Millions dispute in Bendinat: Why a court stopped work on a luxury conversion

Millions dispute in Bendinat: Why a court stopped work on a luxury conversion

What lies behind the construction halt and what consequences it has for craftsmen, investors and residents

Key question: Who bears responsibility when a large real estate project in Bendinat freezes due to payment disputes, and what gaps does the Palma on Trial: The Major Real Estate Fraud and the Question of Justice expose?

At its core the case can be summarized briefly: In February 2020 a developer agreed with a contracting company to convert a hotel in the affluent Bendinat neighborhood into exclusive apartments with sea views, garage and pool. Five months later, in July 2020, the workers put down their tools — the contractor complained that it had not been paid. At the time of the work stoppage the developer admitted that outstanding claims against him amounted to around €1.2 million; he set himself a payment deadline until December 2021. Shortly before that deadline the developer terminated the contract, citing technical deficiencies and increased costs. The result: a years-long legal battle that has now been decided by the appellate court, similar to Acquittal in Can Picafort: Supreme Court Overturns Conviction in Major Real Estate Case.

The court obliged the developer to pay a total of more than €3 million. The sum includes not only the outstanding services, but according to the judgment also the profit share of about €1.7 million that the contractor would have expected on completion. Crucial was that the developer had not sufficiently substantiated his allegations of supposed construction defects. A technical report proving serious errors was not available; the only person who claimed to have carried out such inspections did not appear in court. Instead, written admissions of unpaid services remain as incriminating evidence on the contractor's side.

The court explicitly pointed out that serious allegations about construction execution require a sound, independent technical proof. Without this, the claim of defects remains legally weak. It is also notable that an architect appointed by the construction company expressed doubts during the hearing about the thesis that the foundations were defective.

Which raises the question: What does the case say about the practice of large conversion projects on the island? Projects in sought-after locations like Bendinat on Mallorca are prone to tensions because high expectations from owners, investors and contractors collide. When payments stall, it affects not only company balance sheets but also local craft businesses, suppliers and the people who walk past the site in the morning and see excavators at a standstill.

A simple everyday scene: on a cool morning in Bendinat you can see vans with tradespeople parked at the access, taking cigarette breaks while the sound of the sea drifts in from the nearby coast. The site lights are off, palm leaves rustle, and the men discuss unpaid invoices. Such images repeat when large construction projects stall — the consequences remain local and tangible.

Critical analysis: The appellate court's ruling exposes a number of structural problems. First, there appears to be a lack of reliable safeguards for executing firms on large projects. Retentions, guarantees or escrow accounts would be protective mechanisms that apparently did not come into play here. Second, there is a weakness in handling technical disputes: when a developer alleges serious defects, the submission of independent expert reports should be mandatory before an immediate contract termination. Third, failing to participate in court or arbitration proceedings undermines the credibility of one's own allegations — technical findings cannot be replaced by assertion.

What has so far been missing in public discourse is the perspective of subcontractors and ordinary tradespeople. Reports on luxury real estate usually focus on investors and lawyers; we rarely hear how suppliers and workers wait months for payments. The role of local authorities has also received little scrutiny so far: what checks were made during the conversion? Were there sufficient guarantees for third parties? These are questions that concern residents and neighbors.

Concrete solutions that could move the island forward: firstly, mandatory financial securities should be required for larger conversion projects in sensitive locations like Bendinat — for example, escrowed payments or performance bonds. Secondly, contracts should stipulate clear procedures for independent technical inspections before a contract can be terminated due to alleged defects. Thirdly, speeding up arbitration and enforcement procedures would be sensible so that small contractors are not driven into years of uncertainty. Finally, public disclosure obligations for major projects could ensure that residents know early on who is liable and what happens if payments are not made.

In short: the Bendinat case is not an isolated incident but an example of how financial and contractual gaps can paralyze a construction project — with visible consequences for the island community. It is not only a legal dispute between companies; it is a test of how Mallorca's construction sector wants to deal with responsibility and transparency, as highlighted by 25 Million in Focus: Trial of Matthias Kühn in Palma and What the Island Should Learn. Who pays when things go wrong ultimately shapes the face of the coast — and often determines whether small businesses survive or are forgotten.