Schlagwort: english speaking solicitor

RELEVANT RULING FOR HOMEBUYERS OF NON-COMPLETED PROPERTIES WITHOUT BANK GUARANTEES

Geschrieben von admin am 2 September, 2013. Veröffentlicht in english speaking solicitor.

Ruling for non-completed Spanish properties without bank guarantees

In the last few years, it has become quite common the significant number of homebuyers who have purchased off-plan properties and paid large sums of money on account for their future homes, however, the developer has never completed nor handed them over. Consequently, the advanced money has been lost in many cases, because the developer may have gone bankrupt and lost all assets to refund these amounts to them.

Spanish Government passed in 1968 the Law 57/1968 dated 27th of July on the receipt of sums paid in advance prior to the construction and sale of homes. This was aimed at stopping several cases of homebuyers who lost their money paid for properties which never were built.

Spanish Law 57/1968 is still in force and solicitors, who are specialised in this issue, know the regulations for homebuyers’ protection in respect of sums paid in advance to developers for off-plan or under construction properties prior to their completion. However, the most relevant point at this moment is the judgment argumentation set out for the court proceedings where 46 homebuyers without bank guarantees securing advanced payments, made a legal claim jointly and severally to the bank and the developer demanding the total amounts paid, because the construction works were never completed. The judgment was pronounced by a court of first instance of Albacete on the 08/06/2012 and was confirmed by the Provincial Court on the 11th of February of this year.

The aforementioned judgment ordered the bank to refund all amounts of money paid by the homebuyers, considering that it was jointly and severally liable together with the developer, pursuant to the interpretation of Articles 1 and 2 of the abovementioned Law of 1968, Article 4 of the Spanish Ministerial Order of 1968 and the First Additional Provision of the Law 38/1999 on building regulations.

Although the bank was not a party on the sale agreement and did not either issue bank guarantees for homebuyers’ payments on account, the main line of argument of this judgment to consider the bank to be jointly and severally liable is that this bank knew about these payments in the developer’s account and was aware that these amounts were paid for the purchase of homes in a property development. As a result of that, the bank did not comply with the obligations provided by Law 57/1968 and committed a banking malpractice, pursuant to the interpretation of Article 1.2 of this Law, as the developer should have been required to open a special account where depositing its funds apart from any other amounts aimed at the construction of the properties. In addition, the bank should have not permitted these deposits in ordinary accounts, and particularly when this bank was the only financial entity financing the development and profited from this real estate business.

This judgment entails a court action to recover the money for those homebuyers without bank guarantee securing the amounts paid on account to developers, because, if appropriate, they could bring an action for joint and several liability against the bank where the developer’s loan was granted, where the payments were deposited and where the developer operated. Thus, homebuyers will have better chances to recover the sums paid, considering that there are already many judgments where developers has been condemned to pay, but court orders cannot be enforced because of their insolvency, while banks are always solvent.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

THE “SUMMER HOLIDAY RENTALS” ISSUE

Geschrieben von admin am 10 Juli, 2013. Veröffentlicht in english speaking solicitor, lawyer. Keine Kommentare zu THE “SUMMER HOLIDAY RENTALS” ISSUE

Spain, summer, holiday, rentals, tax, law — New rules Spanish holiday rentals tax

On the 5th of June 2013, Spanish Law 4/2013 dated 4th of June was published in the Spanish Official Gazette B.O.E. This recent Law states the procedures to relax and promote the rental housing market. By means of this Law, the Spanish Government tries to regulate summer holiday rentals, which are not controlled by the Spanish Tax Administration Office.

These regulations aim at two basic objectives: on the one hand, to change people’s habit in respect of meeting their housing needs—up to now, people were inclined to purchase their usual home and obtain a mortgage. Now, it is a question to be more inclined to live in a rental home. And on the other hand, these regulations aim at combating underground economy of summer holiday rentals.

Nevertheless, these regulations leave summer holiday rentals without legal protection, because they provide that “rentals intended for non-residential use” are not regulated by the Urban Rental Law (Spanish acronym LAU), but by the regulations of Regional Governments according to their own criteria.

