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So far Fitzwilliam has created 27 blog entries.

Buying property in Marbella? Search, investigate and search further

Small, discreet and very exclusive. Marbella certainly is one of the most sought after residential areas in Spain. However, with dozens of real estate purchases taking place in Marbella everyday a critical factor is commonly overlooked: checking compliance with the Urban Planning (PGOU).

It is well known that the Supreme Court of Spain recently overrode Marbella´s PGOU 2010, leading to its complete and total disappearance. Thenceforth, the plan was substituted by the old urban plan adopted back in 1986 (PGOU 1986), pushing urbanism back 30 years and leaving Marbella in an urban plan chaos.

However, urban planning is just one of many reasons why in a number of cases buyers have lately discovered that they didn’t buy what they truly wanted. It is therefore important for buyers to realise that the onus falls on them to investigate, search, question and investigate further. Ideally, investigations will be part of the property searching process as failing to get a due diligence carried out is always going to put a buyer on the back foot when it comes to buy property in the Costa del Sol.

A good example of the above recently happened to one of our clients. Two months ago we acted on behalf of a buyer intending to purchase a beautiful apartment in Marbella´s Golden Mile for 900,000 euros. The buyer hired our services in order to obtain a second opinion on what he was to buy. His suspicions were confirmed when we found that the apartment itself, along with half of the development, was (and still is) illegal in light of the PGOU 1986. Consequences of such a shocking discovery were devastating: no mortgage over the property would ever be admitted by any bank whatsoever, only tiny repairs would be allowed in the property (no improvements or refurbishing at all) and of course the property market value must be sharply reduced.

As a result, the buyer did not want to proceed, he pulled out of the purchase and instructed us to find a new property. In less than 2 weeks we found a property exactly meeting his criteria and fully compliant with our revision process. He avoid buying a con and eventually purchased his dreamt property, all for the very same price: 1% of the price of the bought property.

At Fitzwilliam, we are able to provide our clients with seamless advice on any matter arising from their property requirements. Indeed, all of the above was possible thanks to our “All-inclusive Conveyancing Service”. This is a seamless service comprising legal and agency services altogether for a fixed fee:

  • Property finding service pursuant to the client´s requirements thanks to Fitzwilliam established relationships with the key property agents;
  • Carrying out a complete Due diligence review over the property (planning and environmental issues, outstanding tax debts…);
  • Negotiating with the Seller;
  • Designing legal and tax structures for the purchase;
  • Spanish Tax Identification Number (NIE) request;
  • Advising throughout the sale and purchase process, drafting and negotiating the relevant contracts;
  • Assistance and simultaneous translation at the Notary;
  • Registering the purchase within the Land Registry;
  • If needed, advising on financing the purchase; and
  • Fulfilling all relevant tax assessments regarding the purchase.

The all-inclusive conveyancing service is available for a fixed fee of 1% (+ VAT) of the selling price.

Should you be interested in buying or investing in real estate property in the Costa del Sol, get in touch with us and we will be delighted to help.

2018-02-06T19:51:31+00:00 6 February, 2018|

Bad news for PE investors in Spain: no drag along right in SL´s unless minority shareholders agree

A recent decision from the Spanish Companies House Directorate (DGRN) has made clear to investors that no amendment of the articles of association to introduce a ‘drag along’ provision will be valid unless expressly accepted by the unanimously shareholders.

The decision, issued on 4 December 2017, clearly is bad news for majority shareholders and private equity investors alike.

The Spanish Companies House was concerned with the insertion of drag along provision into the company’s articles of an SL based in Barcelona, without the consent of the minority shareholders. The clause was drafted so as to give majority shareholders wishing to sell all or a substantial portion of their shares in the company to an unrelated third party the right to force the remaining shareholders to also sell all or a portion of their shares to such third party.

The decision from the Spanish Companies House Directorate now clearly sets out that any drag along clause must be expressly agreed and accepted by each of the shareholders to be valid. Otherwise, the article´s amendment will be rendered as invalid and null.

The regime for the insertion of drag along provisions under English law are not as tight as in Spain, being theoretically possible for a majority of shareholders to insert them without the consent of the minority. However, following the ruling of the Court of Appeal in Arbuthnott v Bonnyman, there is always a risk that the process will be open to challenge under the Companies Act 2006 which provides protection against the unfair prejudice of minorities.

2018-01-10T17:40:52+00:00 10 January, 2018|

Security granted over future claims and receivables: implications within an insolvency scenario in Spain

Future claims and receivables commonly form part of a full security package in the Spanish lending market. Common types of claims and receivables used as security include: 

  • Debts and other rights to the payment of money; 
  • Rights to require (in project financing, for example) performance of a non-financial obligation; and 
  • Rights to claim under insurances; and 
  • Cash deposited with banks 

Formalities are simple. If granted as a pledge, the security must be executed as a public deed. If secured as a chattel mortgage, the security must be registered.  

However, there has been much controversy over treatment – within an insolvency scenario – of any such security over future claims and receivables. Although regulated in article 90.1.6º of the Spanish Insolvency Act, treatment of such a common security under the Spanish insolvency rules. Although a special privilege was recognised to such secured creditors, construction of the insolvency rules by the Spanish courts has resulted, for years, in a real headache for creditors who – in most cases – were unable to benefit from the privilege ranking of such credits due to the law ambiguous wording. 

It has taken 13 years from the enactment of the Spanish Insolvency Act and two law amendments by the Spanish parliament to eventually clarify and homogenise treatment of such concrete within insolvency proceedings. Article 90.1.6º was redrafted on 2015 – with legal effects from the 22th of October of 2015. By such amendment, the Spanish Insolvency Law now expressly admits that credits secured by future claims and receivables benefit from a privilege position within the insolvency proceedings provided that:   

underlying claims and receivables granted as security arise from agreements or contracts entered into by the debtor before the insolvency proceedings starts”  

The brand new Spanish law approach to security over future receivables has been confirmed by the Spanish Supreme Court and is therefore binding to all minor courts.  

