Camposol becomes unlikely tourist attraction as countdown to bankruptcy auctions begins

Cars full of bargain hunters have been reported as residents vow to fight for their home

This weekend the Christmas countdown has begun in earnest and the Murcia Region is liberally decked with tinsel and lights, Christmas parties and cheerful carol concerts filling towns and homes with noise and light as the majority of residents look forward to the events between Christmas Eve and the New Year.

For most of us it’s a time of joy, but this year some of the unfortunate ex-pat buyers who purchased their dream house in the sun on the Camposol Urbanisation in the Mazarrón municipality of the Murcia region, will lose their homes as their properties are auctioned off in two public auctions, losing hundreds of thousands of hard-earned euros in the process.

In spite of attempts to salvage something from the wreckage of their retirement dreams, some expats are now faced with the brutal reality and inflexibility of the public auction system which will rigorously follow the law and auction off properties technically owned by bankrupt developer Justo y Manoli, which they have themselves paid for and will never be compensated for, due to the “pecking order” of bankruptcy law, which pays off the tax authorities, the bankruptcy administrator, the authorities, banks and larger creditors before it reaches those further down the list; the smaller creditors who are generally those who can least afford to lose their money.

The company "Justo y Manoli" has debts of over 100 million euros and assets worth less than half of that on paper, so in real terms, probably only around 20% of the money owed will actually be raised by the sale of its assets.

Two large blocks of properties split into lots of 100 properties each are now being advertised on the state auction site, and with minimum bids of just 100 euros each, Camposol social media sites have been in overdrive the last week as a succession of unfamiliar cars containing people clutching clipboards, i-phones, cameras, maps, sat-navs and pieces of paper have swarmed onto the urbanisation, navigating the maze of poorly numbered properties in an attempt to identify the potential bargains.

Fortunately for the bargain hunters, the previous council in Mazarrón finally invested in road signs after volunteer emergency medical aid groups found it necessary to position a volunteer by a strategic point at the entrance of the urbanisation so that ambulance crews could be directed to the property they were seeking during a medical emergency, but identifying plots can be a bit of an adventure at times as some properties show only plot, not road numbers, and according to the Plan Parcial of the urbanisation, some of them don´t even exist as they were built illegally over the top of a rambla by the now bankrupt developer.

As all those who live on Camposol know only too well, the developer has failed to live up to his obligations in so many ways that those who accuse the management team and those who allowed them to continue building properties unchecked of incompetence find their accusations falling widely on sympathetic ears, those who cite the irregularities as criminal are so numerous that over 70 disgruntled property owners have joined together to bring criminal charges against the individuals involved in the development, and those who find the whole episode a significant embarrassment are finding it increasingly difficult to hide from public scrutiny as a regional parliamentary commission probes into the irregularities of the whole situation.

But as usual, it’s the little man who will find himself out of pocket and the victim of a long-running saga between the 26th and 28th December when properties “owned “ by Justo y Manoli come under the hammer, several expats will lose their home in the sun.

To read a full version of why this is happening see an article previously written which explains the background to this sorry situation.( Camposol couple face loss of their home as Justo y Manoli bankruptcy reaches auction stage.)

But in a nutshell, many properties were sold without the ownership paperwork being either issued, or registered in the name of, the mainly foreign buyers who purchased the properties off-plan, so remained on the asset sheet of the developer when it sought bankruptcy protection.

There are many reasons why this occurred; the fact that some properties were built illegally without their purchasers being aware that they were illegal, in other cases paperwork was promised but never issued, in others purchasers were lied to, and in yet others the re-classification of properties as “turísticos” made yet more purchasers reluctant to sign paperwork for a property which didn’t match the property purchased off-plan and clearly represented a breach of contract by the developer.

In these latter cases, some purchasers sued the developer, won their cases, the developer was ordered to refund their money, but took every measure possible to avoid actually handing over the money owed, entering bankruptcy before the money could be repaid, leaving those who the court had allowed to remain in their homes until the debt was repaid in a dangerous and fragile position.

Bob and Pat Smith found themselves amongst this small group of purchasers and in spite of spirited attempts to resolve the situation must now bid for their home in a public auction over the Christmas period, after having paid out 104,000 euros to buy it in the first place and running up 18,000 euros worth of legal costs in the battle to regain their money, a battle which they won technically, but will now cost them all of their life’s savings and more, as well as their home.

They were part of a group of five householders who took out a class action against Justo y Manoli and won, but have never been repaid their money, their properties forming part of the assets which must be sold off to pay creditors of the developer.

So their properties are amongst those being auctioned this Christmas and unless Bob and Pat can raise sufficient finances to buy their property again, will be forced to either squat in a house owned by a new owner and possibly face eviction, pay rent for their home to a new owner, leave the property and rent somewhere else, or be forced to return to the UK with no money and nowhere to go.

Some of the “original 5” have abandoned their holiday properties and gone back to the UK, one has died and the family don´t have the energy to carry on the fight, abandoning the property to the administrator, another couple have locked their door and walked away, unwilling to face the misery of the inevitable and rented a property on another urbanisation, leaving Bob and Pat alone with a defiant banner hanging from the balustrade of their dream home and their hearts heavy as the auction approaches.