Particularly, Andalusian legislation on this respect is very strict and tough if compared with other Spanish regions. For example, owners with less than three rental properties in the same building or residential complex are not included within Andalusian regulations. As a result of that conditioning, a high percentage of owners are prevented from renting their second homes. This is aimed at combating “encroachment” upon the tourist professional field and unfair competition for traditional tour operators.

Alternatively, the new Law imposes strict and controlling measures for this type of summer rentals—the Spanish Tax Administration Office obliges electric companies to submit annually a report including household consumption. This is intended to gather the necessary data to detect those housing rentals that are not declared.

The new Law literally provides the following: “… it is not included within the scope of this law: … the temporary assignment for use of the entire furnished and equipped home to be immediately occupied, marketed and promoted through tourist offer channels for economic purposes, when this property is subject to a specific regime as a result of its sectorial regulations.

Upon consideration of this statement, these regulations may be discussed and interpreted in respect of renting a home for holidays from a private landlord. We consider that this rental is possible, but it is necessary to tell the difference between two types of scenarios: on the one hand, the rental per days with a tourist purpose; and on the other hand, the seasonal rental.

In the former case, it implies a regular commercial use of the rental by a professional, offering other additional services apart from the accommodation. In fact, this kind of tourist apartment rentals was also excluded from Spanish Urban Rental Law (LAU) up to now. They were regulated by the legislation of the competent public bodies.

In the later scenario, we are not dealing with a tourist business activity, but a temporary assignment without additional obligation. Accordingly, this new Law does not seem to affect people under these conditions. In case it does, it may certainly imply a clear restriction of owners’ rights. They may be able to rent their homes per season, whether for a long term or a short term, including per days. In addition, these housing rentals are regulated under the protection of Spanish Urban Rental Law of 1994 (LAU).

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

PREFERRED SHARES: THE GREAT SCANDAL

Geschrieben von admin am 11 Juni, 2013. Veröffentlicht in english speaking solicitor, lawyer, malaga. Keine Kommentare zu PREFERRED SHARES: THE GREAT SCANDAL

By the end of 2008, Spanish saving banks and banks already had clear reports stating that current high interest rates may drop and the property bubble was about to burst. In addition, they also knew that the lucrative business of saving banks in the construction sector by means of credits for developers and mortgages for individuals, was about to go to ruin.

Regarding that their core business in the housing sector was about to finish and that saving banks could not issue shares as banks could, they “invented” the sale of a product to obtain funds known as participaciones preferentes (preferred shares). This financial term may be defined as debt securities issuances for an undetermined period of time, in which saving banks pay returns depending on their profits. But they may not even pay anything at all—although this product offered up to 7% returns—, because the payment of these returns depended on the financial entity profits. Thus, as a result of the housing sector slump and saving banks loss, there was no profit. Furthermore, these preferred shares have no voting rights and are not guaranteed by the Deposit Guarantee Fund—which covers people’s savings up to 100,000 Euros—and has no maturity, that is, they are perpetual.

Most of the investors who purchased these preferred shares were retail clients of these financial entities. Most of them thought that this product was similar to fixed income deposits. In most cases, these clients did not have any knowledge about financial risks neither any intention to risk their savings—their money was invested in fixed term deposits and one day they received a telephone call from the bank convincing them of the “advantages” of purchasing preferred shares; however, most of the disadvantages were not explained to them, because the bank employees did not probably even know what they were offering. They just followed the financial entity instructions.

Result: 300,000 people affected by the purchase of these preferred shares which may amount to 30,000 million Euros, although this sum may be higher.

Financial entities are allowed to sell this type of products if they carry out the following: study of the investor’s profile and performance of the private investor test for suitability. In most cases, it is obvious that financial entities should have not sold the aforementioned preferred shares to most of their retail clients, because they did not match the suitable profile to purchase this type of products and had limited savings to be invested only in conservative products, such as fixed income deposits.

Holders of the aforementioned preferred shares have the following options:

A) Secondary market offering, although they may be sold at a loss considering current circumstances.

B) Conversion into shares of the entity—this is the solution offered by saving banks. However, this exchange is also at a loss, as Bankia has already done two weeks ago—in this case, its clients have lost up to 70% of their investment when the preferred shares were converted.

C) Going to the arbitration offered by the Government—we sincerely have misgivings about its results and clients may also have to assume significant losses.