Although specific and detail analysis shall be rendered to every specific case, security granted over future claims and receivables are no undoubtedly safe against insolvency, provided of course that formalities are complied.  

It is also safe to say – as confirmed by the Spanish Supreme Court – that such privilege shall be understood as well as applicable to security over future claims and receivables granted before October 2015. 

2017-12-30T18:10:46+00:00 19 December, 2017|

Choice of English Law in Lending Agreements shall remain unaffected after Brexit

When lending and taking security in Spain, Direct Lending Funds do normally the Facility Agreement to be governed by the laws of England and Wales (normally the LMA agreements will be used as a starting point for negotiations). Security documents, on their side, are usually governed by the laws of the country where the security itself is located. In the case of Spain, Spanish laws are mandatory for security over real estate property pursuant to section 10.1 of the Spanish Civil Code.  

In practice, there is no suggestion that Brexit should cause parties to reconsider their choice of English law as regards the facility agreement. Under REGULATION (EC) No 593/2008 on the law applicable to contractual obligations (Rome I), the courts of each member state are required to give effect to the parties’ choice of law, regardless of whether that law is the law of an EU member state.  

Thereupon, where such parties have chosen English law to govern the facility agreement, notwithstanding Brexit, the Spanish courts – and those of any other EU member states except for Denmark – should respect such decision.   

English law, if selected by the parties, should therefore continue to be upheld following Brexit. The LMA has yet indicated that it has no current intention to adjust the governing law clauses in light of Brexit. 

2017-12-30T18:09:11+00:00 7 December, 2017|

Director´s Liability Upon De Facto Closure of a Spanish Company


This Article is subject to Spanish legislation and considers some of the issues that arise when creditor´s rights collide with company directors’ duties. We focus particularly on the role and relevance of breaches of directors’ duties in the context of the abandonment of the company. That is to say, prior to any proper insolvency being declared. 

Overall View 

It is well known that the two most popular corporate vehicles in Spain – S.L. and S.A. – provide limited liability both to directors and shareholders. However, limited liability does not imply a complete protection for directors, so they must carefully consider their actions and, indeed, their failures, to act in order to avoid future liabilities. 

The disputes in which Fitzwilliamare instructed range from disagreements about how the company should be operated and managed, to claims involving serious allegations of dishonesty and misappropriation of company monies/assets. 

Quite often, in the case of family run businesses and smaller companies, the directors will be substantial shareholders of the company. This can easily explain why, more often than not, claims are issued by creditors instead of by shareholders. 

Director´s Duties 

Directors’ duties are codified in the Spanish Companies Act. The general duties are: 

  • Duty of Care 

Directors must exercise the same care, skill and diligence that would be exercised by a reasonably diligent person. The expected standard is measured against both objective and subjective yardsticks. A director’s actual understanding and abilities may not be enough if more care, skill and diligence could reasonably be expected of someone in his or her position. 

  • Duty of Loyalty 

Directors must act in accordance with the company’s constitution, and only exercise their powers for the purposes for which they were given. The company’s constitution includes its articles of association, resolutions and any shareholders agreements, if existing any. Further, Directors must also do their best to promote the success of the company and exercise an independent judgment. 

It should be noticed that the Spanish legislation extents such duties to shadow directors so that they are also considered for any wrongdoing. 

Breach of Director´s Duties 

 Wrongful Trading   

Wrongful trading often refers to the company “trading whilst insolvent. However, this is only half the story. Directors may find themselves personally liable for wrongful trading where, at some point in time, they should have concluded that the company would not be able to avoid insolvent liquidation but continued to trade. In those circumstances the director may be ordered, by the Court, to contribute to the assets of the company for the benefit of its creditors. 

De-Facto Closure of the Company 

Nevertheless, more and more frequently, creditors find that the company, instead of being purely insolvent, has simply vanished. In such cases, although the company is still validly registered, no financial statements have been filed for years, there are no signs of activity at the companies premises and there is absolutely no trace of the director or any shareholder whom to speak so to claim to take the steps necessary to satisfy credits. This unfortunate situation is known as a “De-Facto Closure”. 

Derivative Proceedings: the ultimate but comprehensive solution 

It is an elementary principle of company law that Director´s acting in breach of their duties become liable to whom they due such duties, that is to the shareholders and to the company itself. Thus, strictly speaking, where a wrong has been done to a company by the directors -such us depriving it of any solvency- only the company or the shareholders can sue for any damage caused. 

There are however some exceptions to this rule, permitting creditors to bring a derivative claim in cases such as the De-Facto Closure. A derivative claim, if certain requirements are met, will make the Directors directly liable to the creditors for every single debt of the company from the De-Facto Closure. Creditors therefore have a good, and last chance, to benefit directly from the proceedings, which are not limited by any amount whatsoever. 

However, creditors intending to issue a derivative claim against company directors must make all possible haste to issue proceedings before any other creditor seeks the Court’s assistance in order to declare the creditor´s bankruptcy. Thenceforth, every creditor shall respect the principle par condition creditorum and no single derivative action might be issued. 


The above is a brief example of how complex situations can be sort out by taking proper remedies. Of course, there are plenty more mechanisms which can be tailored to suit your specific circumstances. 

Contact us at Fitzwilliam Solicitors and our dedicated team in Spain will be pleased to analyse your case to design the best strategy to protect your interests. 

2017-12-30T18:07:40+00:00 22 November, 2017|