A lot to learn from German real estate

n Germany the floor cannot be delivered in exchange for eliminating the debt that originated. There is no dation in payment. But beyond this coincidence the analogy ends: all the context that has given rise to the controversy in Spain, that is to say, an irresponsible economic policy – the neocaciquismo of the brick of Francoist origins and that the democracy perpetuated – that favors the speculative construction, and a population pushed to the purchase and the indebtedness, they do not occur in Germany.

The dation in payment does not exist, but if the debtor has returned an amount equivalent to or greater than that which they had lent, the debt is considered settled. It will be a judge who will decide. A judge in a country with an agile and operational justice, without the slightest relation to the faulty Spanish judicial turtle. Another important nuance is that in Germany there is the possibility of a declaration of private insolvency.

A natural person can be declared insolvent as a legal entity

Personal insolvency establishes for the insolvent the obligation to dedicate all the income that exceeds the existential minimum to maintain himself, to pay his creditors and for a maximum term of seven years, after which the debt is extinguished and the person can start over. Thus, the declaration of insolvency of the natural person, a figure that does not exist in Spain, is neither a ruin nor a life sentence for the indebted. At most seven years of hardship.

The comparison will be incomprehensible without taking into account the differences in context. That the condition of the rescue of banks, that is to assume their debts with public money, is not to forgive the debt of their mortgaged and bankrupt clients as a result of political and financial irresponsibility, is something that challenges the most elemental sense of decency. No German politician would dare to raise something so blatant.

German banks, which have been great accomplices to many property cases of abuse abroad, will never finance 100% of a flat in Germany. The buyer shall demand at least the deposit of 20% or 30% of its value. And before giving a loan, the applicant’s income will be examined: if the relationship between his salary and the mortgage payment is disproportionate, the credit is denied or more equity capital will be required- this one is worth trying.

Equally incomparable is the situation of the real estate market in which Spanish private indebtedness was cooked. The German market is much more transparent and less prone to speculation. It is more difficult for property prices and rents to become independent of the fundamental data of the economy. If you sell your home before ten years of having acquired it, your surplus will tax you.

Unlike a country with expensive rents and little supply -which together with cheap money pushed the citizen to buy housing- in Germany, there is traditionally an affordable rental market and a public power that practices a much more reasonable balance than Spanish between the rights of the tenant and those of the rentier owner. Each city publishes annually its so-called ” Mietspiegel “, the scale of average rental prices per square meter, with what is known immediately if there is abuse. Rentals cannot be raised above that scale. A trick of the owners to do it, declaring “reforms” in the house that justify increases, has just been nipped in the bud in a particularly speculative Berlin neighborhood (Prenzlauerberg), by the drastic decision to prohibit such reforms.

In Germany, there is also a long tradition of housing cooperatives

social housing construction and wholesale entities specialized in housing rental. For all these reasons, most Germans live in rental housing and are not obsessed with the property that is characteristic of the Spaniards. The sum of that with a state of law between works and is enforced is what marks the essential difference between the primitive and barbarian Spanish panorama.

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Exhaust scandal: Investigators may evaluate VW files

Emissions scandal constitutional court allows evaluation of internal VW files

Image result for emissions scandal volkswagen

  • VW failed with the Federal Constitutional Court with a complaint against the confiscation of internal documents.
  • The court pointed to a “high potential for abuse” that would exist if the protection against seizures were put too broadly.
  • So it probably will not allow companies to hide sensitive documents in law firms.

The VW group has finally failed with the attempt to deny the investigators insight into extensive internal documents on the exhaust gas scandal. The Federal Constitutional Court has declared the confiscation of documents and databases at the US law firm Jones Day by the public prosecutor’s office Munich II to be lawful.

The firm was commissioned by VW in September 2015 with internal investigations. At that time it was about the procedure in the USA for exhaust gas manipulation of diesel vehicles. Meanwhile, the public prosecutor’s office Munich II had taken up investigations into the diesel affair in connection with the VW subsidiary Audi – and ensured in March 2017 with a search warrant of the Munich District Court in the offices of Jones Day numerous files and electronic data. They stem from the internal survey of several hundred employees as well as internal emails and documents. VW and the law firm fought against the action – arguing that the data was protected by the lawyer’s secret.


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The Federal Constitutional Court finally rejected the complaints of the company and the law firm. Essentially, this is a ban on seizure, which is regulated in the Code of Criminal Procedure – to protect the relationship of trust between lawyers and clients. In the criminal courts as well as in the legal literature, however, this ban is interpreted narrowly – a reading that has now been confirmed by the Federal Constitutional Court. An absolute ban on obtaining evidence from lawyers would significantly affect the effectiveness of law enforcement, argued the judges.

It is true that the relationship of trust between the defense lawyer and the defendant in a specific investigation is particularly protected. However, VW was not in an “accused” position at the time. The fact that the subsidiary Audi was the subject of investigations is not sufficient for this, as well as the expectation of future criminal proceedings. Above all, the court pointed to a “high potential for abuse” that would exist if the protection against seizures were put too broadly. Which means that otherwise companies could hide sensitive documents in law firms.

Clear signal that companies should cooperate with authorities

The investigating authorities had feared that without access to the files of Jones Day the exhaust gas scandal can not be cleared up. Since the bribery unveiling ten years ago at Siemens, it’s common for corporations to hire law firms on corruption, tax fraud, fraud, money laundering, and other cases to find out why and how things went wrong. The lawyers then scour emails and other files, interview employees and finally present their results. According to Siemens, this was also the case with the VW subsidiary MAN, with Rheinmetall and Thyssen-Krupp, with Airbus, with various financial institutions all the way to Deutsche Bank – and finally even with the German Football Association (DFB) because of the affair surrounding the 2006 World Cup ,

The affected companies had usually cooperated with the investigation authorities for years and provided their own investigation files. Recently, however, it had become apparent that companies and associations are passing on withholding the files from the investigators. In this respect, the decision of the Constitutional Court is a clear signal that companies should cooperate with the authorities.


Audi – the germ cell of the exhaust gas scandal?

Audi - the germ cell of the exhaust gas scandal?

Long played the diesel affair only at VW – for a good reason. In no case, the scandal should be an Audi scandal. But now it could turn out that everything started there. 

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