D) Going to court through civil proceedings to claim for the invalidity of the contract which served as a basis for purchasing preferred shares. This is the most recommended procedure for all people affected, as court orders which have been already known are pronounced in favour of these people. Although this action may imply a longer procedure to recover the invested money, the result is much more advantageous.

We finally recommend you to consult an expert before taking any decision if you are a person affected by this matter, so that all possible options are explored particularly.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

PROPERTIES ON NON-DEVELOPABLE LAND AFFECTED BY RECENT FIRE IN COSTA DEL SOL

Geschrieben von admin am 6 September, 2012. Veröffentlicht in english speaking solicitor, Featured, lawyer, malaga. Keine Kommentare zu PROPERTIES ON NON-DEVELOPABLE LAND AFFECTED BY RECENT FIRE IN COSTA DEL SOL

As a result of the terrible fire initiated last Thursday 30th in Coin, an estimate of 100 to 200 properties built on non-developable land within the municipal area of Coín, Mijas, Marbella, Ojén and Alhaurín el Grande were severely damaged and some of them completely ruined.

In this year 2012 the Decree 2/2012 for the regulation of buildings and scattered rural settlements on non-developable land in Andalusia was passed by the Andalusian Regional Government in January to put a stop to the problem of thousand of properties on non-developable land. However, this Decree does not currently apply nor does it mean the legalization of these properties, as it was already discussed on once of our previous article

According to the above mentioned Decree, most of these fire-affected properties are considered assimilated to out of ordination housing, as they were built without construction permits or infringing their condition and the municipal General Plan for Urban Planning PGOU. Therefore, no measures can be adopted to recover their legality, which has been disrupted over time and they cannot either be legalized. The only permission authorized by this Decree is “…works for the repair and maintenance which may require the strict maintenance of the security, occupation and health standards of the property” (Article 8.3 of the Decree).

In the event of some fire-affected properties considered out of ordination—properties built in accordance with the municipal PGOU, but considered “out of its ordination” after the PGOU modification, the permitted construction works shall be provided by the municipal PGOU, which is currently under development in most of the municipalities. The Andalusian Town Planning Act L.O.U.A. shall be also considered as it provides that “…only repair works for the strict maintenance of property occupation or usage…” as well as “…exceptionally partial and circumstantial works may be permitted for the property consolidation…”. It is worth mentioning that only a few of these properties may be under the “out of ordination” condition.

This restriction or limitation to alter or renovate properties on non-developable land is provided by the definition on the Decree for “scattered rural properties”, which are included within the “out or ordination” concept and its variant “assimilated”. In accordance with the case law, this concept has been defined as “constructions to disappear once their useful life possibilities finishes—the “out of ordination” condition aims the usage of property until it finishes over time, ends up as a ruin and naturally disappears. For this reason, the Andalusian regulation always provides the granting of permits for this type of constructions for the strict maintenance and under exceptional circumstances.

The Decree does not provide the legalization of these properties. In fact, part of the status for these “assimilated to out of ordination” properties considered as illegal, makes them to be given a definition and their use limited, since no measures can be taken to protect their legality, so that they are “attacked”, as too much time has elapsed since the were built.

In the event of a disaster as fire, flood, earthquake, landslides, etc…, in which a property is in ruins or very damaged and cannot be used again for the purposes to be occupied as a residence, if we abide by the current regulations on these events, it would be very complicated to grant a construction o repair permit for these properties, since it is against the concept of “out of ordination” and “assimilated to out of ordination” provided by the Decree.

The problem lies in a Decree which does not give any solution to the current legal condition of these properties, which have been tolerated by the Andalusian Regional Government and Town Councils for many years. During all these years, nobody has done anything at all on this matter and for that reason no legal measures can be legally adopted to restore their legality.

