'Law of the Coast' - not pirates' law, it's the Spanish Government

by John Sharp on 2 Jun 2010 'Law of the Coast' - not pirate's law, it's that of the Spanish Government.

Owning a marina berth in Spain or other Mediterranean countries has long offered a good investment and an attractive lifestyle for sailors who enjoy cruising the beautiful waters of the Med.

But recent implementation of Spain's 'Law of the Coast' puts this in jeopardy.

UK-based Genus Marine – Europe’s leading marina berth broker – has recently confirmed that Spain’s much-feared but seldom implemented ‘Ley de Costas’ (Law of the Coast) is now rearing its head in the marina berth market.

‘Ley de Costas’ is usually associated with groups of ex-pat property owners desperately trying to fight their way through miles of Spanish red tape to hang on to their seaside villas. During the last few months Genus Marine has noticed a brand new minefield developing in the Spanish legal system. It now appears that the long-ignored law is reaching out to blight marina developments too, slashing the lease periods and values of marina properties and berths at a stroke.

For marina operators the law was introduced in 1988 with the intention of limiting the concession (or lease) period for all new marinas to 30 years. But, as is the case with so many Spanish property laws, there are a lot of ambiguities and the law has, until now, never been enforced. However, in the last month, the experts at Genus Marine have seen the Andalucian authorities starting to apply the original 2018 end date to all marina concessions, even those signed prior to 1988.

Previously, during the purchase of a marina berth in Spain, a local notary would generally re-draft the existing property deeds with the necessary changes of ownership and submit them to legal record. However, this paperwork is now being re-routed to central government in Seville. On their return, the deeds have had their concession end dates changed to 2018, the original termination date of the long-ignored ‘Ley de Costas’.

Genus Marine has already witnessed the process in Estepona, Duquesa and Sotogrande and the feeling – among berth owners at least – is that the law will continue to be applied in Andalucia and spread to other coastal areas in due course. If it does, berth owners could see their ownership period cut drastically short, which will have a profound effect on its value. For instance, berth owners in Sotogrande could have 39 years slashed off their original 2057 expiration dates; in Puerto Banus owners could face a loss of 51 years off their original 2069 lease expirations.

“In January alone, at least seven berth sales fell-through in Estepona, Duquesa and Sotogrande,” explains John Brewster, Director of Genus Marine & Leisure. “But still the port authorities and berth vendors are saying that there is no problem. However, prospective purchasers and their lawyers are discovering that the long-flouted law is now being enforced and are backing-out of sales due to uncertainty about the actual length of the lease they are purchasing.”

“In Spain, the law has existed for 22 years. But still, none of the owners, the port authorities or the government knows what the outcome will be. A few years ago ‘Ley de Costas’ started to be enforced in the Balearics – and they still don’t know which way it will go.”

“This development is typical of the inconsistencies we’ve witnessed throughout the Spanish legal system during the last 25 years of doing business in the marina berth market,” says Brewster. “It is important that concerned owners contact their solicitor and organise a meeting with their marina operator to ensure that the wheels of protest are put in motion as it’s the port authorities that need to clarify and change the situation with the Spanish government.”

UK berth owners who are currently caught-up in the Spanish system are also being urged to contact their local MP to ensure that an official government response can be co-ordinated effectively. A full list of all the UK MPs is available at http://www.parliament.uk/mps-lords-and-offices/mps/ it gives telephone numbers, postal and e-mail addresses.

“Despite the ogre of Spanish bureaucracy, the current situation is providing a huge opportunity for investors willing to bet against the outcome of the law,” explains Brewster. “Due to the uncertainty, some owners are bailing-out and are having to accept well below perceived market value for their berths – as a result there are some major bargains to be had for those willing to take the risk.”

The Spanish legal system has long been complicated by an apparent lack of consistency between the existence of a particular law and its actual enforcement. Take for example the Europe-wide ban on smoking in public places. In Spain, this became law in January 2006. However, due to apathy from the authorities, owners of public places and the public alike, the law has still never been enforced.