Developers going bust

mintmagic · 17-09-07, 05:23 PM

Hello chaps,

As in the UK, when a developer goes bust, there is a solicitor that takes care of the legal paperwork and hopefully gets some compensation for the investor.

Is there any such thing in morocco? What happens if a developer gets bust during construction and does not go ahead? Can investors get compensation? I'd like to understand the legalities of purchasing and securities in a bit more detail.

Anyone have any clues?

mintmagic · 24-09-07, 09:40 PM

Helllllllooooooo......anyone?

camel · 24-09-07, 10:09 PM

mintmagic: I am not a lawyer but my understanding is that in theory this cannot happen as developers cannot sell until they have the Bank guarantee.

My other undesrtanding is that the Developer will not be offered a guarantee until the foundations are laid.

I hope this confuses the issue for you. It was not my intention.

mintmagic · 24-09-07, 10:13 PM

ok, so once a developer lays the foundation, they go to the bank and ask for a guarantee.
Bank confirms they have laid the foundation, and then offer them a guarantee, presumably confirming that if during the build process they go bust or stop costruction, the bank will take over the project and either compensate or finish the project.

is that the gist of the matter?

camel · 24-09-07, 10:41 PM

Yes, that is the jist and this is my understanding. A bit of a chicken and egg situation I am afraid.

Now, the question comes where does the developer gets the 40% ??? He tries to collect as much as possible from our reservation deposit and this where the investor is left exposed.

The investor has paid to the Agent and if the Agent does not pass the funds to the Developer in the mean time the Agent goes bust or decide to take your money to Cuba.

The money has been paid to the Agent in UK/Eire, the funds have been moved out of UK/Eire. Normal Agency law applies. ie, the principal is not responsible for the Agents action.

Sorry, its a dooms day senario but sadly I have seen happen in Spain.

mintmagic · 25-09-07, 09:30 AM

So I suppose really the only way to safegaurd your investment is to go with developers that have a track record and sound financial backing. A company that is worried about its reputation and pride will do its utmost to protect the investors.

Sadly the same cannot be said of the agents. So that's where I see the most exposure as such.

camel · 27-09-07, 05:15 PM

mintmagic:
"So I suppose really the only way to safegaurd your investment is to go with developers that have a track record and sound financial backing".

THIS IS A GOOD STARTING POINT.

A company that is worried about its reputation and pride will do its utmost to protect the investors.

NOT NECESSARILY, THE MARKET IS A BIG PLACED EXPERIENCED AND LONG TERMS INVESTORS FOLLOW DEVELOPERS AND THEIR FINISHED PRODUCT. NEW COMERS DONT HAVE THIS BENEFIT AND THEY FALL INTO THE AGENTS SALES PITCH, MEDIA EXPOSURE. YEILDS ETC, ETC AND BUY THE TIME THEY GET THE FINAL PRODUCT ITS TOO LATE AS THEY ARE 100% COMMITTED. I KNOW COMPANIES/AGENTS WHO HAVE TAKEN OUT GAGGING ORDER AGAINST DISSATIFIED BUYERS.