Interview from the Law Gazzette

My legal life: Antonio Guillen

28 October 2013

Topics: Personal and professional development

Antonio Guillen

 

Head of foreign property, DWF, Manchester.

Watching LA Law in the late 1980s captured my attention and pushed me towards pursuing a career in law. I loved the talk, the looks and the suits. Life and a legal career then came to prove that a lawyer’s life is not always quite as glamorous, but I have never had any regrets.

My legal training took place in Spain and covered a variety of different areas of law, from property to criminal. A number of years later I also qualified as an English solicitor and found that, in spite of the differences, there are some commonalities and principles that can be applied regardless of the legal system and the jurisdiction.

As a lawyer you are occasionally required to work unsociable hours and to tight deadlines, although this is part of the job you are aware of when choosing a career in law and it adds to the variety. I never complain as my wife is a doctor and her shifts are much longer and more unsociable than mine.

There is a big difference between dealing with lawyers in the UK and lawyers in Spain, and in my daily job I deal with both. Lawyers in the UK usually prefer to communicate in writing, whereas lawyers in Spain prefer the telephone and face-to-face meetings.

I have never been keen on criminal law. I found it interesting while studying at university but I have always had a stronger passion for civil and international law, specially the latter due to my international background.

Even though I have only practised law for 15 years I have seen a big change. Technology has had a major impact on how we work and communicate, in particular it has increased the time and speed at which we can turn things around. Occasionally I miss how we used to work when I started my training; lawyers would often spend the morning in court or with clients, and the afternoons were spent learning and studying cases. On the other hand, it must be acknowledged that new technologies have proved very useful for international lawyers. The advancements have certainly made my job easier.

Specialisation is extremely useful when the economy is running well but it can be a hindrance when the times get tough. In Spain, for instance, where lawyers are less specialised, it helped individuals to survive the recession. However, in the UK, specialisation meant many lawyers were at a higher risk of redundancy because not everyone was able to rebrand as a specialist in a new area of law.

Dacion en pago for non-residents. Do we have a deal?

Do we have a deal?If you have read the Spanish press this week you will probably have seen plenty of articles on the Government’s new proposal to solve the current problems with those who cannot pay the mortgage.  Luis de Guindos, Minister of Economy, will announce this week some new measures to enable consumers to surrender their properties back to the bank in exchange of clearing the debt (a procedure known as “dacion en pago”).  

This would be applicable to low income families where all the family members are unemployed. The “dacion” will enable the debtors to return the property to the bank and have the mortgage debt cleared entirely. This can be positive as many property owners who are behind in their mortgages, are in negative equity and therefore owe more than what their asset is worth. Under the current rules, the borrower responds with all his personal assets and therefore the repossession of the asset does not end the debtor’s liability if the asset is in negative equity. The debtor will still owe money to the bank until he has repaid the full amount. This is extremely burdening for low income families and the new proposal will try to find a solution to the current problems enabling some families to return the “keys” to the bank and start from scratch without debts. The proposal will also contemplate the possibility of renting the property from the bank and paying the bank a “socially acceptable” rent until the debtors can get back into the employment ladder and refloat their finances.

The above will be, obvioulsy, subject to the bank’s approval but Miguel Martin of the Spanish Bank Association has already stated that the banks will be interested in co-operating and finding useful solutions for those families.

The above looks promising but unfortunately will only be applicable to those properties that form the main residence of the family. This means that non-residents owning property in Spain, such as the usual readers of this blog, will not be able to benefit from the new proposal.

So, where does the above leave non-residents who are currently struggling to pay their Spanish property? Well, the proposal has not been launched with their situation in mind. Those non-residents will have to contact their banks and suggest a dacion but the bank will not be obliged to accept these.  In fact, during my daily practice in law I have seen a decrease in the amount of “daciones en pago” accepted by Spanish banks. Some of them are even too busy to be concerned about non-residents debtors as they have more important defaults from Spain to deal with. 

