Background Investment Checks

CPC are now working with expert financial investigators who operate from two key locations in the U.K. and have associated offices in Spain, France, Brazil, Argentina and Dubai.

The team is able to conduct searches of property ownership, business ownership and the financial status of both businesses and associated individuals.

We can also have “background checks” conducted on any potential investment opportunity that you are considering.

The research will identify the credibility of the investments and outline the details and track records of the individuals behind the opportunities. In doing this, we aim is to assist potential investors to make an informed decision as to whether a particular investment opportunity is right for them.

To provide asset-checking services throughout Europe we can provide our report within a 48-hour timeframe. This will include official documentary proof of ownership.
To provide an equivalent service outside of Europe we require a ten-day turnaround from instruction.

Investment checking services and backgrounding are available now to both CPC clients and non-clients alike.

SPANISH MORTGAGE RECOVERY

The European Court have declared floor clauses in Spanish mortgages illegal. CPC and associated Spanish experts will review your deeds / escritura, free of charge to see if you are a victim of abusive clauses.

The European Commission has issued a damaging report for Spanish Banks who have for many years introduced floor clauses into their mortgage contracts.

These clauses (although common, are not used by all banks) set a minimum interest rate that clients have to pay even if the benchmark rate (Euribor) drops below that figure.

Spain’s Supreme Court has declared this practice “abusive” and so far has sentenced banks to pay back, but only the payments made since May 2013.

The European Executive disagrees with the setting of this date, stating that refunds must be made way back to the very first mortgage payment; obviously their rationale is that if the clause is void, it is void from the start of the mortgage.

There are 2.5 million mortgages with abusive clauses in Spain, is yours one of them?

We can help you NOW; our Spanish Legal Teams are on standby to advise if your mortgage carries these clauses and our reviews are carried out free of charge.

Mortgage – Cap & Floor Clauses

A floor clause (or “cláusula suelo” in Spanish), usually entered in a financial agreement in relation to a cap floor, refers to a specific condition generally included in financial contracts, principally loans.

As a loan can be agreed based upon fixed or variable interest rate, the loans agreed with variable rates are usually linked to an official interest rate (in the UK the LIBOR, in Spain the EURIBOR) plus an extra amount (known as spread or margin).

Thus, what the mortgagee actually pays the bank every month is: a portion of the capital plus the benchmark or interest reference plus the spread. The latter (the spread) is, from the bank’s perspective, the profit for lending the capital; from the borrower’s is the price of using the monies borrowed.

Since the parties will want some certainty on the amounts actually paid and received in case of sudden and sharp movements of the benchmark, they can, and usually do, agree a system by which they are sure that the payments will not go too low (on the bank’s side, so they count on a certain and regular profit) or too high (on the borrower side, so the payments keep in an affordable level all throughout the mortgage term).

This system of limitation of the interest getting too low or too high, is that one known as “floor and cap clauses”.

Stage 1

These schemes have been used for many years in banking, and have been deemed as a useful way to keep the risk and uncertainties of the signing parties of a mortgage at bay. However in Spain, from around a decade ago, the original scheme has been corrupted to a point in which it has taken the Spanish Supreme Court to issue a Judgment in order to protect the consumers / mortgagees from the constant abuses that the banks inflicted on them.

The problem started around the years between 2001 and 2003. In the beginning of the last decade thousands of properties were sold every year in Spain (many of them to foreigners, as second residences), and thousands of mortgages were agreed to finance those purchases. In a crazy push to gain new clients, the local banks had to look for fresh ways to attract new borrowers.

In the midst of what is now considered irresponsible lending, a way to appeal to the new applicants, to all those looking for offers on how to finance their new homes, was to offer mortgages with a ridiculous, almost symbolic, interest rate, linked to an also very low margin – ads reading “mortgage at EURIBOR plus 0.5 %” or very similar were typical for almost a decade.

The competition between the banks was fierce in offering lower and lower rates. Since the EURIBOR, or benchmark, was low (it started the decade at 3% and ended up in 2010 below 1%), a quick calculation provided attractive figures: the repayment costs virtually nothing in the medium and long term, and with a lease it would be a profitable investment.