According to the first political reactions read on the papers about the burned properties, it seems that each particular case may be studied. In some cases, a forced and exceptional interpretation out of the legal framework would be adopted, so that those families with just one house would be allowed to rebuild and live on their non-developable lands as they did before the fire. The problem of this “shortcuts” to implement what the legal regulations do not provide is that a precedent is set, so that in the future event that any of the owners of the more than 100,000 properties built in non-developable land in Andalusia had a disaster of this kind, aren’t they also entitled to receive a similar treatment from the Public Administration? For this reason, the problem lies in a Decree for appearance’s sake, which does not solve the problem and is currently open to doubt in this type of situations.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

INCREASE OF THE VAT AND OTHER TAX MEASURES REGARDING THE PROPERTY IN SPAIN

Geschrieben von admin am 17 Juli, 2012. Veröffentlicht in Unkategorisiert. Keine Kommentare zu INCREASE OF THE VAT AND OTHER TAX MEASURES REGARDING THE PROPERTY IN SPAIN

The Spanish Government, particularly Mr Cristobal Montoro, Chancellor of the Exchequer, has announced last Friday 13^th of July that, from the 1^st of January 2013, will apply a VAT of 10% (of the declared value of the property) to new build properties, with regard to the current 4%.

During the press conference after the Council of Ministers, the Chancellor has recalled that the application of the reduced VAT (4%) for the purchase of a property had an “expiry date”, that the Government has stated today for the beginning of 2013.

Mr Montoro has also indicated that, according to the recommendation of the EU, from the 1^st of January 2013, “the tax deduction on the purchase of a property in Spain will be abolished”.

So, if you are thinking of purchasing a new property, it will definitely be crucial, from a financial and economic point of view, that you do it before the 31^st of December 2012. To see it more clearly, the difference in a direct taxation regarding a property valued at 200 000,00€ is 12 000,00€.

If you are planning to purchase a property here in Spain, do not hesitate to contact a professional lawyer for a deeper tax planning.

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

TAX EXEMPTION WHEN BUYING A PROPERTY BEFORE 31/12/2012

Geschrieben von admin am 6 Juni, 2012. Veröffentlicht in english speaking solicitor, malaga. Keine Kommentare zu TAX EXEMPTION WHEN BUYING A PROPERTY BEFORE 31/12/2012

Regarding the current financial situation, which is reflected in the drop of property sales in Spain every three months, the Spanish Government has passed a new tax exemption. This exemption tries to promote the sale of properties and may become very interesting for both individuals and bodies corporate considering buying a real estate property in Spain in the short term, whether they purchase commercial premises, homes, offices, garages, plots, storage rooms, etc.

On the 12th of May 2012, the Central Government passed the Spanish Royal Decree-Law 18/2012 of 11th of May on the restructuring and sale of the property assets of the financial sector. This regulation included in its First, Second and Third Final Provisions the tax exemption for bodies corporate and individuals, whether resident or non-resident in Spain. This reform law allows all those buying a property from the 12th of May 2012 till the 31st of December 2012 to pay taxes only on the 50% of the capital gains tax when selling the property subsequently, whether in 1, 5, 10…etc years, while the remaining 50% is free of charges.

This exemption may save an important amount of money, because if a property is currently sold in Spain, capital gains are taxed at 21% for non-residents (19% from 2014), at 27% for resident taxpayers in Spain (21% from 2014) and at 30% for bodies corporate.

Here we present an example: imagine you are thinking about buying a property in Spain considering the current market opportunities; the price for this property may be EUR 200,000; the following eventual scenarios may occur according to the date of purchase when selling this property, for example, in 2017 for a sale price of EUR 270,000:

1) Non-resident taxpayers: EUR 70,000 of capital gains at 19% makes a total payment of EUR 13,000; if the purchase is performed before the 31/12/2012, the total payment would be EUR 6,650.

2) Resident taxpayers: EUR 70,000 of capital gains at 21% makes a total payment of EUR 14,700. If the purchase is performed before the 31/12/2012, the total payment would be EUR 7,350.

3) Corporate: EUR 70,000 of capital gains at 30% makes a total payment of EUR 21,000. If the purchase is performed before the 31/12/2012, the total payment would be EUR 10,500.

Obviously, this tax saving is not definitive in order to decide whether to buy a property or not in Spain, as it is not possible to know whether prices may go down much more nor the gains resulting from the eventual property sale. However, this fact may be a helpful factor to take a decision for those considering buying a property, especially for those non-speculative potential buyers whose main purpose is to enjoy this property for many years; thus, the longer they own the property, the greater the capital gains may be when selling it. Look at the figures and draw your own conclusions.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)