The law is there to protect off-plan property buyers and their deposits.
It’s very short and precise, in black and white
If a developer wanted to sell off-plan they had to obey certain rules
It’s applicable to Morocco when there is a Spanish developer involved.
Developers should have asked their clients to transfer the money to Morocco and NOT to Spain.
They breached the law.
How can we prove it? – Didn’t I sign my contract with developer x?
We must prove to the court that the Maroc side was the Spanish one masquerading as a “Moroccan” developer.
“A verdict for all verdicts” – What’s this? – We call it a “Matrix” – A sentence confirming all the “masquerading” that’s all.
How can you do this? – We’ve got the documents… Took long enough!
What happens if we win? – We create a precedent and THEN we’ll put your individual case through.
Who pays you at the end of the day? – The “unfortunate” bank – What happened in reality is that developers unconsciously passed the “buck” to their bankers, pity for them, under the law they (the bank) should have blown the whistle and insisted the money went to Morocco. Did the money go to Morocco? – We don’t know but it doesn’t look like it, otherwise…
Can I join that “matrix” case that you’re talking about? – If your money went to Spain and not to Morocco, it’s up to you. You don’t have to.
Don’t forget… There are TWO cases, one that will give us very good guarantees if we win and there is your individual case.
Why don’t I just wait until you win that case and then jump in? – Because it will be more expensive then.
And the Moroccan case we are all embarked on?
This goes on, business as usual. You will still get regular updates as up to now. This is SEPARATE AND PARALLEL.
Again… You don’t have to.
The law is a pioneer, at least in Spain, before it, there was nothing to protect buyers off-plan, not that there were so many of them at them, but the signs of the times created a kind of gold rush por property.
The spirit of the legislation is to stop abuses committed by developers against, sometimes, vulnerable people who paid them deposits bona fide, and to stop “the justified social alarm in public opinion provoked by repeated misuses even with misdemeanour that are present” or so said the legislator of the day. The legal measure pretended to arm buyers with guarantees when paying considerable funds, sometimes their lives savings, to developers for an off-plan sales contract. These builders and promotors frequently delivered the product late, sometimes years, or not finishing it at all. It looks that things have not changed much.
Law 57/68: Permits buyers of off-plan property to directly make a claim to all those banks (not developers) who take in buyers deposits as long as the property is not finished or in all those cases where the property is finished but the contract is resolved before a final occupation licence is issued by the local authorities and/or that the buyers have been required to complete (and the property is not of the contracted standard).
Interpretation of this law has been perfected by the Supreme Court and it’s systematically applied in cases where there is a bank guarantee (general or individual) in favour of the buyer or where there is no such document.
It’s a technical legal procedure that requires the participation of a specialised legal firm with a wide knowledge and experience of civil and banking procedures.
Fernando Salmerón, August 2019.
LAW 57/68 NEW DEVELOPMENTS
A little over a year ago I wrote about a peculiar old law in Spain that could come very handy for those Moroccan Real Estate developers who channelled their money through the Spanish Banking System, whether it was to the developers themselves or the client’s lawyers.
There have been considerable developments since then and in the next few weeks I will be posting here with full fully and will try to guide the reader through the details and offer all the legal angles available.
Suffice to say for now that we are concerned here only with those Spanish developers who built in Morocco through a Moroccan subsidiary and only in those cases where client deposit was transferred to Spanish accounts
As I will be gradually deciphering this law in plain English, I think that the best thing would be to follow the blog for the next few weeks and you will be ongoingly notified automatically.
Le Jardin de Fleur (Saïdia)
Le Jardin De Fleur was supposed to be the flagship development within the macro-complex Mediterrania-Saïdia in turn one of the prototype state-of-the-art resorts planned under the umbrella of the Plan Azur 2010 tourism and infrastructures programs designed to quadruple the number of tourist to Morocco.
LJDF was, indeed, an ambitious project that even won some prestigious design awards. It’s variety of apartments, townhouses, villas and Riad style villas all built over 11 different plots ascended to 1342 units. The project also made a provision for in-house facilities such as sporting infrastructure, spas together with cafés and restaurants in addition to that available at the overall resort per se. In those boom years of the first decade of the 21st Century it naturally attracted a good number of International Investors and Private buyers with considerable success.
