A property scandal involving the seizure of British-owned homes has incensed the Costa del Sol's expatriate community and provided a cautionary tale for the increasing number of Irish investors drawn to the region.
Prohibitive house prices at home are leading significant numbers to invest overseas and Spain is proving by far the most popular location - in the past year numerous agencies have sprung up specialising in property on the peninsula. But the heavy-handed use of legislation to seize foreign-owned homes has highlighted the country's draconian embargo laws, where an owner's debts transfer with their property and can result in its appropriation and sale by judicial order.
In two recent incidents on the Costa, British-owned homes were sold by compulsory auction without their owner's knowledge. In the first case, the £100,000 property of John Evans, a Surrey art dealer, was seized and sold when a Spanish bank mistook him for a man of the same name who owed 150,000 pesetas (£750) on a hire purchase TV.
A Malaga judge approved the auction and the 23 million peseta home went under the hammer to a Spanish property dealer for 6.5 million pesetas (£30,800). Mr Evans and his wife, Nazira, now face a protracted legal battle for compensation but, according to Danny Collins of the Costa del Sol News, getting their home back will be out of the question.
British pensioners Mollie and Peter Day lost their 40 million peseta (£189,000 approx.) house when a judge in Alicante ordered that it be sold to cover a debt incurred by their property developer. He had taken out a bank loan on the land just before selling to the Days, and while Mr Collins says there is a possibility that compensation may be forthcoming in the first case, he holds out little hope of the Days ever regaining their villa, car or personal possessions. Having sold their original home to relocate to Spain, they were left virtually homeless and now live with their daughter in England.
The families involved in both cases were unaware that their properties faced compulsory auction; although the law demands that owners be contacted, a loophole makes it sufficient to inform a neighbour.
While ex-pats on the Costa have begun lobbying for the reform of embargo legislation, resentment is running high as the community eyes its adopted neighbours with suspicion. The Days' home was sold to a Spanish buyer for 3.4 million pesetas (£16,000) and observers such as Danny Collins expressed surprise at the extra ordinary low selling price. The auction details were never made public.
Like the Evans couple and Days, most Irish investors drawn to the Spanish Costas are "ordinary people", according to Diarmaid Condon of IPC Property Consultants, a company specialising in property on the peninsula. He says there has been a big increase in business since the Bacon Report's release, with buyers typically spending between £25,000 and £50,000 on holiday homes or rental investments.
In order to avoid Spain's judicial pitfalls, Mr Collins and Mr Condon offer much the same advice: above all, use a reputable lawyer who has insurance and will therefore be financially liable should the transfer of deeds be mishandled. Insurance safeguards the client but is not a prerequisite to practising and, as a rule of thumb, unscrupulous attorneys generally go uninsured.
The same goes for estate agents who should be checked for full accreditation, again, not a requirement for going into business. Find out whether the property developer is bank bonded so that compensation will be provided if the building is left unfinished.
Mr Condon recommends going through an Irish agency, saying that buyers are guaranteed that the lawyers and developers used will have accreditation and be fully insured. Above all, he cautions against letting the sun and sangria take over.