Stage 2

At this point very few borrowers, if that, would read the whole mortgage agreement before signing it, let alone having it translated and fully explain by an independent accountant or solicitor. There were a couple of years at a fixed rate, typically 3.5 %, but that was just the beginning – for 15, or 20 or more years the monthly payment was going to be ridiculously low. The buyers jumped on these offers – at the peak of the property bonanza (between 2004 and 2006) one million properties were sold every year in Spain.

After signing the agreements, the borrowers started repaying the loans for the first couple of years, at the initial fixed rate, expecting a drastic reduction of the payments once they go to variable. However, after some years into the term of the contract, the monthly repayments went up. They called their banks managers commenting on a mistake in the last month’s charge, but the reply they got was that there was nothing wrong with the charges – these were correct, all made as per the agreement.

Stage 3

It was in the agreement. Going down to the smaller print of the mortgage deeds, conveniently hidden amongst the endless and tedious legalities (a mortgage agreement has normally about 50 pages of complex verbiage, hard to understand even for a Spaniard not completely familiar with the legal jargon), there was a clause that simply was to make that godsend clause reading “EURIBOR plus 0.5%” totally futile, completely irrelevant, as good as not actually entered in the contract. This was the floor clause.

No one mentioned it to the borrowers initially, but somewhere in the contract there was a clause setting the floor and cap levels. The floor clause meant that regardless how low was the benchmark or official mark linked to the mortgage (EURIBOR), there was a floor in place: a minimum interest to apply to the mortgage every month. For instance, if the floor clause is set at 4 %, it didn’t matter that the rate of reference rate would go down to 1%, because if the sum of this rate to the spread gives less than four, then 4 % would be the interest to pay.

The borrowers complained about it to their banks in two ways, closely related one to the other: firstly, it is unfair that they do not benefit from the cut in the interest rates of the reference rate (the EURIBOR has been below 2% for 4 years now, from 2009 to 2013. Currently it’s 0.5 %); secondly, it is there in the agreement, but nobody explained it clearly to them. However, the banks refused firmly to discuss it, retorting in all cases to the same reply – you signed the agreement freely, and now it’s final in all its clauses enforceable, there’s nothing they will do about it.

The Aftermath

Since the banks rejected even to consider discussions with their clients, so the claims started to reach the Courts, profusely, and all based on the same grounds; that something essential to the agreement, such as the cap and floor clauses, should have been explained precisely and more into detail, not left in a clause towards the end of the contract.

The first Judgments were dubious – it was a new circumstance, a dispute based upon complex, unique financial terms and conditions. Some Judges ruled favoring the banks – after all, there was an agreement and witnessed by a Notary.

However, the Higher Court, and eventually the Supreme Court, all ruled in the same direction in their pronouncements of the appeals (which came by the thousands): the clauses are obscure, very difficult to understand, hence they must be declared abusive and taken off the agreements.

Even if there was an agreement in place, and it was freely signed by the borrower, the general rules on financial contracts state that the essential clauses of an agreement (and the applicable interest rate is one of them) must be discussed individually and must be stated clearly in the document to sign.

Stage 4

The Supreme Court issued a historical Judgment (May 9th 2013) ruling illegal all floor clauses entered in the mortgage contracts from BBVA and two other Spanish banks. The conclusions of this document works like a handbook on the use of floor clauses in fair contracting:

The Courts must protect the weaker party in an agreement, usually the consumer against the lender. A clause is abusive when: a) it limits only the rights of the consumer, and b) it has not been negotiated and discussed individually between the parties.

The professionals (the banks) must prove that they offered to discuss the essential clauses individually, and has offered the consumer (the borrower) alternatives.

Any clause deemed abusive must be taken off the agreement, retroactively, i.e. not from the moment it’s declared abusive, but from the date the contract was agreed.

So you think you have a claim… what next?

There are too many misconceptions surrounding the law and the relevant court procedures that fall beyond the scope of this article. However some of the practical points on the relevant procedure for money claims are covered here.

Watch the time!

Firstly you need to remember there is a time frame within which a claim may be issued. So as soon as there has been a breach of the contract or a problem has occurred leading to a valid claim, seek legal advice immediately and don’t watch the time go by. The time limit for issuing a claim in most contract cases is 6 years starting from the date of breach. The relevant time frame within which a claim must be issued is dependent on the nature of your claim and it may not always be as long as 6 years. As an example for judicial review, the limitation period is only 3 months!