As stated before, this is a fully legal injustice, and the couple are determined to fight to the end, hoping that the UK media attention their situation will generate, may help them to find some sort of resolution to their problem, although time is running out and the finances to resolve their situation continue to elude them.

Bargain hunters may well pick up a few good deals amongst the plots on offer in the auctions, although of course, they may also acquire a “pig in a poke”, of which there are several in the auction lots on offer.

So between now and the 26th December when the first lots(see link) go under the electronic hammer, and the 28th December (see link), when Bob and Pat will probably lose their home unless Santa brings them a (necessarily large) stocking stuffed full of euros, then Camposol will become a tourist attraction for all the wrong reasons, as cars full of prospective buyers tour the urbanisation attempting to identify the lots on offer and bag themselves a Christmas bargain.

Please note:

Most residents are very happy on the urbanisation, as the potholes in the road or lack of street lighting on sideroads are not viewed as being major impediments to the comfortable and contented lifestyles enjoyed by most of those who do not have structural problems with their properties, which is the majority on Camposol. It must be stressed, this is the majority, and the CRA, Camposol Residents Association, is very happy to provide information for anyone with a query about a specific property they are considering to ensure that those interested in moving to the urbanisation buy one of the many properties which are free from problems and will make an excellent home for anyone looking for a good life in the sun, rather than one of those which are known to be "problematic."

Background information:

How did this situation happen?

The boom in "residential tourism resorts" when everybody and his donkey wanted to own a holiday home in, or move to Spain, created a situation which quite rightly worried the Spanish government. Yes, it was good for the economy that there was plenty of work, but the uncontrolled explosion in construction created a whole series of concerns, amongst them the sharp rise in property values which made housing unaffordable for young people, the urban irregularities which proliferated across Spain and the many cases of urban abuse which followed, the loss of virgin land to new construction, lack of planning, lack of forethought about the use of natural resources such as water, corruption and of course, the long-term implications for tourism. Today one of these chickens has come home to roost and the Spanish authorities have a major problem with sites such as Airbnb, which encourages the letting of property for holiday rental online, the response to which is a massive programme to regularise the "turístico properties" and manage the large-scale tax fraud which is now rife in tourism areas.

By law, a percentage of the properties on the urbanisation should have been built for the specific purpose of holiday rental, the idea being that legal income would be generated for the regional coffers by licencing properties legally for rental specifically to the holiday market and a sustainable future for tourism be created by ensuring properties were available for holiday rental.  However, an “oversight” somewhere resulted in all of the properties on the first Plan Parcial being classified as urban residential.

The classification of some properties as “turístico” was only made retrospectively after the properties had already been sold off-plan, and many of them built, when the town hall intervened and insisted that the oversight be rectified  and the correct percentage of properties were designated as “turístico“.

Rather than adopting the approach which others took, of designating an unbuilt plot of future development for turístico properties, poligonos were selected and the appropriate number of properties on  B-8, C-2, C-12, C-14, C-15, C-16, C-17, D-15, D-23, D-24, D-29, D-32 and D-35 reclassified retrospectively.Some properties on A are also classed as turístico.

Turístico properties should be built specifically for the purpose of renting them out and must fulfil a number of conditions in order to be properly registered for tourism rental. Owners have to register these properties for business use, comply with safety legislation and register their earnings through legal channels to ensure they pay their taxes. The legislation for their use is implicit, in that it states what they must do rather than not do, so the requirement that the property must be available for rental for a minimum period per year implies that the owners cannot live in it for the full 12 months of the year.

Which is NOT what the purchasers who bought off-plan had bought: they had purchased residential properties off-plan and were legally entitled to sue the developer for breach of contract, as the re-classification had been done without their prior knowledge or consent.

Various comments have been made by legal representatives consulted in the writing of this piece, the common thread of the situation summed up in the statement that, "there is often a discrepancy between the wording of a law and its application in Spain," meaning that just because something is law, does not necessarily mean that it is actually applied by the letter. Some even commented that the law at this time was "unworkable" and at the time of writing no cases have been found penalising anybody who owns a turístico on the urbanistion for living in a turístico property as a residential dwelling. ( It must be highlighted that legislation relating to the registration of turísticos and their use as rental properties has been updated in the regional strategy for tourism development since this happened.)

This resulted in a situation whereby some legal representatives consulted by  purchasers arriving to take possession of their pre-purchased properties who noticed that what they had paid for wasn´t what they were being asked to sign for, adopted the approach that the classification of their property of turístico wasn´t the end of the world if the house was of the size and shape requested and it was highly unlikely that anybody would even bother whether they rented it out or lived in it themselves and they should just take the escritura for a turístico and be grateful the property wasn´t subsiding or illegally built on top of a rambla, whilst others recommended that this was a clear breach of contract and the injured parties should request an annulation of the sales contract and seek a refund of their money.

