I wrote a while back about a “Federation” I spotted, called the Federation of British Estate Agents in Spain, which was supposedly setup to regulate “British” estate agents in Spain. This initially seemed, to me, to be a good idea, but upon investigation I spotted a few things which put my hackles up. Here’s the previous articles:

http://www.davidjackson.info/2008/federation-of-british-estates-agents-in-spain.htm

http://www.davidjackson.info/2008/federation-of-british-estate-agents-in-spain-2.htm

You can see the website of the company involved at www.fbeas.com.

These posts were picked up by some other blogs and resulted in an interesting thread over at Spanish Real Estate Forum, which ended up being one of the most popular ones on the board, over 13 pages long. While this proved popular, this week it mysteriously vanished off the forum, without explanation. I suggest you check out Google Cache (here) to see it.

The basic issue is, and I stress that I am not implying in any way that any of the companies or people involved are participating in anything illegal, is that the Federation is actually a multi listing service which allows real estate agencies to share properties for a fee. However, this is hidden behind a facade of being a not-for-profit organisation that is attempting to regulate the industry, when in reality it is a limited company called BRIRES S.L.

Now, first of by using the word “Federation” in the title (Federation of British Estate Agents in Spain) they are implying that they are a Federacion, or Federation. A Federation, or Association, under Spanish law is a properly constituted not for profit legal entity, which is regulated under certain laws and guarantees -  the Ley Organica 1/2002 (22 de marzo), which controls not for profit organisations under Article 22 of the Constitution, and, for Federaciones or Asociaciones constituted in Andalucia, the Ley 2/2006, (23 de Junio), de Asociaciones de Andalucia (even if they are national in nature) For Associations constituted in other autonomous regions different Leys apply, although they are all much the same in nature.

What this means is that under Spanish law, an Association or Federation is a legal entity in the same way that a limited company is a legal entity, although it’s a lot easier to setup up (you just need three sponsors, the articles of constitution and the aims). But, it is registered, along with the board of directors, sponsors and articles of association in a central registry and must obey certain laws in order to give the public reassurance.

The main difference between an Asociacion and a Federacion is that the formed is composed of physical entities, whereas the latter is composed of legal entities. So if you have a group of neighbours with a common aim you setup an Asociacion, if you have a group of Asociaciones or companies you setup a Federacion. So you may have several sports teams in different villages, each one being an Asociacion, but if they all group together they can form a Federacion. With all the rights and responsabilities that come with this. I will henceforth use the term Federacion without being too picky about the legal niceties between the two, as we are talking about a Federation here.

Now, you setup a Federacion to defend your rights and promote your cause. It is non profit making, any income is supported by the group and used to further the aims of the group. It does not pay taxes (except in certain cases) but is not supposed to run profit making activities (with the exception of fund raising), and cannot distribute profits back to members or directors. It has no “owners” (only founders) and has a clear voting structure that allows for the removal of directors, etc. Under English law it would be a charity.

A limited company (an S.L., sociedad limitada, or a S.A., sociedad Anonima), on the other hand, is the opposite – it is a profit making vehicle that is designed to make money and distribute that wealth among its shareholders. Owned by certain named people and with a central person (the Administrador) in charge.

These are titles. You can no more, under Spanish law, call yourself a Federation if you are not then call yourself a SA you are an SL – by doing so you are claiming to be a different type of organisation. It’s like a limited company pretending to be a PLC, or a charity. I’m told that the FBEAS argument is that they are using the English word “Federation” in their trading name, so it’s legal. Frankly, I doubt it, as a court case some time back in Malaga ruled that a company trading under an English name that included the word “Corporation” had intent to deceive.

So straight away we have a conflict of interest in the case of the Federation of British Estate Agents in Spain. It claims to be non profit making organisation, but is run as a profit making organisation. So it has to charge I.V.A. on all income, and pay tax on all earnings. It claims to be a regulatory body, but as a limited company it has no legal power to accept subscriptions nor enforce regulations. I would consider that what it is doing is basically leasing its logo to companies in exchange for a payment of 175€ a year. After all, if the company running this “Federation” declares a loss for three straight years it’s closed down by the Registrar of Companies – it is obliged to generate a profit year on year, a profit that is then handed back to it’s shareholders.