Which court?

The second factor you need to be aware of is where you should issue your claim. In civil matters, the relevant courts are: the County Court and the High Court.
As a general rule, money claims below £100,000 and in case of personal injury, those less than £50,000, should be issued at the County Court. Claims above that amount should be issued in the High Court.

There are numerous sub-divisions within the High Court dealing with different types of claims. These include:

➢ Administrative Court

➢ Chancery Division

➢ Queen’s Bench Division:

• Admiralty and Commercial Court

• Mercantile Courts

• Technology and Construction Court

You also need to issue the proceedings in the district in which the Defendant resides or carries business rather your own hometown. Failure to do this could lead to the transfer of the claim to the Defendant’s location.

Costs

Going to court is expensive, regardless of whether you have a legal representative or not. For any claim issued at the court you will be required to pay a fee. The greater the amount you are claiming, the higher the court fee will be. There will also be the extra costs for travelling and preparation for the case etc. Be sure to calculate all the costs before starting your claim to ensure it will be worth it!

Pre-action protocols

A big part of civil procedure rules relates to the steps that need to be taken before a claim is issued at court. This often includes attempts to resolve the dispute through alternative means rather than recourse to litigation. This could also include pursuing any complaint procedures set by the Defendant or going to the ombudsman where applicable. The court will often require evidence of compliance with this step and in some instances claims have been struck out due to failure to comply with the pre-action protocols. Further, in some cases, such as in personal injury claims, there is a formal and strict pre-action course to be followed. You should consult the relevant procedures applicable to your claim prior to issuance of a claim at court.

The paperwork

Once the above has been complied with and you have identified the correct court for issuing your claim, the battle starts on paper. The amount of paperwork in a case is immense and almost everything you file to the court must be in three copies. One copy will be for the court, one for you and one for the Defendant. So if your claim is against more than one person, you must ensure each of the Defendants are supplied a copy.

The claim form is the starting point where you set out the contact details of yourself and the opposite site. It must also set out the nature of your claim, the facts you rely on and the amount that you are claiming. A separate document setting out the particulars of the claim is often attached to the claim form. This will be more detailed and contain the exact dates and grievances. However, when drafting the claim form and particulars of claim you must consult the Civil Procedure Rules (CPR) to comply with the required format. Otherwise the court could reject the papers and send it back for amendments at your cost.

Written Battle to be continued

Once your have submitted the claim form to the court, then the court will send it to the Defendant. After receiving the papers, the Defendant will have 28 days to send a defence in response to the allegations set out on the claim form and the particulars of claim. Then you will have 21 days to reply to the defence. Although the reply is optional the defence is compulsory and if the Defendant remains silent then you may win by default.

After the claim form and defence are filled, both parties will need to submit, questionnaires about the length of the case, evidence and time needed etc. The parties will also need to disclose and exchange any evidence and documents relevant to the case to the other side. This includes the evidence you intend to rely on in court and any document which is against your case. All documents must be disclosed and shared.

The hearing

The court date could be as long as a year (if not longer) after you first issued your claim form. Not only are the courts always busy but also the extensive preparation described above is extremely time consuming. On the day of the hearing various evidence will be assessed and both parties will present their case before a formal judgement can be delivered. There are numerous rules that need to be observed and legal advice should be sought prior to the trial day.

Post Judgement

One of the greatest misconceptions is the view that once you have ‘won’ and have a judgment in your favour, then you will receive a cheque from the Defendant before your triumphant departure from the courtroom. Sadly this could not be any further from the reality. Enforcement of judgment is crucial post-trial.

It is important to be aware that the court will not automatically seek to enforce its judgments. There are various methods of enforcing judgments set out in part 70 of the CPR. This can be a complex procedure and the suitability of the method employed depends on the nature of the judgment being enforced. It could be time consuming and costly to pursue enforcement but this will be the last hurdle before your judgment is satisfied.

Judgment creditors can for instance satisfy their debt by taking control of the debtor’s goods via a warrant of execution and/or through obtaining a charging order over the debtor’s land or securities. But be aware that these procedures will not be free and there is a cost involved! Also have the financial position of the Defendant in mind. If the Defendant has gone bankrupt or for any other reason is unable to satisfy the judgment, then enforcement measures will be fruitless.

