Are you having problems with your Investment in Cape Verde?
As specialists in tackling the problems which can arise with a property investment in Cape Verde, we are frequently contacted by frustrated investors who are concerned about or experiencing problems and delays with their property purchase and their resort developer. As a result, and over time, we have seen the same patterns repeated.
What is the problem?
The most common issue investors face with their investments in Cape Verde is the late or non-delivery of their property, particularly when buying “off Plan” properties on large unbuilt beach front resorts. It has become a common theme in recent years for resort developers to sell properties which will not be delivered for many years on the promise that whilst the properties are being constructed, the investor will benefit from receiving a guaranteed return every month from the developer on the money invested.
Advantages
This can be very attractive on the surface. In return for their capital investment, investors will receive payments from the developer whilst the off plan resort is being built. Thus, receiving a fixed ongoing income during the construction and also sharing in the capital growth of the property development itself. A “Win Win” deal for investors it would seem.
Disadvantages
Clients are completely reliant upon the developer finishing the project on time (or event at all) and are completely reliant on the developer honouring and paying to the investor the contracted returns.
The developer is claiming Force Majeure
Force Majeure is a French term and literally translates as “superior force”. In reality this means an act outside of the control of the person involved. Also referred to as an “act of God”. Developers – particularly in Cape Verde – have claimed various reasons for invoking the Force Majeure clause in order to avoid honouring agreements. Examples given by developers have been a failure to obtain planning permission, a failure to secure or obtain the next round of funding to finish the project, we have even seen developers claim the resort is being built on the wrong type of sand. None of these would constitute Force Majeure being claimed as a justifiable excuse by a developer for not delivering on their contracts with their clients.
The developer has offered to me an alternative solution
Developers, when no due payments have been made to an investor, will typically offer what appears to be a solution to the problem. The developer will often propose paying to the investor an increase to the present guaranteed return if the investor agrees to sign a new agreement which “shifts” the completion date further into the future. Therefore extending the delivery date. In the majority of cases we have seen however, once new agreements are signed or a Revocation Agreement is signed for a full refund, the new payment schedule is again not honoured. Or any payments that are made are made very sporadically. The “solution” therefore has actually removed the legal options for the investor as the developer is no longer in breach of contract and now has a few more years to deliver the property to the client.
What are your options?
The answer to this question relies to an extent on the objectives of the individual investors. Some are happy to remain in the investment for the long term and content to allow developers more time. The vast majority of investors however will have bought into projects specifically on the premise they will be receiving an income on their money whilst the project is built. Such schemes have been typically presented to investors by their own Independent Financial Adviser (IFA) solely on this basis. No investor should feel obliged to settle for anything other than what they originally contracted to receive and have the legal right to pursue the developer for any breach to their agreements. And to seek the enforcement of the agreed terms.
Recent case study
We have recently and successfully resolved a case for a client and recovered all of the monies which had been advanced to their developer in Cape Verde along similar circumstances to those above. More information on this case study can be found in the link below;