Developer mortgage during construction

[wendles]

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

[michaelbush]

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.

[kenny]

Hi Wendles,

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

[Aegean]

Originally Posted by wendles

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

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.

[jennifer.fordd]

Wendless,

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

[JMBroad]

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?

[Jim Zed]

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.