Conclusion

The main things you should remember when it comes to court procedures are the relevant expenses, time and compliance with the mandatory formalities. The battle between the parties is mostly in written format before the court hearing. In addition once you have obtained a favourable judgment that does not conclude the proceedings. You must seek to enforce your victory in order to recover the money claimed and satisfy your judgment.

By:

Faegheh Jenabi
MLaw BPTC
CPC Worldwide Ltd

Words of Kindness

Here at CPC our team work hard for days, weeks and even months on end to get satisfactory results for our clients. As it is our job, we do not expect anything in return; it is however, great to receive some gratitude and words of kindness. Here’s what some of our clients had to say to us…

“Nikki, you got my money back in 3 days. I tried for 3 months” – Arun

 

“Everything is so clear when we talk to you – thank you” – Linda C

 

“4 years of constant support. The CPC team always make the time to talk to us” – Iris & Billy

 

“Many many thanks for the hours of reassurance you give us” – John & Rosemary

 

“Money back in 24 hours, your team is genius” – Steve D

Choosing Legal Help

If you have come to find yourself in a sticky situation or you require legal assistance for the first time, you may be stuck on where to go, who to see or what to do. In this article we look at the options available to those in England who are seeking to instruct a law professional or obtain some legal advice.

Legal assistance can often be pricey; it is vital that you research the level of legal help you need. In some instances a legal executive may be able to handle your case and produce outstanding results, in more complex cases it often proves more effective to use a solicitor, barrister or even a whole legal team.

Legal executives often specialise in one small area of the law; they do much of the same work as solicitors such as conveyancing, criminal law, probate, civil litigation and more. Legal executives are governed by CILEx, the Chartered Institute of Legal Executives; they have around 20,000 members, each of which are independently regulated by ILEX Professional Standards.

In order to qualify as a legal executive, aspiring candidates must undertake a series of training courses and pass qualifications relevant to the area of practice in which they want to specialize. Despite often having similar knowledge to solicitors around their field, legal executives often tend to be cheaper and are being used more frequently now than ever.

If you were to look for a slightly more advanced legal practitioner, a solicitor could be the appropriate option. All qualified and practicing solicitors are regulated by a governing body, the Solicitors Regulation Authority (SRA). Solicitor’s main duties include general aspects of giving legal advice and conducting legal proceedings.

Prospective solicitors must complete a law degree and a Legal Practice Course (LPC) in order to complete “phase 1” of their training; Once the LPC has been passed the would-be solicitor must undertake 2 years apprenticeship, commonly referred to as a training contract, with a firm who are entitled to train solicitors.

Solicitor’s fees can often be quite high, if you are to get true value for money you must make it worthwhile and hire a specialist in your required field. It is often the case that in civil matters, a good solicitor can negotiate a deal with a desired outcome, without going near a courtroom.

If you are looking for a specialist advocate to represent you in the courts, you may be better off with a barrister. Barristers tend to specialise in one area of law, they often hold a fantastic knowledge of their field and can often be called in to advise solicitors on their cases too.

A barrister must go through a law degree, much like a solicitor before they can qualify. Once the perspective barrister has completed a law degree they can choose to study a Bar Professional Training Course (BPTC) instead of an LPC, once this is passed they are eligible to be called to the bar. Training however isn’t finished there, before gaining qualified status, trainees must complete a pupillage – 12 months practical training with an experienced barrister.

All barristers, regardless of their specialism are regulated by the Bar Standards Board, a division of the General Bar Council. The actual work carried out by a barrister is heavily dependant on the field in which they work. For example, criminal law specialists would spend most time prepping cases and presenting in court whereas those working in other fields may have to do more office based advisory work.

Although barrister’s fees are often amongst the highest charged by legal professionals, if you have been subject to serious criminal allegations or involved in a high profile financial dispute, it could be worth paying a little extra for a professional’s expertise… Selecting the correct assistance could be the difference on weather or not you get the outcome from your case that you desire.

If you are seeking guidance from a legal professional, why not email on of our team on info@cpcworldwide,co.uk? We could help you find out what level of assistance you require and introduce you to the right person for the job.