Developer mortgage during construction

Discussion in 'Brazil Property' started by wendles, Nov 19, 2007.

  1. wendles

    wendles New Member

    Hi
    We are in process of buying an apartment in Estrella Do Atlantico in Natal and have received conflicting legal advice on one of the clauses. Hoping some knowledgeable person on this forum can help.
    The property is freehold and the clause is for us to authorise the developer to take out a mortgage/loan during construction. We are worried where this leaves us if the developer does not repay his loan to the bank. Manzanares are the lawyers acting for the development and they advise that there isn't an issue. If the developer defaults, the bank will take on the liability and we owe the purchase price to the bank.
    However the independant lawyer we have appointed says this is an unusual clause and not normal practice in Brazil, he says should the developer default then we will have to repay the bank loan.
    I'm now questioning which of the lawyers is correct. Has anyone come across this before and which of the answers is correct?

    Wendles
     
  2. michaelbush

    michaelbush New Member

    I would check this out with your own lawyer! If Manzanares act for the developer it will be difficult for them not to have a conflict of interest. Nabas Legal Consultancy in London can advise and check all your contracts over before you part with your money, and also get your CPF numbers etc. They are qualified in the UK and in Brasil and speak excellent English.
     
  3. kenny

    kenny New Member

    Esrella Mortgage

    Hi Wendles,

    Just curious did u get that mortgage issue in Estrella solved?
     
  4. Aegean

    Aegean New Member


    The bank will take on the liability - pure ****e they will have a charge on the property as they are owed money on it.

    Get good legal advice friend as you could be left high and dry if the developer default.
     
  5. jennifer.fordd

    jennifer.fordd New Member

    Wendless,

    Did you get the problem of the mortgage solved with Estrela do Atlantico?
    Can you paste here the clause regarding this mortgage?
     
  6. JMBroad

    JMBroad New Member

    Who are the independent lawyers and are they based in Brasil or abroad?

    It sounds like both lawyers are saying the same thing, except one is saying that it's a problem and the other is saying it's not an issue.

    Manzanares:
    "If the developer defaults, the bank will take on the liability and we owe the purchase price to the bank."

    Independent:
    "should the developer default then we will have to repay the bank loan."

    Or does the independent lawyer think that you'd have to pay interest, etc? I'm also assuming that if you are repaying the loan on the construction price, that will be significantly cheaper than the purchase price (cost price vs sales price) so any additional bank costs should be covered.

    But yes, also interested, what was the outcome?
     
  7. Jim Zed

    Jim Zed New Member

    Estrela do Atlantico

    How did you end with your mortgage on this development? I have also an apartment there and am trying to raise finance at the minuite.
     
  8. acarroll

    acarroll New Member

    Hi Wendles & Jim Zed,

    Can you please let me know how you are getting on with your purchases of
    apartments in Estrella Do Atlantico?

    Many thanks,
    A
     
  9. Wack666

    Wack666 New Member

    Hi ACaroll and Wendles & Jim Zed, i have purchased a property in Estrela do Atlantico (Apartment A 203). Unfortunately nearly 2 years ago I found myself (along with half the world!) in financial difficulties and cancelled the purchase (taking up my right to cancel as detailed in the contract) I cancelled back in May 2009 after paying 2 of 4 installments, the developer however is refusing to honour the contract as they have invested all money in the project. I am dealing through Manzanares to try to recover my money but it is proving a slow process.
    Has anyone else purchased in Estrela do Atlantico and are they still goung ahead? The build is 18 months behind schedule
    I would love to hear from anyone with an interest in Estrela do Atlantico

    Wack
     
  10. Eric007

    Eric007 New Member

    Estrela do Atlantico

    Hi Wack

    I am also buying one of these apartments. I spoke to Manzanares last week and was reassured that the development is nearly completed. The still seem very relaxed about the actual timing.

    I have not worried to much about the late completion because as you, I had only paid 50% of property value and was wondering about finding the other 50%!.

    I am now watching with curiosity as to their next moves with regard getting all of their customers to complete.

    Fingers Crossed.

    Eric
     
  11. JOHNALANROBERTS

    JOHNALANROBERTS New Member

    Can you update please.I am also in the process of trying to get my money back after the developers refuse to repay my stage payments

    145751]Hi ACaroll and Wendles & Jim Zed, i have purchased a property in Estrela do Atlantico (Apartment A 203). Unfortunately nearly 2 years ago I found myself (along with half the world!) in financial difficulties and cancelled the purchase (taking up my right to cancel as detailed in the contract) I cancelled back in May 2009 after paying 2 of 4 installments, the developer however is refusing to honour the contract as they have invested all money in the project. I am dealing through Manzanares to try to recover my money but it is proving a slow process.Has anyone else purchased in Estrela do Atlantico and are they still goung ahead? The build is 18 months behind scheduleI would love to hear from anyone with an interest in Estrela do AtlanticoWack[/QUOTE]
     
  12. JMBroad

    JMBroad New Member

    I'd read your contracts very carefully, both of you. While it may seem very obvious to you that if they are 18 months delayed you won't have to make the payment of the remainder in its entirety, you are legally not allowed to simply deduct a debt to you from someone you have a debt with.

    For example: You buy a house for 100k you pay 65k and the developer is delayed. Because of his delays, you may say that he now owes you 10k in fines so you only have to give him 25k. In reality the developer can demand the full 35k and then tell you to take him to court to get your 10k. If they do take that option, you'll be forking out a lot of money in legal fees to get representation locally to fight the courts decision and then need to shell out even more money to take them to court to pay their fines. Many developers don't actually pay their fines unless taken to court and drawing out the process quite a long time.

    Either way, I'd make sure you know what is going to happen and if possible have something signed from the developer before they actually finish the development and demand payment. Otherwise you can end up losing a lot of money.

    Good luck - as for the development, I go past it a couple of times a week and I have seen some progress so it does look like they are still trying to finish it which is a great sign.
     
  13. rangers

    rangers New Member

    The delay!

    Hi guys,

    It's started a new thread on Estrela do Atlantico on this website, for those who do not know, this is called: Estrela do Atlantico Ponta Negra.

    It may be good the more we are as we are landed in this mess.

    If there are lawsuits against the developer, it becomes easier for them and take us out one by one.
    This applies to both those who have paid two or three installments.

    Regards Rangers
     
  14. growler

    growler New Member

    I have just read this thread and ..........it seems like a case of "here we go again."

    Like many others I invested in another development (PDC In Maracajau nr Natal). I paid 50% way back in 2007.

    The developer arranged a Work Conclusion Insurance (WCI) which guaranteed completion of the project by the Bank should the builder fail to do so. Everything was check by Manzanares and in some cases, Costa Barras, and everyone was assured it was good.

    5 years later and only about 30% of the project has been completed and the WCI has lapsed or been cancelled (we have had conflicting stories on this).

    I also exercised my right to cancel and get my money back but.....the developer doesn't have the money to do this.

    It seems the problem in Brazil is that WCI/Guarantees are meaningless, contracts are worthless and Lawyers cannot be relied upon.

    Meanwhile, many people are losing a lot of money!
     
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