Developer Fails to Meet Contractual Completion date

We are buying a property off plan, on a development of 600 detached and semi detached villas on the Costa Blanca and have a penalty clause of 30 Euros per day written into our contract, for late completion. The property is likely to be completed approximately 1 year late therefore the amount of compensation is considerable. Our lawyers have advised us that the developers are refusing to honour the contract, as there will be too many claims to settle, which would place them in financial difficulties.

We have offered to accept extra work instead of money but they are refusing to negotiate. We understand that in some cases they have agreed to compensation and then refused to sign the deeds at the last minute, placing the owners in a take it or leave it situation at the Notary's desk. We are now applying for a Court Order to make the developer sign the deeds and pay the compensation or allow us to deduct it from our final payment when the property is finally completed.

Even then there is no guarantee they will do so. Is this a common occurrence with developers in Spain and what are our chances of a successful outcome to this?

Des Sparkes reply:
Considering the information provided in your question, I would like to provide you with some guidelines. My understanding is that there is a penalty clause of 30 Euros per day, which is a reasonable amount. In this situation it is important to take into account that the delivery of your apartment has been delayed for one year, and such a long delay has not been justified by the vendor, either by reference to terms in the contract or other legal justification.

Prior taking any formal action against the developer it is necessary to obtain evidence of your attempts to claim compensation for the delay prior to your signing the title deeds on completion. This can be done by arranging for formal letter setting out your claim to be sent to the developer by a Public Notary.If the promoter rejects your formal letter for compensation my recommendation is that you sign the title deeds anyway.

Otherwise if you do not and start legal proceedings through the Spanish Courts the delivery to you of your apartment will probably be delayed for a year or more. Once the title deeds are transferred into your name, you are still entitled to claim compensation for the late completion through the Spanish Courts.

(The above answer was written by Des Sparkes (Solicitor) who works in association with Spanish property lawyers in Marbella , Malaga , Spain and who writes the Spanish lawyer answers to readers letters in Living Spain Magazine.)