Woes of hard hit Spanish property developers continue

Developers in Spain are being brought into line with a series of judgements that are benefitting hard pressed property investors.

A judge in Valencia has ordered a local developer to pay 49 clients almost €3 million in compensation for misleading marketing. It is a decision that could set a precedent for buyers who feel they have been mislead by their developers.

Property investors sued two companies belonging to the developer Bautista Soler for marketing the Playa de la Patacona development in Alboraia, on the coast just north of Valencia, as front line beach locations with sea views knowing full well that this would not be the case.

Buyers at Playa de la Patacona, developed and sold in the 1990s, were given brochures promising 'front-line beach quality of life, and magnificent sea views' that have now disappeared behind a wall of cement. The same developer has built another development between them and the beach using the same marketing slogan.

The judge decided that the developer was perfectly well aware that its marketing claims would turn out to be false

Meanwhile the deadline for creditors to register their claims against failed Spanish developer Martinsa-Fadesa has been extended to 25 October, as a result of lobbying by Spain's Association of Users of Banks, Savings Banks, and Insurers (Adicae).

The extension has been confirmed by the administrators, and announced on the official website for Martinsa-Fadesa's insolvency proceedings.

The move is intended to give creditors living outside Spain, especially in the UK and Portugal, a better understanding of the situation, and more time to register their claims.

British property investors who bought homes off-plan from Martinsa-Fadesa but have not received anything in return for their staged payments can now join the company's many creditors, especially if they do not have a valid bank guarantee.

'It is vital for people in this situation to register their claims before the deadline, or risk losing all claims to the money they have invested with Martinsa-Fadesa,' said Spanish property expert Mark Stucklin.

The news comes as another large Spanish developer, Polaris World, is beset by financial problems. The Spanish press claims that it is struggling to pay some of its debts to local government.

It is apparently struggling to get banks to guarantee millions of Euros that it owes to municipal governments in Murcia for planning agreements. It is looking for an extension on its debt payments, with company executives blaming a temporary lack of liquidity, rather than structural problems.