We then come to the MLS, the Multi Listing Service part of the business. This is a service that provides, in exchange for a fee, properties from other estate agents that you can market under your own brand. It’s a popular idea, as it allows smaller estate agents access to a larger property portfolio. Nothing wrong with it, and Brires SL charges a fee for belonging. But, it’s a conflict of interest. “Members” of the Federation are paying to list their properties on the MLS and market other peoples properties. How can we be sure that the Federation will expell a member for breaking its articles of association if that member is contributing a large number of properties to the system and selling other peoples properties? The simple act of expelling a member could give the whole network a crippling blow from which it would not recover – a network that is receiving money.

“The FBEAS actively encourages the highest standards in real estate practice. Its unceasing aim is that the practice of real estate in Spain be recognised by the Members and the general public as a profession and that its Members be respected and trusted by all.” (From the FBEAS website – http://www.fbeas.com/)

“As a Member you will be permitted to use the letters FFBEAS, MFBEAS or AFBEAS after your name depending on the level of your membership and carry and display the Federation membership card.” (http://www.fbeas.com/Join_the_federation.asp). Guess what? Maybe I’ll go copyright the word “FFBEAS”. Then serve you with a cease and desist notice. You’re an SL company that has no reason to use my trademark. Or maybe I’ll just start using the word FFBEAS in my real estate agency. (I don’t have one, by the way). No way you can stop me. You could if you were a proper Federation, as it would be registered in the Register of Associations.

Another thing that I’m doubtful about is the title. “British Estate Agents in Spain”. How do you qualify this? Who is a “British Estate Agent”? Do you need to be based out of the UK? Do you have to have a UK passport?

Complaints. Joe Bloggs the estate agent gave me terrible advice and as a result I’m €5000 out of pocket. I want to complain to the “Federation” whose fancy logo enticed me in his office in the first place (Hey! He has the letters FFBEAS on his business card! He must be legal!). How do I do this? There is no clear way to do this on their website, simply vague references to “formal complaints (received in writing)”.  Unlike the vast wodges of text dedicated to training or becoming a member. I’ve been suckered into Joe Bloggs Estate Agents, but the very organisation that made me trust him now don’t want anything to do with me.

7. Complaints and disputes

i).The complaints and disputes board will be appointed as necessary by the Directors of the Federation. They will oversee and adjudicate any formal complaints (received in writing), whether these complaints are made by members of the public against conduct of a Federation Member or indeed by one Federation Member against another.

ii). After due consideration, the board are empowered to:

a). Dismiss the complaint and take no action.

b). Issue a written warning.

c). Impose a financial penalty.

d). Impose a reduction in membership.

e). Issue a suspension notice.

f). Issue an expulsion notice.

(from http://www.fbeas.com/Code_of_Practice.asp)

But who… are the “Directors”? Are they the same as the Board? Doesn’t say anywhere on the website.

Here’s my points, summarised:

• This organisation is misrepresenting itself. It’s pretending to be a not for profit organisation when it’s consituted as a for profit organisation. It is pretending to be regulated under one legal jurisdiction when it’s actually in another. Clients who see that logo on the door may actually be swayed into making financial decisions without realising that they don’t have the legal cover they think they had.
• Monies received are being wasted. Members “subscriptions” actually go in the owners pocket and in taxes, when “members” may believe that it’s all being used for promotion of the market.
• It is missing out on public money and the many advantadges of being a proper association with many members.
• There is a lack of transparency. There are no explanations of how directors are appointed, who these people are, who can stand for membership of the board, etc. Oh, sorry, I forgot: it belongs to Bill, so Bill does whatever he wants with it.)
• There is no interest in communicating with the end clients. How do I register a complaint? How do I know what’s happening?
• There is a clear conflict of interest, by running an MLS for profit at the same time as a regulatory body.
• There is no third party control or auditing of this company.
• They are potentially enticing innocent “members” into deceiving their clients by misrepresenting their legal status.
• As a commercial name of a limited company (“Federation of British Estate Agents in Spain”, FBEAS, being the commercial name of Brires SL) I consider it to be against articles 5.G and 5.J of the Ley 17/2001, de 7 de diciembre, de Marcas.

I started off thinking that this was a good idea that was amazingly badly mishandled; maybe, I thought, old Bill Peterkin had a vision and just didn’t have a clue how to go about it. But at the end of a good long think about it, I’d say it’s just another attempt to take advantadge of lax Spanish laws for personal gain.