I read a post the other day where the blogger indicated that a bank will not consider the “dacion” if the mortgage is in arrears. With all the due respect to the said blogger,  I have found in my practive that this is not always the case. In fact, I have seen banks telling me that they cannot consider a dacion until the mortgage is in arrears!!! Very confusing. 

In my experience the key thing is to try to keep with the payments and keep the property. Otherwise, all the money and dreams invested in the property will dissapear. However, sometimes this is not possible and therefore a person may have to consider a measure as dramatic as the dacion. In those circumstances, it is better to come clean with the bank and show all the cards. The financial situation should be explained and documentary evidence provided. Obviously, the assistance of a lawyer can also help as sometimes relevant information is lost in translation and in the peculiarities of the Spanish legal system.

So, there is some hope for Spanish based families who are struggling to pay their mortgages and are afraid of still owing a large amount of money to the bank after the house is repossesed. For those who do not live in Spain, the situation is not as good, if not worse, but Spanish banks will consider the possibility of a dacion and in some occasions approve it. 

 Photo from www.dreamstime.com

Daddy, where is my money?

 

This week a Spanish national from Castilla but living in England for many years came to see me for advice on wills. In fact I was the second solicitor to be consulted. The other one recommended him, without taking into account his national law, to grant an English will and leave everything to the surviving spouse.  There is an attractive reason to do so and this is making use of the inheritance tax exemption between spouses. The idea may seem clever if we obviate a detail: my fellow countryman is the proud father of two children. Given the fact that under Spanish law his nationality determines the law governing his estate, the children are entitled to get what is called a forced share on the estate (legítima) which in this case equates to 2/3 of the estate.

English law gives to the testator freedom to dispose of his assets on his death. Spanish law, on the contrary, places some restrictions on the testator and therefore he is not free to dispose entirely of his estate and he has to ensure that certain beneficiaries such as children, spouses and, in certain cases, even parents receive their forced shares. The forced share is not a typical English legal concept. That is the reason why this concept may seem odd for a solicitor who is used to prepare English Wills for English clients. However, the origins of the forced shares are old. It is a concept developed in Roman law, but if we consider it from a sociological point of view it is clear that the forced share appeared in earlier societies to protect family welfare after the death of a relative.

A forced share is the right of the next of kin to receive freely a share of the deceased’s estate (unless they have been given this share by a previous gift). Although it may seem strange for an English person, this concept is very important in inheritance issues, not only inSpainbut in other countries.

Most of the legal systems based on Roman law have preserved this succession system. We can mention France, Germany or the countries which continued with Spanish law in South America. The forced share or “legítima” is not a controversial topic in Spain, but there are obviously different opinions about it. On one hand it has a good reason to exist: protecting the future of the descendants and the spouse. If we accept that the Laws should always safeguard the interests of the weakest parties, then forced heir-ship is a good idea that helps to avoid unfair situations. On the other hand it is clear that the forced shares restrict freedom to dispose and in the event of this Spanish person, in particular, it may affect his plans to protect his children from potential inheritance taxes.

Returning to the main subject of this article, in the end I informed the Spanish national that he had restrictions to his capacity to make a free will and recommended him to comply with Spanish law and therefore provide for the children’s rights in the will. If not, on his death his children could challenge the will and demand the mother and surviving spouse, the payment of their rights under Spanish law. This, which may be difficult to believe if you have a happy family, does happen in real life and as lawyers our obligation is to inform the client appropriately and try to avoid potential problems. The client’s will might not be as tax efficient as he wanted but at least is a legal will that complies with his national law. As a colleague of mine said the other day: you can’t always win!

 

 Photograph by www.dreamstime.com

When will there be any good news?

 

Well, it appears that Santander has changed its mind and will not be selling its portfolio of properties for a discounted price as it was unable to find suitable buyers. It appears that some of the offers were made by foreign investors who were pushing for discounts of up to 60% on the properties.

I think is a pity. This could have been the beginning of a new trend with affordable property prices.

At the same time, another Spanish Bank, BBVA, has said this week that property prices are expected to fall a further 10% in the next 2 years.