After all, a turístico property can be sold on in the same way as a residential property, and at this time there were already concerns being expressed in some quarters that the developer was not managing the urbanisation in a fashion which induced confidence that they would stay the course and fulfil their obligations in the future.

Rumours abounded, there was a great deal of confusion about the implications of the situation and the re-classification and a great deal of mis-information circulated as the opposing legal camps stated their alternative interpretations of the situation in the scramble for clients.

Around the same time problems with the quality of construction on some properties began to manifest, the irregularities of construction over an in-filled rambla and area in which a hill had been levelled without adequately compacting the ground started to cause problems and the town hall and developer entered a tense period of disagreement over the alleged irregularities. And the major ingredient which finally banged the last nail into the Justo y Manoli coffin showed itself in the first quarter of 2008 when the buoyant Spanish property market started to implode and the sale of properties to foreign buyers collapsed, depriving the developer of their revenue stream. Gradually as the implosion hit developers all over Spain, banks started to run into problems and were reluctant to lend to developers. They found themselves starved of cash, unable to borrow, unable to sell their stock of properties, and with the market totally overstocked with properties nobody wanted to buy, prices started to fall, the developer stock was soon devaluing and the properties completed were worth less than they had been sold for.

Developers started to drop like flies, and soon there was a noticeable difficulty in speaking to anyone from the company other than a couple of beleaguered employees with no real power to sort anything out.

Justo y Manoli squirmed and wriggled over a period of years, some property owners managed to achieve property swaps through negotiation, and others won court cases against them for breach of contract, but they failed to pay the orders made by a succession of courts, lodged appeal after appeal to buy time and finally were forced into insolvency.

An administrator is now engaged in the process of attempting to sell off the assets of the company to pay its debts, but realistically will only manage to recover a relatively small percentage of the money owed through the sale of assets as the property market has devalued considerably, the administrative spaghetti left by the company involves many alleged irregularities which are being investigated by a regional parliamentary commission and the infrastructure of the urbanisation has not been completed, leading to a situation whereby the town hall is unable to begin a process of completing the infrastructure due to the high costs involved (millions of euros) without the assistance of external bodies as it is unable to meet the costs through its own municipal finances in spite of having sacked the developer and taken on that role, and the obligations that implies, itself.

Meanwhile, trying to apportion blame in order to resolve who should pay for what is proving extremely difficult and a regional parlaimentary commission examining the situation is finding more questions than answers as it wades through a morass of denial from all sides.

Do you think you may be at risk?

Practical information which may help others in the same situation or those who suspect that they may be at risk (if you don´t have an escritura, have been in a dispute with Justo y Manoli, have won a court case against Justo y Manoli, haven´t paid all the money on your property to JyM, been in dispute over a turístico property or have been given a replacement property without an escritura). PLEASE NOTE: The classification of a property as turístico is NOT a cause for panic as long as you HAVE THE ESCRITURA. If you don´t, then it is highly advisable to contact your legal representative to clarify your position as you may be on the creditor list; Bob and Patricia were not aware they were on this list:

Speak to the CRA: these volunteers understand what is happening, continue to work tirelessly to try and find resolutions for those affected on Camposol and to achieve practical solutions for all sectors of the urbanisation. Contact: Silvana 968 972 949

Speak to Mercedes from Viva House (formerly employed by MASA) who is a liaison link to the administrator and is engaged in the process of identifying which properties should be on the asset list and handling the practicalities. Her number is 968 155 732.

Contact the administrator to find out if you are on the asset list, or if you believe you are owed money by Justo y Manoli and want to make sure you are on the list of creditors:

Jose Fernando Galindo Samper

Auren Concursal SLP

Camino de Nelva,

1 Urban Centre (Torre B Planta 17)

30007 Murcia

Tel +34 968 231 125

Fax +34 968 233 495

E-mail sjv@sjv.auren.es

MPs

List of MEPs for the UK in the European Parliament should you wish to contact your own local MEP: http://www.europarl.europa.eu/unitedkingdom/en/your-meps.html

Also there is Emma McClarkin who has tabled 2 written questions to the European Parliament regarding Camposol, covers the West Midlands but has knowledge of the problems, here is her email: emma.mcclarkin@europarl.europa.eu

The nearest MEP to us here in Spain is Lola Sanchez Caldentey, she is based between Cartagena and Brussels she is a Podemos Party MEP, you will need to contact her in Spanish through her bio page here's the link:

http://www.europarl.europa.eu/meps/en/125035/LOLA_SANCHEZ+CALDENTEY_activities.html

What to do if you believe that your legal representation has been negligent (info provided by the British Consulate)

If you believe your lawyer has been negligent and has not met their obligations, you should complain in the first instance to the provincial bar association. If the response is unsatisfactory, you can take your complaint to the regional and then national bar associations. Complaints should be in writing and in Spanish. A full list of the bar associations around Spain can be found on the website of the General Council of Spanish Lawyers.

If you have a complaint about the way a court has handled your case, you can present a complaint to the General Council of the Judiciary.

If you have a complaint against a notary or gestor administrativo, this should be directed to the professional council of which they are a member.