In Good Faith or The Road to Hell is paved with good Intentions.

Over recent months, with the surfacing of many property problems for individuals we have seen the increasing use of the phrase, ‘Good faith’. A little research has found the following definitions
‘Good faith, or in Latin bona fide, is the mental and moral state of honesty.’ ‘If you act in good faith, you believe that what you are doing is right and legal.’
Those summarise well the attitude of many expatriate and even more Spanish property buyers who are now looking at losing their properties or having substantial fines to pay after discovering that their properties do not have the proper permissions to have been built in the first place. It has gone so far that the Mayor of Marbella has publicly declared that all 18,000 'illegal' properties in the municipality will be granted because they were bought 'in good faith'. So, as long as one goes around in a state of innocence with one's eyes shut and ears closed, one can do anything against the laws of the land and be excused.

Unfortunately, there is another little phrase that has a much more reliable history in law, ignorantia juris non excusat – ‘Ignorance of the law is no excuse’. Without that legal base, we could all go to court and say, “Sorry, I didn't know what I was doing was wrong”, and be excused. The other legal basis, without which ownership anywhere will not work, is that by selling something that is illegal, the illegality is not wiped out. However, over the years a practical basis has had to be set up of creating legal ownership where there is a lack of proof of legal title, with appropriate compensation to the person who has ‘lost’ the property. The legal books provide definitions such as -
‘Where a non-merchant purchases property that the seller lacks legal title to convey, the issue of good faith is known as the ‘innocent purchaser doctrine’. If the purchaser acquires the property by an honest contract or agreement and without knowledge of any defect in the title of the seller, or means of knowledge sufficient to charge the buyer with such knowledge, the purchaser is deemed innocent.’ ‘If a court establishes the purchaser's good faith defence, the person who claims title has recourse only against the fraudulent seller.’

I have placed the underline within the first definition as that is the core of the problem that we have in many places today with regard to Ayuntamiento’s granting illegal permission for construction and the effects of the Ley de Costas. With both of these, could the buyers have known that what they were buying was not legal? The answer to that must be 'Yes' as the law was there for anybody to see. Admittedly, you had to know of the problems, but most advisers to buyers should have known of the problems.

With regard to Marbella in particular, it was known that the two draft PGOU’s created by Sr Gil’s Council were not accepted by the Junta de Andalucia and thus any permission based on them was not reliable. There must have been the first developer and his financier who said “Let's take the commercial risk and just do it. It'll take them years to sort things out and the result will be a fine and in the meantime we’ll have made our profit”. After one had done it, others would say, "Well, they've got away with it and if we don't do the same we will be losing all these opportunities". And there also must have been the first individual buyer of the finished product who either went ahead without any research or whose adviser/lawyer didn't advise properly. Others would then come along and say or be told, “He has done it so it’s OK”. Maybe that's what lemmings think at the edge of the cliff!

The most troublesome part of the Ley de Costas, which was initiated in 1988, states that there should be no building of any kind within 100 m of the high tide mark. It also has regulations regarding proximity to rivers. However, over the years people have built within that boundary and, by 'getting away with it', have encouraged others to do the same.

In both these cases, if the appropriate legal authorities and/or advisers had acted swiftly at the beginning, the first ‘lemmings’ would have been informed of the illegality of their proposed action and not proceeded. Things still proceeded in Marbella even with the Junta de Andalucia having initiated and won court actions against Marbella Ayuntamiento and individual developments, as greed and ignorance combined to form an unstoppable force. However, behind it all the law churned on, ever so slowly and apparently ineffectually, which is a great part of the problem in Spain. Eventually, we have reached the stage that we are now, with the illegal acts having been stopped, at least in Marbella.

So how has it all to be sorted out? The properties are there, ‘innocent’ people have bought them and politicians have been put on the spot to find a way out that will hurt the minimum number of people and keep their votes. The people who are to blame should be the ones who pay the penalty. There are no innocent buyers, as all had ways of knowing the background to the law. If they proceeded without advice, well they took the risk of acting illegally. Most would have been advised by a lawyer or some other 'adviser' who will or should have known of the background problems. They have been professionally incompetent at best and working for the seller and not the buyer at worst. They accepted their fees for giving advice, which turned out to be wrong. They should bear the financial burden of their client’s problems. This also applies to the advisers to the banks and developers, although their clients are less innocent as, going back to the definition above, they are not really ‘non-merchants’. They have at least to carry some of the blame themselves for not having carried out the appropriate investigations. Where they have paid individuals for the granting of these permissions that is another matter entirely, as that can go on where the permissions are 100% appropriate. The law must be followed through and those to blame have to carry the cost of compensating those who have lost out.

And what about the truly innocent people, being all the others who live, work and play in Marbella? They have lost their green spaces; their views; their beach. Their infrastructure is over-burdened and under invested. Maybe they have applied for permission in an illegal area and been turned down because they haven't known or been prepared to follow the rules of the 'game'. How are they to be compensated? It can only be by the compensation being paid back into the infrastructure and future of the town. Where individual properties have lost a view or had their amenity significantly reduced, there should be avenues for them to claim compensation too.

As with many matters relating to property, if things are done properly at the beginning it will save so many tears and so much hassle trying to sort them out later on.

The comment from Surveyor, while well intentioned reflects to imposition of common law, Anglo Saxon thinking to states based on civil law.

The reality is that the system was flawed and this allowed those in responsible positions to abdicate their responsibilities (while things were going well).

For those wanting to know what the new Marbella Town Plan will do and how it will effect them, go to our blog at:

http://blog.marrisonproperties.com/

There is no need to make compensation claims and buyers are placed in a better standing from the new plan. It will also provide a basis for land law and development for the future.

One thing that I would add is that when buying abroad act as you would in your home country - ask for assurances and use a reputable advisor.

My background is in Scotland with a Roman Law base so I have excaped the vagiaries of Common Law. However, its not the system of law that has the problems, apart from its slowness, it's the lack of professional conscience of the participants, namely the professionals. About four years ago, when the boom was booming, I had a major UK banking investor walk away from a seemingly profitable investment because their lawyers could not assure them that the development had all the permissions required. They had been told of the uncertainties of the PGOU. If one firm of lawyers could advise on that basis, all professionals should have had the knowledge to do so. If the first developer/investor had been advised in that way and walked away the whole disaster would not have happened.

The politicians way out of it, and remember it was politicians that created this mess in the first place, is to sweep everything under the carpet, let everyone get away with their illegal profits and carry on as if nothing has happened. Okay, there are a few politicians/officials who are imprisoned and having their assets seized, but where is the compensation to Marbella and the truly innocent inhabitants who have lost so much?

It is certainly true that lawyers in Spain were lax. Part of the problem is the fee structure - a percentage rather than an hourly fee. The incentive is to close the deal, not provide good advice. I imagine your bank paid for the advice and was not paying a percentage.

That is the problem I have with so many pundit advocating 'use an independent lawyer'. This is not good advice because all lawyers have the same incentive. I always recommend one law firm because they are very capable and I can work effectively with them to ensure everything is above board. But that goes against all the 'independent advice'.

My point is that one should not assume things are the same in Spain as in the UK. We have a very details buyers guide on our website and I know of others that inform of all things connected with buying a property, I also have my blog:
http://blog.marrisonproperties.com/

I also disagree that many people have lost out in Marbella. At this time individuals have not suffered and are getting the protection that their lawyers did not afford them.

I have a lot of issues that I would like to change but I work in the here and now and that ensures my clients are informed of what is required.