Time is running out for buyers on the Santa Ana del Monte development in Jumilla

2010-04-30

 Residencial Santa Ana del Monte, also known as Jumilla Golf, was going to be the answer to many British buyers´ dreams of having their own place in the sun.  A luxury golf development nestling amongst the mountains, not far from the town of Jumilla in north-east Murcia, Santa Ana del Monte is just over one hour's drive from Alicante airport, so it was hardly surprising that so many British buyers decided to buy an off-plan property there mainly as a holiday home or for their retirement. 

 

The new urbanisation was going to have two 18-hole golf courses, a 5 star luxury hotel, multi-sports complex, shops and restaurants and would be built in several phases, the first one consisting of over 2,700 properties.  Although these properties were inland, buyers would be in easy reach of Costa Blanca resorts, giving them the best of both worlds.

 

When John and I paid our deposit in March 2006 we had already been on several viewing trips and knew that this purchase represented good value for money; however our reason for buying there, like so many other people we have met since, was simply that we fell in love with the area.  The property market in Spain at that time was buoyant, so we paid our deposit and waited patiently for our new house to be built. 

 

We made a couple of trips to Spain to check on progress, which seemed very slow, but our agent told us not to worry about this.  We were quite excited when we saw that the foundations had been laid, though concerned that Herrada del Tollo (HdT), the company within the San José group that was building the new development, was still waiting for the final licence to build. However we were reassured when we could see definite progress on a visit to the site at the end of 2007, and told that any delay would be minimal.  We had absolutely no inkling of the nightmare that was lying in wait for us.

 

In May 2008 we received the devastating news that the developer had gone into voluntary administration.  There have been various conspiracy theories but two key facts stand out as the main reasons for Herrada del Tollo going into administration: the world-wide credit crunch, and banks refusing to extend their credit in difficult times, no doubt influenced by this being such an ambitious project.

 

We had decided only the month before to rent a property in Jumilla, expecting our own home to be completed by the end of the year, so now we had to make our minds up on what we should do next.  Did we still want our house or would we prefer our money back?  Of course it wasn't that simple as we had no bank guarantee, in spite of numerous requests for one, and we weren't the only purchasers at Santa Ana del Monte to be in that position.

 

We had arranged the viewing trip through a UK-based company, and the local estate agent who showed us round was English though she had a Spanish father.  Before signing the contract we appointed a Spanish solicitor who spoke English and our solicitor assured us that the company was well-established and that all licences were in place - however she failed to mention the need for a bank guarantee and she let us sign the contract without one. 

 

Unfortunately it was only after transferring the money into the developer's bank account that we discovered that, according to Spanish law, we should have been given a bank guarantee.  We then requested one through our agent, who seemed slightly surprised that we were concerned about not having one, and we continued pressing for a bank guarantee over the next months, but without any success, only lots of excuses why one hadn't materialised to date and assurances that we would have one "very soon".

 

We had thought our research on buying a property in Spain was thorough, however we didn't come across the magic words "bank guarantee" until it was too late - and of course we weren't the only ones. We assumed (wrongly as it turns out) that by using a Spanish lawyer our lack of knowledge of the Spanish property market wouldn't matter.  Why did our solicitor, and solicitors acting on behalf of other British buyers, allow us to hand over our money with no bank guarantees in place?  Herrada del Tollo have claimed that they had too many applications for bank guarantees coming into their office to process them all, but if solicitors had advised their clients correctly HdT would have been forced to deal with them to get money for the development!

 

Tony Malpass and Brian Dornan were amongst the many British buyers who didn't have a bank guarantee and who were in danger of losing everything.  They both wanted their houses in Santa Ana del Monte and decided to try and save them by setting up a purchasers group to liaise with Herrada del Tollo.  The purchasers group was named Santa Ana del Monte Residents Cooperative (SARC), and a website was launched to provide everybody with the latest information on the administration process, plus reports of meetings between the Directors of HdT and SARC . To read more about SARC´s negotiations on behalf of purchasers, go to: http://www.santaanadelmonte.org/.

