Will you ever get your money back?

What's happening at Alcudia Smir?

Will you ever get your money back?

Postby Pepe Le Pew » Fri Jul 26, 2013 11:42 am

By Pepe Le Writer

This article doesn't specifically cover Alkudia Smir but can be applicable.

Morocco wasn’t really a residential tourist destination until some folks from North-West Spain called Fadesa came along. All right, there were always the classic Riads within the historic cities and some timid construction along the Atlantic coast but that was that.

The arrival of Fadesa in 2005 kicked off with the launch of Mediterrania-Saïdia with much fanfare (how much they spent in that cruise in the Mediterranean I shudder to think). This was part of a number of macro projects along the coastline which were all under the umbrella of the Plan Azur 2010, an ambitious government plan to quadruple the number of tourists by that year, or so they said.

So here was Morocco as the alternative to the Costa del Sol and the message got though (somehow). For a sample of this madness you only have to read some owners forums and see how the initial euphoria gradually diminishes into a cry for help. From trying to get a reservation in at all costs to being prepared to accept a loss just to get your money back. Cannot help thinking of some biological function to do with men after a little excitement but I won’t mention it.

Morocco as a country is growing economically at 4% has very good relations with the two ex-colonial powers, France and Spain of course extensive to the European Union and within the Arab world it is one of the most stable politically. No forgetting the fact that it’s quite moderate in its religious outlook, ever so important in the region. But a man doesn’t live on meat alone as they say. As in other tourist destinations you are dependent on the economic health of your clients and we know what happened in the last five years.

Coming back to business (and reality, this is 2013 after all) and for all the distressed buyers out there. FAQ: Is it possible to get your money back if there is a breach of contract on the part of the developer? The answer is YES but it depends who you are dealing with, how strong your case is and only if you take the developer to court.

I like to catalogue developers in three groups. This is not in line with their ability to ignore you because they are all just as slippery.

1. If you know they’ve got money (but they’re playing hard to get, literally).

2. If they are broke (they’ll tell you they’re looking for finance - A classic in our trade).

3. If they’ve disappeared. (Didn’t you realize their Headquarters were in a distant Caribbean Island and their lawyers in a very civilized far away land?)

4. The honest, trustworthy and reliable developer who gave you what you paid for. (Only joking, sorry – take the above three only). There must be some out there.

Before I tell you how to go about dealing with this lot… A word of warning: Don’t think that by appealing to documentary proof or people’s common sense you are going to get somewhere. You’re not, you will be lucky (very) if you get somebody at the end of the line. So, you are still complaining because your emails aren’t answered? Ha.

And what do you say of all those amusing stories you read about owners getting together to join forces, the Moroccan Embassy, Rabat, the King, God, blah blah. Complete and utter rubbish, these dramatic manifestations “a la western” doesn’t cut ice with the Moroccans I’m afraid. Oh, and if you do manage to get hold of somebody you are going to leave like a Royalty with the times ne pas des problemes were thrown in. The Moroccans do have this ability to charm people, after all, the oriental bazaar is an Arab invention but I’m Spanish so I can safely say… nada de nada, amigos.

What to do:

Case 1: The Bottom line: A Moroccan Court can and will rule in favor of a buyer if there is breach of contract. If the property has not been delivered on time or has not been built to specification the buyer has a case. This is the more straightforward scenario but there are more complicated ones. For instance some developers are taking advantage of people’s desire to cancel their contracts even accepting a 25% loss by issuing “a protocol” or cancelation letter which is sent to the buyer for signature and returned. Sometimes, the letter is never signed by the developer. This is really done with a view to selling the property to a third party. Even if the property is sold, the client sometimes doesn’t get their money back as it is a well known tactic to take things to the wire (legal action) the developer clearly playing on people’s hope to wait and not wishing for the hassle of going to court. There are even cases where properties under private contract have been re-sold without the owner’s knowledge. You would think that such a drastic act would merit a refund together with compensation “a la western” all laced up with a sincere apology. Forget it, just get hold of your nearest lawyer if you don’t want to waste valuable time and worse still wear yourself out. One final thing, some developers (for example “old” Fadesa) used to include a Bank Guarantee in their contracts which may now be enforceable in Spain and in some cases Morocco. This is still the practice by some developers in the land of Cervantes. For some reason (put it down to ignorance) Fadesa even did this with Moroccan Property at the beginning of their Moroccan adventure in spite of the contracts being signed under Moroccan law. The Bank guarantees in theory are there to protect the buyers from breach of contract or bankruptcy by the developer. This was a system used in Spain before the property bubble created such a demand that some developers felt unnecessary to continue the practice as they were going to anyhow sell the property to the first one in the queue no questions asked. In this scenario it is not the developer who refunds the money to the client it’s the Banks. So, if you are one of the chosen few with such “avales” as they call them. Don’t sit still; take it to your Santander, BBVA or whichever is the “unfortunate” Banco and demand to be paid. First check and make sure the guarantee is not out of date, even if it is it can be fought in a court of law in Spain by a good lawyer as a judge could not consider reasonable that a developer could delay delivery or not finish building within a certain time even if the property is in Morocco. If this fails, court action in Morocco it is. It will take going to court about 3 years on average before you see light at the end of the tunnel though.

Case 2: Here the situation is of a bankrupted developer that still shows signs of life. They will gallantly contact clients, have forums and generally keep them informed. Well, that’s the theory at least. Some of them will say that they are looking for finance to finish off construction and tell stories of near misses in their quest. However, the harsh truth is that they have stopped building and in some cases facing the possibility of their assets being taken away, the pie shared with creditors and the whole thing moving in a different direction. The only tiny hope for buyers is getting in the queue with those other creditors as they are not going to get their total money back for the time being and if and when they do it may not be for the full amount of what they’ve paid. It’s what we call in Spanish (roughly translated) “Saving the Furniture” in other words; hope that you get something from that pie. So, how to go about joining the queue? Court action in Morocco, hope for a ruling in favor and if successful placing a lien (embargo) on the assets of the developer. FAQ: How do we know how many other creditors are there? This information can be obtained from the local land registry but what’s the point, the list will increase as more and more buyers (and suppliers, and ex-workers and banks…) put liens in and what’s more important: How do we know how much those assets are going to be valued at? In theory when those assets are shared and I repeat this is theory, the amounts recovered will depend on the price paid for said assets by the new owners and in the case of bankruptcy any factors considered by the judicial administrator. The amount invested by clients should be taken into consideration but there could be many other things involved. For this to happen individual buyers need to become official creditors and this is only possible with a lien. If people sit still and do nothing: Reach your own conclusions… UNLESS of course: there is a miracle and the developer gets their finance and its business as usual. Or so they said back in 2006.

Case 3: the disappearing act merchants: I’m not going to waste my time writing and if I were a buyer here I would kick myself in the posterior for believing that convincing agent and get on with life. Save money on lawyers, consultants, etc. Not worth it.

TAKING LEGAL ACTION:

A lawyer with experience in Moroccan Property Law should be appointed who will ask for a copy of the contract, proof of funds paid and copies of passports. All lawyers will ask for a Provision of Funds to initiate proceedings that is usually in the region of € 3000 to € 4000 in addition to court taxes at 2% of funds claimed also payable at this stage. There may be sundries of € 300 to € 400 that will cover translations, land registries, phone calls and other administration. If the case is successful, the overall fee could range from 10% to 30% of funds recovered. The provision of funds paid beforehand will be deducted from the resulting figures in favor of the client. All cases take place in Morocco.

Just a final note, Morocco is a great country and its institutions work. The problems we are talking about here are not exclusive to this country alone as there are inefficient operators everywhere. In fact a good number of those developers who joined in the gold rush were foreign. Of course the country has its own way of doing things, have different sensibilities and this for some foreigners can be quite frustrating. However, many of us believe in the Moroccan Legal System, a system that have proven efficient and operational in many occasions.

Pepe
Pepe Le Pew
 
Posts: 55
Joined: Mon Jul 14, 2008 11:00 pm
Location: North Africa

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