ETW Scam - The Real Estate Developer Company Dissolution Scheme

Dear all,

I am not sure if I want to post this here without concrete company names, but personally I do not have all the documents and also do not want to name any names in the ongoing case. I hope the thread will be approved kept this general, as I find the topic interesting and it will probably help other owners or interested buyers as well.
So, now it’s about my condominium. I bought it in 2015 from a developer (hereinafter developer). Completion was in 2016, when I moved in.
The purchase contract was with a GmbH specially founded for the project, which was a 100% subsidiary of a well-known large development company. Actually, the parent company (hereinafter PC) was responsible for the planning and supervision of all trades, the people you dealt with were all directly employed by the PC (or possibly commissioned as freelancers?) and had, for example, email addresses with the domain of the PC.

At the acceptance, a few defects in my private property were complained about and most were remedied. What remained was not much (possibly worth 500 EUR).
For the acceptance of the common property, an independent expert (however commissioned by the developer/PC) was appointed, who discovered so many partly serious defects (including the roof), which, according to his statement, will cause us problems in the future, that the owners’ association refused acceptance.
There was back and forth with defect notifications, offers to talk, lawyers, and so on. In the meantime, the developer GmbH was dissolved and now the second legal successor, an investment company, is our opposing party. Currently, there is a preservation of evidence procedure with this investment company, whose lawyer only used delaying tactics, and most recently a mediation appointment ordered by the judge was canceled due to the lawyer’s failure to appear.
Now a court date is scheduled (February 21) and it is foreseeable that our lawsuit will probably be granted in absence. Since it involves a sum of over 300,000 EUR, it is to be assumed that the investment company will go insolvent.
Our owners’ association as well as the administrative advisory board, which also includes a real estate lawyer, say there is nothing to be done.
I imagine, wait a minute, if it is obvious that this developer GmbH and its legal successors were actually only there to get out of liability for warranty and defects, so ultimately the liquidation and finally insolvency of the respective companies with outstanding receivables was accepted, if not even intentional, can one then not go after the respective managing directors or founding shareholders personally for fraud?

What is your assessment here? Does anyone have experience with this?

Thanks and regards

Tolentino

can't you then go after the respective managing directors or founding shareholders personally, because of fraud?

Fraud means intent. Can you prove that? If not (which I strongly assume), swallow your anger against the managing directors and put your energy into the dispute in court. P.S. What do you think the fraud was? Was money taken and the apartment not built or something like that? In your case, it's "only" about defects. It's nitpicking, I know, and it won't help you or your anger either.

So there are defects in your apartment amounting to 500 euros, but defects in the entire residential complex amounting to 300,000 euros? Basically, it is not forbidden for two GmbHs with the same shareholders and managing directors to be related in a direct line (100% subsidiary/parent), and property companies in the developer business exist precisely so that the potential insolvency fate of a community of property owners does not drag down all sister companies. I would only see a punishable fraud here if it concerned construction defects that were deliberately caused to the properties out of greed (cheap steel, poor-quality concrete, omitted moisture barriers). If fraud exists, insolvency does not protect those responsible.

You should ask this question to a specialized lawyer.

The problem is always the burden of proof and you have to advance costs. Therefore, you should speak with your legal expenses insurance. If you (like me) don't have one, it can quickly become very expensive for you.

Experience with such proceedings is generally good for the fraudsters – and lengthy, expensive, and frustrating for the plaintiffs.

It is about the common property here. And yes, I also think that the burden of proof is problematic. But it is not simply a BT GmbH that was founded and liquidated after the completion of the project, rather the GmbH was liquidated before the acceptance of the building to be completed and merged into a new GmbH, and then the same thing happened again. Against the GmbH now existing as legal successor, there are 3 proceedings concerning defects in new construction projects. The procedure is already ongoing, as a co-owner I can basically only wait, but it is known that the MF has done something similar with other projects before, back then the legal successor was ultimately a British Limited, which was then simply sent into insolvency: contribution of 1 GBP. So it is not just a protection against the insolvency of the parent company, but it seems to be a method to delay defect claims and make them unenforceable through reorganization. They are playing for time, maintaining liquidity through salary payments. It certainly will not work with our case, but maybe the mastermind can somehow be caught in the overall construct? I just find it shocking that this is so easily possible, from my point of view this is a loophole in the law.

Everyone here can surely sympathize with you; but it doesn't help you. Being right and getting justice are two completely different things.

And even if you do get justice; there will be no money left to compensate you and you will be stuck with all the costs; liability lawsuits have a very hard time not only in Germany. Even large organizations struggle to successfully carry through their lawsuits.