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Disputes with Property Developers

Buying a property

Needless to say, the great majority of property purchases in the country in question proceed smoothly. The builder builds the house. You pay your money. You take delivery of the house. Any problems in these transactions tend to be of a limited nature. Perhaps the buyer discovers a defect in the construction of a garden wall or the builder fails to honour the terms of his guarantee.

On other occasions, much more serious problems arise. The builder does not build anything at all. The builder builds only a part of the project before going bust. Or the builder builds something so grossly defective in terms of the quality of its constructions that you are simply not prepared to take delivery of it.

In each case you need to consult a lawyer and in each case the sooner you do so the more likely you are to secure a satisfactory outcome to your dispute.

Dealing with minor disputes

Generally, we suggest that you start off by speaking to the builder and trying to arrange a friendly solution to the problem. The problem is usually one of two things. Either the builder thinks that you are being excessively demanding - the deep gouge you complain of being, in his eyes, a minor scratch - or the builder has not got the money to pay you.

In these cases you will need to be guided by the promises made in your purchase contract and by the requirements of the law as to the responsibilities of the builder of a new property. If you are unsure about your legal rights it is worth taking a limited amount of legal advice at a very early stage so that your ongoing discussions with the builder are based upon realistic objectives. Our member in the country in question will be very happy to discuss the position with you, by face to face meeting, by video conference or by normal conference call.

Remember, however, that standards and expectations do differ dramatically from the country to country and that if you come from, for example, Western Europe or the US your expectations at to quality and finishing standards are likely to be far higher than the expectations of somebody in Eastern Europe or North Africa. This mismatch of expectations is not likely to be settled in your favour as, in the event of a court case, the judge would (in the absence of clear quality standards in any contract) apply local standards to the work that was done.

Negotiating a satisfactory settlement in cases of this kind is, therefore, a question of deciding upon what can realistically be achieved and what compromises you are prepared to make.

Sometimes such negotations are better carried out via your lawyers as they will have a better idea of whether the points being made by the builder are reasonable in the local context of whether they are a 'try on'.

Once again, our member in the country in question would be pleased to help you set your objectives and in the conduct of those negotiations.

Major disputes with developers

These are statistically rare but not infrequent and the consequences of these disputes can be devastating for many buyers involved in the same development. Often the sums in dispute run into tens of millions of dollars/euros/pounds.

In these cases, your worst enemy is delay.

There is a regretable tendancy for people to be far too trusting of what the developer tells them, even if it is flatly contridicted by the evidence of their own eyes. If the developer is telling you that the project is half built and you have been to the site and you can see for yourself that it has hardly been started this is a very good indication that things are going to end up badly. In this case the sooner you take action the better. The longer you allow to go by whilst doing nothing the more likely it is that the project will deteriorate from one with financial troubles but which could be rescued to one that is a total basket case. It also increasing the possibility that the developer will have hidden or spent any assets that he might have had, so making it difficult or impossible to obtain compensation.

There is also a regretable tendancy for people to set up or take part in internet forums where they complain to each other, feed each other half truths and misunderstood information and end up doing nothing except allowing time to run by or, worse still, attempting a collective settlement with the developer on a basis that is legally flawed and/or has no realistic prospect of success.

In the case of disputes involving whole developments we believe that the best course of action is the following:

  • Step One - As soon as you are aware that there is a problem, attempt to contact as many other owners in the complex as possible.

  • Step Two - Contact us to arrange a meeting of those owners at which we can set out the options available to you and help you to decide which will be the best for you. Where necessary, we can arrange for that meeting to be joined either in person, by video link or by conference call, by our member in the area in question. Our staff at The International Law Partnership Ltd have been dealing with serious developer disputes for getting on for 25 years and so they will be able to suggest to your new group some straight forward, common sense and relatively low cost ways of dealing with the problem.

  • Step Three - Working with you, The International Law Partnership Ltd will try to locate other buyers in the complex with a view to increasing the numbers in the group. We will do this by using our contacts in the industry and in the press and television. Remember that the more people there are in your group the less it will cost you per head to take effective action to solve the problem!

  • Step Four - Whilst we are still assembling the group our member will begin a detailed investigation as to the nature of the problem, your legal remedies and any practical alternatives that might be available to the group.

  • Step Five - A month or so after the first meeting of the group we would hold a further meeting at which the group would decide upon it's strategy for dealing with the problem.

Dealing with such disputes with property devlepers is difficult and time consuming work. There is almost never a simple solution but there is usually a practical solution - even if the solution is only a partial solution and only changes the position from one where everybody stood to lose everything to one where, for example, they all secure their properties for payment of a certain extra amount or where they recover a percentage only of the money they have invested. Dealing with these cases often involves almost as much internal politics within the group as time spent negotiating with or taking court action against the developer in question.

We are often asked why we choose to try to resolve these cases by negotiaiton rather than going to court. The answer is simple. Over 25 years we have found that it generally works better. Often going to court can leave you with an empty judgement against a company with no assets.

If you woud like to find our more about dealing with disputes with developers, please click on the link below.

Remember that dealing with disputes with developers or builders requires a detailed knowledge of the local law and the local customs as well as the same level of knowledge about the law in your own country. We cannot stress enough that it is the interaction - and sometimes conflict - between the two systems that creates most of the potential problems and many of the best potential opportunities for saving you time, trouble and money.

Next steps

Please look at the Legal Guides, videos, MP3 seminars and other materials set out to the right of this page.

If you would like us to help you, please complete our Client Pack and send it back to us. We will then contact you to clarify your requirements and then introduce you to the person most appropriate to deal with your case.

If you do not find the information that you need, please send us an email explaining your problem and we will contact you.

© The International Law Partnership Ltd. Page last revised 18/07/09

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