With the onset of the World Financial Crisis building works stopped in 2009 as it seemed that some of their funding partners went bankrupt and nothing has been done on the building front since then as the developer have found it difficult to raise finance despite impressive associations with leading players in the field and subsequent near misses. 2009 was also the very same year the King of Morocco, HM Mohammed VI, officially opened the rest of the macro-project which had and still has his backing. You have to feel for the Moroccan authorities who have fervently supported the launch of their country as a first class tourist and residential destination and to see some foreign developers, as it is not the only case, start and stop in mid-flight leaving thousands of bona-fide investors stranded coupled with the cost in image for the country as a whole.
Developers Property Logic had a clever marketing strategy, we all thought it a masterstroke at the time getting high-profile premiership players such as John Terry and Rio Ferdinand amongst others to do promotional work for them in return for discounted properties at LJDF worked at first but backfired later. It must have proven very embarrassing for the players so much so that the story was featured in an article in the Daily Mail in April 2013. The developer also collected considerable sums from off-plan deposits paid by buyers, a good number of them British including 25 footballers mentioned but there were other nationalities too. All of them are now with nothing to show for their investment and a great deal of frustration.
Property Logic published their last update also in April 2013 in all probability provoked by the newspaper article. This humble blogger has also tried to contact Sean Cusack, one of the directors there without success. The only information I have is what it’s published together with what I see on the ground in Saïdia and comments made by investors and buyers.
In the newsletter the developer admits that about 50 buyers have taken legal action in Morocco against them and insist that they are going to finish the development. They claim to have invested 10.5 million Euros with 60 or so million provided by the buyers in off-plan deposits. Two thirds of the 70 million went towards land purchase, construction and licenses with the rest going into design, marketing, sales and agent’s commissions.
The 10.5 million euro said to have been invested by the developer, was according to the update, invested by Estonian businessman, Margus Reinsalu through his company KC Group who are also active in other developments in Brazil. There are two further partners involved in Property Logic according to the April 2013 newsletter, the aforementioned Sean Cusack and one Joop Huisman. As KC’s initial loan was not repaid they took over the majority of the shares according to a certain 2009 agreement when building stopped. However Cusack and Huisman appear to still have the option of to reclaim their original equal 2.6 million euro stake in the venture. Property Logic Invest (Spain) also has equal interests in the project with KC, Cusack and Huisman as members of the board.
The Mediterrania-Saïdia resort as a whole is about 45% complete as we write in October 2013. It is now under the control of CDG an important Moroccan Company specialized in the field who intend to finish off the resort including the 9 luxury hotels originally planned. At present there are only 3 hotels operating but they have not fulfilled their intended grand role to cater for the international jet set with many that would have arrived in their luxury yachts at the Marina from places like Monaco and Marbella. Just one look at the hotels gives an indication of how things have changed for the worse. They close their doors in winter and its summer clientele are tour groups and civil servant from nearby Melilla on weekend outings. 50 or 60 euro all in will give you a stay in a supposedly five star grand luxe, gin tonics in plastic cups notwithstanding.
At the very least both Reinsalu and CDG are saying that they intend to finish off their respective projects. Obviously CDG have it easier as they are one of the biggest operators in Morocco and still have the backing of the government and the Monarch. Nevertheless Property Logic are keeping their clients informed from time to time even if it is to say that they have nearly missed yet another important funding scenario or that they have joined up forces with some big fish investor from a far off land. Credit has to be given to them though which is more than you can say for other foreign investors/developers.
If you are a disgruntled investor in LJDF what are your options?
1.) Sit pretty and hope that PL’s messages become a reality that is to say you are going to finally get the property you’ve bought. Better late than never as they say.
2.) Politely ask for a refund that you are not going to get. No money.
3.) The logical antidote for this type of situation, not the panacea but at least you will be protected is to take legal action and get a Moroccan Court to allow for a lien to be inserted against the assets of Property Logic Morocco. This is a type of preventive embargo that will secure your rights if there are any negative official movements against PL, exactly what the 50 or so people that the newsletter mentioned did, they will not get their money back immediately but they have their name officially recognized as a creditor. For more information about legal action see my articles of August 2013 at the beginning of the blog.
The worst case scenario would be that any potential negative official movements bypass the original buyers. A lien will safeguard your interests as the hypothetical new owners would need to take creditors legally into consideration before they do anything else. Let’s hope that this doesn’t happen, for everybody’s sake including Property Logic themselves.
Property Logic Newsletter 05.04.2013
The Daily Mail