Property Developers, Promoters and Construction Companies are above the law
By Keith Donovan – Nov 24, 2009 – 1:12 PM
CRA member Keith Donovan has sent us his opinion
The Spanish police are to be applauded for their superb detection work in every sphere and at every level of Spain’s community!
Over the last 3 months alone we have read of the seizure of tons of Cocaine and other drugs and the arrest of the perpetrators.
Every day we read of the arrest of more people on corruption charges up and down the length of the county.
Murders are tracked down and brought to justice as are ETA terrorists and their helpers.
So, how IS it that the Property Developers, Promoters and Construction companies appear to be above the laws of Spain?
This group appears to find every way they can to duck or evade or get around the laws of Spain written so as to protect the house buyers!
It appears that the Government of Spain still does not understand what is going on and have injected taxpayer’s money into the banks that backed the builders and, as a result, have lost BILLIONs of Euros. Through their own stupidity & greed the banks expect the Spanish people to bail them out.
It is estimated that there are something like 1,500,000 – 2,000,000 buildings that have been built, half built or abandoned. How may resale’s? Another 2 million?
If we accept that the exposure of the banks to the builders could be of the order of 300 billion Euros – the opinion of analyst Inigo Vega at Iberian Securities, and that the exposure of the banks to the cedulas ALONE is nearly another 300 billion Euros (plus other classes of more conventional mortgage backed-securities, which are possibly at least as large), then we are talking about an injection of something of over half of one years GDP in Spain.
That these property developers have been allowed to break so many laws by not meeting the legal obligations and infringing urban law is breathtaking:
They do not guarantee refund of deposits.
By law they have to!
Law 57/1968 rules that developers will have to provide free of charge to the purchaser/s a bank guarantee or Insurance Policy to guarantee the refund of their stage payments plus 6% interest in the event of the developer becoming insolvent.
What do the Developers always say?” We are too big to have to follow this law” and ignore it? Why is that allowed?
They do not guarantee indemnification for possible damage to the building.
They do not build to the building regulations stated by law, concerning noise; humidity/damp; thermal insulation; accesses for handicapped & elderly people.
They charge the buyer for builder’s electricity & water, this is prohibited by law.
They do not provide a licence for the work nor a license for first occupancy, without which the buyer will not be able to contract electricity, water & gas supply.
In some cases that is not true as I have water and electricity even though I do not have a Certificate of Habitacion. 7000 dwelling, no Certificates of Habitacion!
They use contracts that are previously written with abusive clauses against the buyers.
My (Spanish) lawyer laughed out loud (and then apologised) when he read the piece of paper that covered my 10 year builders guarantee! He asked if I had read and understood what I had signed, I said yes BUT if I did not sign it they would not give me the keys and I had a removal van with all my goods in it waiting outside!
Why did he laugh? The document stated that any building work required on the building or surrounds, any extra work, wall heightening, pool building etc, in fact anything within the boundaries of my house HAD to be carried out by a named builder! If I did not use this named builder for work and arranged others to do it at half the cost, then my guarantee would become null and void.
The named company was owned by the builders Father-in-Law!
Nepotism, restriction of trade, creating a monopoly – all against Spanish law.
And they demanded the last payment in cash, I wonder why!
They use solicitors that are on the payroll of other companies, they charge their fees through these firms, making proof of payment more difficult.
They hand over the properties without them being finished, with damage and construction faults that affect habitability of the house or the whole urbanization.
They make multiple extra charges for damage repair; finishing incomplete work; legal action, contracts, disputes & reclamations.
They declare themselves bankrupt when they receive judicial reclamations so that the buyer has to then “quita” (which means, be paid less), and also has to “esperar” (which means, in most cases waiting years to recover part of the money).
They walk away from urbanizacions that are incomplete and leave the people living on them with no electricity, no water, no sewerage and the Spanish Government does nothing!
How is it that the political party in charge of a particular town can approve a development and 3 years later another different political party is voted in and declares the development illegal? How fair is that?
If I owned a bank and a builder asked me for a multi million Euro loan I would say no problem BUT:-
There would be a Bank Manager allocated to the project and be involved in all stages of the project.
Any sale would be carried out with the involvement of the bank.
All stage payments would be paid directly into the bank and NOT to the promoter etc, etc.
The banks that are in trouble now are begging for a bailout and, people of Spain, you are all paying for these reckless, greedy, venal, lazy and incompetent banks as they are rescued with Government money and, as Governments have no money, they only have your taxes to rescue these banks. They have speculated, gambled and lost, with your money!
The amount of corruption involved in the building industry is mind blowing, and what had been uncovered thus far is the tip of the iceberg. Every day I read that more Politicians, Mayors, Councillors, Architects, Planning Officers and other municipal staff have arrested on corruption charges.
If the Government want to find out the full extent of this corruption then all they have to do is investigate every large urbanization created over the last 10 years or so. They will be horrified at the numbers. (And the millions of Euros in (untaxed) Black money)
And even now, promoters want to build more new urbanizacions!
Article 47 of the Spanish Constitution states: “All Spaniards have the right to enjoy decent and adequate housing. The public authorities shall promote the necessary conditions and establish appropriate standards in order to make this right effective, regulating land use in accordance with the general interest in order to prevent speculation. The community shall have a share in the benefits accruing from the town-planning policies of public bodies”
TOTALLY AND UTTERLY IGNORED
The Spanish Constitution has been reformed once (Article 13.2, Title I) to extend to citizens of the European Union the rights as outlined above.
TOTALLY AND UTTERLY IGNORED
Protect all Spaniards and all the peoples of Spain in the exercise of human rights, their cultures and traditions, languages and institutions.
TOTALLY AND UTTERLY IGNORED
The Spanish people are paying dearly for the greed and corruption of the Property Developers, Promoters and Construction companies and banks!
Lastly, according to the Corruption Perceptions Index produced by Transparency International, Spain ranks as the 32nd worst performer as found in 13 independent surveys! That says it all really!