New 'no win, no fee' legal service against developers

 

Potential owners of off-plan properties whose developer does not have a bank guarantee or an insurance bond should consider taking legal action, once source of information claims.

During the Spanish property crash of 2008/9, over 170,000 Building contractors & developers – 23% of Spain's total - went out of business. This is something that looks set to continue for the foreseeable future, according to Daren Wallbank, Director of Reclaim Your Deposit – a company whose main focus is to help buyers get their money back.

Wallbank, who has researched both the system and dozens of affected owners states : ‘The good news is that it is a legal requirement in Spain to provide a bank guarantee or an insurance bond to protect client monies in the event that the property is not constructed in line with the contract. Many buyers will therefore be able to contact their lawyer and reclaim their deposit on this basis'.

He continued, ‘The bad news' is that we've discovered many cases where this guarantee has not been provided and it's not yet clear who in general is ultimately responsible for this failure - the bank, lawyer or developer. We therefore recommend clients take action against their original lawyer for failing to ensure that legal requirement was in place at the time of transferring funds.'

Whilst the Spanish system makes provision for this legal protection, it still contains a number of loopholes, and as such you should ensure that your appointed lawyer is experienced in the work that you are engaging him to undertake.

The company has launched a no win, no fee, service for property investors in Spain who want to get their money back after a development has failed to be completed on time.

‘One interesting solution could be an investigation into the activities of this developer to see if a criminal case against the directors is possible. Logic would suggest that all the deposit monies paid must have gone somewhere. If the developer is part of a group then it may also be possible to sue the related companies who still have assets,' he explained.

‘Similarly, if a bank mortgage exists on the property, although this will give the bank priority over the developer's assets before property purchasers can stake their claim, it may give potential to claim against the bank,' he added.

Wallbank reports that it is in response to demand after it found that 20% of all enquiries it receives relate to properties in Spain. To qualify clients must be able to satisfy four criteria; having the original private purchase and reservation contracts, having a bank guarantee or insurance bond certificate, having proof of payments and having a contract that has expires without the property being completed.

‘It's often the legal costs that provide the biggest hurdle for people who have already invested their life savings into a Spanish holiday home and really have no spare liquid funds available to them,' he explained.

‘The reason we've selected Spain for this particular service is that we feel it provides a large enough pool of claimants, has good client protection in the form of bank guarantees and insurance bonds and also a fair legal system which should give us a strong chance of deposit recovery,' he added.