Tag Archives: Lawyers

INTRODUCTION

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.

 

 

Advertisements

LAW 57/68 NEW DEVELOPMENTS

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.

Many Thanks

Jorge

Le Jardin de Fleur (Saïdia) III

Recent article appeared in Diarmaid Condon’s celebrated site: http://www.diarmaidcondon.com
Diarmaid Condon is Ireland’s foremost Independent Property Consultant and journalist. He has been in the industry since 1995 and, in that time, has been a strong advocate for improved legal protection in the sector.

Newsletter Mar 2007 Web-1.jpgProperty Logic – Moroccan Developer

This piece of advice on the Moroccan market was very kindly written by Jorge Garcia Larios who is a property expert based in Melilla, a Spanish enclave in Morocco. It deals with the topic of developers that are experiencing financial difficulties but still maintain assets in the Kingdom of Morocco. The assets in question are usually in the form of land as most developers of unbuilt projects, at this stage, have little or no money.

One such developer is/was Property Logic Maroc S.A.R.L a subsidiary of Property Logic (Spain) based near Marbella in the Costa del Sol. The company’s flagship development, called Le Jardin de Fleur, was to be composed of Tourist Apartments and Villas over various plots of land at the Macro Resort “Mediterrania-Saïdia”

Property Logic stopped building some time ago and have ever since been seeking finance to continue the works. The result of this sequence of events has left scores of derelict shells of what were to be luxury apartments and villas full of rats and weeds. It appears to be totally beyond repair at this stage.

To give Property Logic some credit, by comparison to other developers in the region they have been reasonable at keeping up communications with their clients. Unfortunately most of these communications refer to the possibility of raising further funding to complete the project. This funding has always been ‘just around the corner’ but it has never materialised. The willingness to communicate is, however, more than has been shown by other developers in difficulty in coastal Morocco.

From 2004 to 2007, like many other areas, off plan purchases in tourist regions of Morocco experienced a huge boom. Many people came in contact with Property Logic’s high visibility marketing campaigns and it consequently attracted a lot of purchasers. The developer even persuaded some UK based Premier League footballers to invest in the resort. This obviously played very well in UK and Irish media outlets, succeeding in attracting even more buyers. Unfortunately nobody who bought has had deposits refunded, which amount to around 40% of the original property sales price.

Property Logic Payment Structure

Clients reserved their properties with a token deposit which was followed by around 20% of the total cost. Over what was to be the initial construction stage a further 20% was requested at which stage came the signing of a private contract loosely translated from French as “a promise to sell”. Under Moroccan Property Law all these contracts have now expired and, as they were written to favour the developer, they are not robust enough to offer their holders any protection in law. Essentially, the beneficiary names don’t appear officially anywhere in Morocco. There is no legal reference to them so the Moroccan authorities know nothing about them, despite their having parted with significant amounts of money and now having nothing to show for it.

What can clients do?

There are essentially two things you can do. Be passive or be active.

The First Option – Do Nothing and hope Property Logic delivers

The passive route is to wait and hope that Property Logic obtains long promised funding. This is highly unlikely but the building licence has now also expired so the developer would now need to re-apply for a new one. Property Logic also has a good deal of creditors with liens on the company assets who will need to be dealt with before any building is contemplated. To clear the creditor list Property Logic will require the ‘main levé’ from its creditors (literally translated as ‘hands up’ or ‘surrender’ from French. This is a legal document enabling the developer to clear the creditor list. It involves all creditors signing away their legal rights. No strong creditors will do this unless they are happy with the negotiated settlement. Those without rights will be left out in the shuffle, relying totally on Property Logic’s goodwill.

Another matter of concern is that it has been mooted that the company is not held in high esteem by Moroccan Authorities. It is widely considered that the Moroccan government is anxious to see the back of the company and others like them. This makes the possibility of obtaining a new build licence very slim indeed.

Second Option – Become a Creditor of Property Logic

The second and more active option open to clients is that, if they are not already official creditors they should consider very seriously becoming one. Why should a client go to the bother of doing this? As stated previously, contracts with Property Logic are now pretty much worthless. It is almost inevitable that Property Logic will eventually drop out of the equation and whoever takes over will no choice but to deal with the creditor list. Those who are not officially listed as creditors will simply be forgotten about. It’s not an ideal scenario for many clients as it involves reliving the nightmare of the investment and it is obviously going to involve extra expense.

We will deal with the process of becoming a creditor of Property Logic (or any other developer for that matter) in a later article.

Jorge Larios can be contacted at saidia@gmx.es.

Enforcing Contracts in Morocco

The World Bank under its “Doing Business” heading publishes very interesting data as to the efficiency of Judicial Systems worldwide in terms of quality, cost and time. The report covers 185 countries.

Below are the figures for Morocco regarding the enforcement of commercial contracts that naturally also include Real Estate. The percentages include Rank (in comparison to other countries) and cost and time measured from the time the plaintiff files the law suit until payment is received. The most recent data was collected in June 2012.

I have also included figures for the UK to give readers a comparative idea.

Time (In Days):

  • Filing & Service,
  • Trial & Judgement,
  • Enforcement of Judgement

 

        Morocco: 510 Days

        United Kingdom: 399 Days

Cost (% of Claim):

  • Lawyer Cost
  • Court Cost & Taxes
  • Enforcement Cost

        Morocco: 25.2 %

        United Kingdom: 25.9 %

Rank:

        Morocco:  Rank 88

        United Kingdom: Rank 21

Image