Since 2011, CostaLuz Lawyers has been instrumental in several landmark court sentences against developers and their banks. As a result, many buyers of off-plan properties in Spain have successfully claimed back deposits and other monies paid on unbuilt or unfinished homes. In this article, we look at your course of action when the developer is actually an estate agent.
What’s the difference between a developer and estate agent?
In general terms, both the developer and estate agent have clearly defined roles, as follows:
The developer
The developer is present in the project for off-plan property in Spain from its very beginning. The company finds a suitable plot of land, organises the architectural project and sources finance for construction. The developer is also in charge of getting the appropriate building permits and then managing the building project. Some developers also sell the end product, usually via a show home in the development itself.
The estate agent
This entity has no role in anything other selling the end product. The estate agent’s job is to find buyers and liaise between them and the developer to ensure a smooth purchase. They may carry out sales in conjunction with the developer or as a sole agent.
What are their responsibilities?
Under Spanish law, developers have civil responsibility for all off-plan properties in Spain. It is up to them to respond to all problems and issues such as:
- Failure to comply with construction schedule.
- Failure to complete construction.
- Construction and structural defects on the properties.
The period of responsibility lasts for construction defects lasts for ten years.
Estate agents, on the other hand, have few civil liabilities and are not generally obliged to respond to problems caused by their actions. Their responsibility is limited to issues related to the management of their mediation role, which in practice, means they have very little.
What about financial responsibilities?
When it comes to payments for off-plan properties in Spain such as deposits, staged payments and final amounts, both the developers themselves and their guarantors (banks or insurance Companies) or depositor banks are the responsible parties. Under Spanish law, they must respond as guarantors for all monies handed over to developers.
This means that if you paid for an off-plan property that was never started or completed, both the developer and their guarantors or depositors are obliged to refund you your money.
The weight of this responsibility and its onus on developers explains why some choose to appear to buyers as estate agents when in reality they are developers or co-developers. Under Spanish law, this is fraudulent practice.
Can the roles of developer and estate agent overlap?
Usually developers and estate agents are separate entities, but during the Spanish property boom (prior to 2008), this was not always the case. Some estate agents were officially operating as real estate agents but were in reality developers or co-developers as well. This is the case with Ocean View Properties on the Costa Blanca and Palmera Properties on the Costa del Sol.
This dual role, tactically hidden from the buyer, opens up the possibility of claiming against them for a refund.
What can I claim for against these hidden developers?
Under Spanish law, you’re entitled to claim for all the amounts you paid towards your purchase of the off-plan property. This also includes legal interest from the date you made payments into the developer’s bank account. In some cases, you may also be able to recover legal costs.
What guarantees do I have of getting my money back?
The Spanish Supreme Court has already ruled in favour of buyers and consumers – the landmark sentence came about after action by CostaLuz Lawyers – and this has opened the door to claims for refunds. To date, these claims have been highly successful.
All banks with a firm sentence against them are refunding claimants. Many Supreme Court decisions since 2015 clearly state developers’ liabilities in these cases and another Supreme Court ruling made in September 2016 has paved the way for further claims. Contact us to find out how to make yours.
What if the developer’s bank no longer exists?
Since 2008, many financial entities, particularly those operating under international names, have been acquired or merged with other banks. However, under Spanish law the bank that bought or took over the original entity can be held responsible. Action is therefore possible against the new bank.
Is there a time limit for taking action against hidden developers?
Officially, the last date for initiating court action is 7 October 2020. However, this date has been suspended because of the Covid-19 state of emergency in Spain.
How do I start a claim for a refund?
If you believe that you bought off-plan properties in Spain (or paid a deposit towards one) from an estate agent who is actually a developer, contact us immediately. We offer a free consultation to look at your case and assess its potential for a refund.
We have been helping buyers get their money back since 2011 and are justly proud of our success. We look forward to helping you too.
Maria Luisa Castro