 

Tony and Brian also got in touch with the administrators appointed by the court in Alicante to oversee Herrada del Tollo, whilst the company was working on a viable proposal to continue with the project and trying to raise the necessary finance.

 

Over the next two years it became apparent that there were many different views on the way forward for purchasers at Santa Ana del Monte.  The internet is a powerful tool for communications, and one website in particular proved popular with British buyers: Eye on Spain (EOS).  A forum had been set up specifically for Residencial Santa Ana del Monte buyers and, as the pressure increased for many people whose dreams had been shattered, views expressed there became increasingly outrageous. 

 

Tony and Brian had started several threads on EOS such as "I want my House" and "SARC", however people were posting harsh criticisms and even directing personal abuse towards them.  This intimidated many people who had been posting on a regular basis over the years and deterred them from posting new information.  There is nothing wrong with healthy disagreement - and it is helpful to see different points of view especially if you are unsure what your best option is - however many people were clearly overstepping the mark.

 

A vociferous minority was demanding that HdT should be liquidated, apparently ignoring the fact that purchasers without bank guarantees, who had been classified as ordinary creditors, were unlikely to get either their houses or their money back if this happened.  Many of the posters in the liquidation camp had been fortunate, both in having a bank guarantee and in having their money returned, although there are other people supporting this view who stand to lose everything. 

 

SARC on the other hand believes that the only viable solution is for the development to continue, albeit on a smaller scale, and that this is the best option for those without bank guarantees, whether they want their money back or want their house. 

 

The judge in Alicante has consented to Herrada del Tollo´s proposal being presented to the creditors for their agreement.  The proposal is for the company to complete phase 1, which will consist of 1263 properties and a nine-hole golf course, club house, plus commercial and green areas, with timescales of 3-5 years.  There are 966 live contracts, which on completion should give the company adequate funds to pay their creditors.  Half of the live contracts are with Spanish buyers and the rest are overseas buyers, most of whom are British.  For those buyers who want their money back, the offer is 65% of their deposits back - 10% by the end of year 4 and the balance by the end of year 5 - which it is believed will give a higher return than liquidation at this point in time.

 

SARC has persuaded HdT to set up meetings both in the UK and Spain to ensure that as many purchasers as possible have the opportunity to hear full details of the proposal and to have their questions answered. I attended the meeting in Jumilla, where the Directors of Herrada del Tollo were questioned on issues such as whether water resources would be adequate and the challenge from a local shepherd whose land was to be expropriated and who had taken the company to the Supreme Court.  The Directors assured everybody that these matters had been settled to the satisfaction of the court and also the Ayuntamiento (Town hall) in Jumilla.

 

The Company's current position is that they have 966 live contracts, a stronger position with Spanish banks, and more financial options from both International banks and other investors.  They have also reduced their financial costs by scaling down phase one of the project.  They expect to generate profits from completing the properties that they have already sold in the first phase and also selling the remaining 297 houses.

 

Creditors who agree to the proposal will be asked to sign to this effect in front of notaries, and any creditor who doesn't do so will be assumed to have said "No" to the proposal.  The Proposal must achieve more than 50% in its favour to be acceptable to the court.  It is therefore of paramount importance that anybody who wants their house or their money back says "Yes" to the proposal by 30^th April, as the paperwork needs to be with the judge before 6^th May.

 

What next for the purchasers at Santa Ana del Monte?  To some extent, once the voting deadline has passed, it is out of their hands.  If the vote is in favour of Herrada del Tollo they still need to secure the necessary finance to complete phase one, although they seem confident that they will do so.  For those buyers who want their house the dream will still be alive, for those of us who want our money back, we still have a long wait ahead of us and we have to accept that we have lost 35% of our deposits.  If Herrada del Tollo fail to get 51% of creditors to agree with their proposal, the company will go into liquidation, and the sale of their assets is highly unlikely to raise enough finance to repay the ordinary creditors without bank guarantees.

 

May 6^th is D-Day for many British people.  The politicians will be anxiously awaiting the decision of the voters in their constituencies, whereas Herrada del Tollo and the purchasers will be anxiously awaiting a different result, which will also have a major impact on their futures.

 

 

 

Back to News