Any positive stories, anyone?

More news next week.

 Photograph by Heinz Teh Chee Siong/Dreamstime.com

Some good news, for a change

 

 

 

 

 

 

 

 

This article was written with Alejandro Yufera, lawyer from Barcelona, during his stay in our Manchester office.

Dear bloggers:

We have good news fromSpain. A buyer has recovered the deposit paid to a developer when he didn’t get the mortgage.

This is the second resolution of the Civil First Instance Court of Logroño, La Rioja, that acquits a buyer from the lawsuit filed by the developer, cancelling the contract and sentencing the developer to return the deposit plus legal interest.

Pursuant to article 1,124 of the Spanish Civil Code when one of the contracting parties defaults, the other party can choose between two options: enforce the contract or terminate the contract with a compensation for damages.

The most common option, taken by the developers when a buyer defaults, was to terminate the contract so they could sell the house to another person. But nowadays, in the current economic climate the demand is nonexistent and therefore the developers are choosing the other option.

In this case the buyer signed a contract with the developer, he paid the deposit and after that he went to the bank to get a mortgage but the bank denied it. Because of the failure in getting a mortgage with the bank and the two-month delay in the delivery, he decided not completing on the purchase. The developer considered that it was a breach of the contract and decided to file a lawsuit.

The judgment says that the developer, as a professional in its sector, must know the difficulties of its activity and therefore has to anticipate the circumstances and has to make sure that he can comply with its obligations. In the point of view of the Judge of the Civil First Instance Court of Logroño, the developer breached the contract because it didn’t take the necessary steps to grant the “mortgage subrogation option” when this option was clearly stipulated in the contract. The Court considers that the financing was indispensable to fulfil the contract and the developer failed to identify the potential problem.

Apart from these two judgments of the Civil First Instance Court of Logroño, the trend of the Spanish courts is to rule in favour of developers in this type of scenarios and force the buyer to complete the contract so they have to pay the rest of the money or lose the deposit. It is therefore an interesting progress towards a more ethical justice where all factors are taken into consideration.

Pictured above  Monasterio of Valvanera in La Rioja

Mistakes made when making a Spanish Will- Part III

This week I will talk about a mistake that is made after making a Spanish Will. I am talking about marriage.

Obviously, I am not saying that marriage is a mistake (although some of my divorced friends may have something to say in this respect…). It is what happens with the marriage what worries me.

In certain jurisdictions, like England for example, when  you marry any existing Will is automatically revoked. This means that if you had made a Will and you marry or re-marry for the second time, that Will gets revoked. This is quite clear when it comes to English Wills but what is the position with respect to Spanish Wills?

Spanish law does not contemplate a similar scenario. Basically, if you marry your Will is not automatically revoked. Therefore, it is necessary to revoke it, otherwise that Will continues to be valid.

The problem arises with English nationals owning property in Spain as Spanish law states that, in general terms, English law should be applied to the Spanish Estate (although there are some exceptions which will be explained in a future article). If this is the case and we do have to apply English law to the Spanish Estate, then clearly any marriage will also revoke any Spanish Will granted before tying the knot. This means that we need to be very careful if we marry as we may be revoking the Spanish Will.

The truth is that Notaries and Land Registrars in Spain are not usually aware of this peculiarity of English law and therefore in many occasions this issue is not picked up when dealing with the Spanish estate. However, this situation can cause potential problems in the future, mainly as Notaries and Registrars are becoming more and more versed in international private law matters. The increased pressence of inmigration and North-Europeans retirees in Spain is forcing those professionals to update their knowledge of international private law at considerable speed and therefore are more likely to be able to detect scenarios like the one I have described above.

Having said that, what should you do if you marry and have assets in Spain?

If you have granted a Spanish Will before being married then it is advisable to grant a new one. If you have not granted a Spanish Will then there is nothing to fear, although it would still be advisable to grant one to ensure that you provide for your loved ones.

As always it is better to be safe than sorry or as we say in Spain “Más vale prevenir que curar”.