How conmen have dashed the dreams of co-op members hoping for houses

Roberto Carlos Toribio was single in 1999 when he chanced upon a flyer. It read: "Your dream come true. Live in one of the finest housing developments in the Madrid region: aluminum radiators, reinforced doors, tiled bathroom and kitchen, mixer taps..." For years he made monthly payments totaling 33,000 euros. They told him his apartment would be ready in five years. Now married with two children, he is renting in Morata de Tajuña, 32 kilometers south of the capital. The plot that was to house his building, which was supposed to have a pool and garage, is unchanged: a wasteland choked by weeds.

Cooperatives are characterized by being not-for-profit, ideologically independent, and respecting members' rights to information ? the same guidelines established by the pioneering cooperative association of weavers and artisans in Rochdale, England back in 1848. Around 1.5 million Spaniards have bought homes guided by these ideals since 1911. But the lack of credit, the appearance of construction firms posing as co-ops and out-and-out con artists have dashed the hopes of a generation of young people who, in the majority of cases, were hoping to buy their first home.

In the Madrid region, some 40,000 co-op members are waiting to get the keys to houses that are in the planning stages or under construction, according to official figures. Close to 40 percent of them have been waiting for over a decade, despite paying religiously, month after month.

What went wrong? Firstly, a general lack of knowledge about the housing sector led to the proliferation of gestoras, or administrators. Instead of springing from traditional groupings of labor unions or neighborhood associations, a new swathe of cooperatives appeared that were founded by these administrators, who grew to account for the best part of the co-op housing market. It is bad management (or bad faith) on the part of these administrators that has left thousands of people out in the cold.

The golden rule for the person in charge of this kind of project is not to buy plots without permission to build. A good number of companies failed to abide by that. The price of land with planning permission shot up in price by 600 percent during the housing boom, way above what was affordable (the Cooperatives Law limits the price of plots.) Paperwork is never ending when land has to be re-classified and patience runs out.

"Poorly managed projects take so long that the members stop paying out of desperation, drop out and demand their money back. The cooperative breaks up," explains Alfonso Vázquez, the 82-year-old president of the Confederation of Spanish Housing Co-operatives (Concovi).

There is a register of solvent, reliable administrators but those who trashed peoples' hopes of owning a home have names like CPV, PSV or PSG. The latter was run by David Moreno. Victims of his project (he raised 17 million) still protest at the gates of his home. The company that Moreno set up used its funds to sponsor Formula 1's Fernando Alonso and Getafe soccer club. Members have not recovered their investments and their attempts to sue the insurer have failed.

A bit further south, in Moraleja de Enmedio, some of the 1,200 young people who invested an average of 40,000 euros are sleeping rough on the ground where their building should be. They founded the co-op in 2001 but since then PGOU has been paralyzed, and their future along with it.

The General Labor Directorate has now published a guide for co-operative members that tells people how to look out for fraud. Above all, members must exercise their right to information, and stay up to date with permits, timescales and accounts. Some cooperatives had left all the paperwork down to the administrators, who levy a charge of between three and 10 percent for their services on the total amount invested.

Well-run cooperatives have delivered homes to 320,000 Madrileño families. But sometimes not even all the precautions are enough. Natalia García, 32, made sure she stayed informed and checked that Ofigevi counted on all the backing, banking guarantees and necessary insurance. Ten years later she still doesn't know what happened to her 40,000 euros.