All you need to know about property scams in spain.
Property Scams are in the counts of hundreds of thousands in the country, although many remain in the background, unaware that they can recover their savings, thanks to a judgment of the Supreme Court that establishes jurisprudence. People who invested in off plan property in Spain are usually the orphans of the real estate crisis. Here, we are focusing on those who budgeted important amounts of money for the purchase of flat homes and lost it. However, since banks did not fulfil the duty to guarantee these amounts, they are returning those amounts.
The biggest Spanish scams.
The economic crisis in Spain that mainly affected the real estate market was mainly due to the economic problems of promoters, many of whom entered into bankruptcy proceedings. In addition, there were many buyers who, under housing purchase agreements, paid large amounts for homes that were not finally delivered to them. Thus, they did not get the houses and lost money.
The crux of the matter is that the scams increased, and one of the most prominent incidents happened in Mallorca.The real estate company, Mallorca Investment, offered off-plan properties in a number of areas on the Balearic island, at below-market prices. Then, Clients handed over 10% of the sale price as a deposit, and when the future owners saw that the plans were filed with the local council, the alleged scammers took advantage of the situation to ask for more money. Time passed and construction never began. When clients demanded explanations, no information was forthcoming from the company
The Civil Guard has so far arrested six people, from developer “Lujo Casa” and the real estate agency Mallorca Investment, who are accused of keeping the deposits handed over by clients. The amount of money swindled from the victims totals more than €4 million, according to sources from the investigation. This could make it the biggest scam ever perpetrated in the history of the Balearic Islands.
The Costa del Sol bargain
Macoda´s promoter company built more than 800 illegal homes in Marbella, some of which were sold twice. Later on, they were convicted for fraud and they are now accused of haven carried out an asset raid to avoid the assumption of their responsibilities.
The owners of Macoda promoter, who were responsible for the construction of the “Bello Horizonte” urbanization, have been charged by a court in Marbella for crimes of fraud and property uprising.
Not everything is lost: in accordance with the Spanish Law, builders and property developers who received funds from the deposit for housing had the legal obligation to put them in a specific account and provide their clients with a bank guarantee. The guarantor would then be liable for the return of the deposit/s in case the developer failed to deliver the property on a timely basis.
The Spanish Supreme Court ruled that Financial Institutions are now responsible, together with builders and property developers, for refunding any amounts anticipated by home buyers in case they fail to deliver the properties on a timely basis.
Some tips to avoid the scams
- If you meet anyone who says they work for a real estate company, or claim to be an estate agent, ask them for details of their website. If they don’t have one, then it is clear that they are not legitimate. If they say the website is ‘down’ because it is being updated, don’t believe them.
- If they do have a website, don’t be fooled just yet because there are some properties for sale put up on the website. There is a good chance those properties are not for sale and are just on the website ‘for show’ to deceive.
- A legitimate realtor or estate agent will have nothing to hide, so their website should include their personal details, such as their full name, and also include a photograph of them. If such information is lacking, chances are the person you are dealing with is not legitimate.
- The person you deal with should behave and act in a professional manner at all times. They should have full printed particulars of any property or provide a genuine reason why they are not available. When it comes to making an offer, once again, there should be official documentation. When you make a bid, it should be very clearly documented to reflect exactly what is included in the sale. If the person you are dealing with wants to do everything ‘verbally’, this should set off your alarm bells.
- If documentation is provided only in Spanish, ask for a copy in your native language. If you do not feel comfortable with this, you can also let the translation be checked.
- Of greatest importance, never pay for anything if you do not get a solid and concise contract with the guarantees you need as a buyer.
- Furthermore, you should only be expected to pay in full when you are signing the deed at the notary, whether you buy a newbuild property or a resale.
- Never accept to buy a newbuild property without a bank guarantee.
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