks

Ed.

Thread: Abusive agent commissions ... 40% !!!

--------------------------------------

27 Jan 2009 7:22 PM:

Maria,

Back to the original thread, I have the following from ACC Seguros "explaining" the reason why they will not pay legal interest on one of my two off-plan properties.

"La poliza o polizas adjuntas no se encuentran sometidas a la Ley 57/68, ya que las fincas objeto del seguro no van a ser destinadas a domicilio o residencia familiar, con caracter permanente, ni a residencia de temporada, accidental o circunstancial. En consecuencia no se garantiza interes alguno de las cantidades anticipadas entregadas por el comprador, sino unicamente el principal"

I have read somewhere before that banks and insurance companies try to justify this by saying that anybody with more than one off-plan is not a consumer but an investor. Whilst both properties are in my name, one was purchased for a relative with their money, and both were intended as holiday homes in the same development.

Do you have any views on their legal position or how I would force them to pay legal interest on both bank guarantees if I needed to execute them?

The developer is hiding behind ACC's position. The developer also says that my lawyers accepted this explanation at the time the bank guarantees were put in place (without my knowledge).

Thanks

Ed.

Thread: At what point can a bank guarantee be executed?

--------------------------------------

22 Jan 2009 12:42 PM:

I spoke to the developer. They tell me that ACC Seguros refused to give legal interest on both bank guarantees. They are going to provide me with a letter from ACC explaining their reasons. Apparently my lawyers at the time accepted their position.

Q. Who has broken the law protecting my rights as an off-plan investor? The developer or ACC Seguros?

Any views? Maria?

Thanks

Ed.

Thread: At what point can a bank guarantee be executed?

--------------------------------------

21 Jan 2009 5:58 PM:

Maria,

Thanks for your response.

I assume that Spanish consumer law 57/68, reinforced by Decree 5151/89, makes it illegal for the developer to take out a bank guarantee / insurance policy that only returns the original amount I invested and does not pay any legal interest over the period of the investment?

According to the bank guarantee / insurance policy I have with ACC Seguros, the annual premium for this cover was 1% when it was put in place two years ago. Over the three year period of cover to 31 Dec 2009, this amounts to about €1500 (the one with legal interest) and €1300 (the one without legal interest). Given this small difference, it seems incredible that the developer would have intentionally broken the law for the sake of just €200 of extra cost to them.

Is it a straightforward process for the developer to get the bank guarantee / insurance policy changed to include the legal interest, perhaps by paying a small additional premium? I assume banks are charging higher premiums in the current climate than they were two years ago when this bank guarantee was taken out, but we are only talking about a couple hundred euros I assume?

Am I unrealistic in thinking that the developer will agree to change the bank guarantee to include legal interest without me taking them to court (or at least threatening to)?

Thanks for your help.

Ed.

Thread: At what point can a bank guarantee be executed?

--------------------------------------

19 Jan 2009 2:57 PM:

Maria,

Thanks for your reply. I had a couple of points of clarification:

1) You state that: "You need to fix for completion deadline stated in the contract, without the automatic extension: 30 June 2009".

The developer has clearly taken out the bank guarantees to the later date of 31 Dec 2009, as the "vencimiento" on my bank guarantee from ACC Seguros says 31 Dec 2009. Does that mean that I cannot execute it until 1 Jan 2010, even if my private purchase contract says that the developer has to deliver the property by 30 June 2009 (ignoring the 6 month grave period, which you say is not legally allowed)? Or will ACC Seguros be legally bound by the date of 30 June 2009 in the contract?

2) I have two separate bank guarantees in place covering the two properties. On closer inspection, only one of the two bank guarantees appears to include any legal interest, i.e. the insured amount is equal to the amount I invested plus an amount of c.5-6% over the period insured (to 31 Dec 2009). The other states that the insured amount ("Capital Maximo") is equal to the amount I invested. I thought that it was a legal obligation for the developer to take out bank guarantees to protect all monies invested in off-plan developments and paying legal interest on those amounts. Are ACC Seguros legally obliged to pay legal interest on all amounts, or will I be forced to chase the developer to get a new bank guarantee put in place paying legal interest on all monies invested? The developer is paying a lower premium for the bank guarantee without legal interest, so I assume they have done this intentionally. Will I need to chase the developer or ACC Seguros to get this sorted?

Thanks

Ed.

Thread: At what point can a bank guarantee be executed?

--------------------------------------