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Bank Repossessions in Spain: A Legal Perspective

Raymundo Larraín Nesbitt - Lawbird Legal Services
25th of June 2008

The amount of bank loan delinquencies has soared over the last months and it’s at levels unseen in more than 8 years, according to the latest figures of the Bank of Spain. The underlying causes are related to the economic crisis we are in: high levels of unemployment, the rising inflation, and the Euribor (used as a reference index in most of the Spanish mortgages) having reached a historic peak, something which translates into higher monthly repayments. Also, the strengthening of the Euro against other currencies such as the Sterling Pound or the US Dollar makes it harder for these currency holders to meet their monthly mortgage repayments in Euros. Falling property prices have also discouraged many potential purchasers as well as making it difficult for people to borrow against their properties through equity releases or life-time loans.

Eur vs GBP historic data (24-06-2008)

This fall in value means some people are not interested in continuing to service their mortgages as they have run into negative equity (meaning they owe the bank more than what their property is worth). It is a common misconception to believe that handing over the keys for the property will settle the matter with the lending bank. Although some Spanish banks have accepted this in the past (depending on each particular case and providing the borrower is not in negative equity) most do not any longer. In many cases, on doing this, many banks will be losing money as they realise your property is not worth in a public auction the value of the outstanding mortgage loan. This is basically what running into negative equity means.

Foreign home owners are concerned with what will happen to their assets back in their home countries if the bank refuses to accept the keys in exchange of the cancellation of the mortgage. While it used to be uncommon for Spanish banks to pursue debts abroad, on the wake of this new grim economical environment we are in, they are now forced to do it due to the alarming surge in delinquencies. 

Exactly How Can One Run into Negative Equity?

We have witnessed in the last months how some banks are actually just accepting the return of keys and keeping the property as repayment. However, this will only happen if there is no significant negative equity on the property. In this case you will have to sign before a Notary a deed by which the loan is terminated. It’s much more cost efficient for banks to just repossess the dwelling without having to go through the hassle and costs of a public auction which could take a couple of years. Avoiding a Public Auction also allows banks to waive setting-up financial provisions on their books to off-set the loss which doesn’t look good in the eyes of shareholders and investors.

Although it may seem difficult at first, the truth is that running into negative equity is surprisingly easy. In the following lines we explain how this can happen.

Drop in Property Prices

The bank, on deciding if they will grant you a loan, will command an appraisal of the property to issue their Binding Offer. This property will act as collateral of the loan. If this value is unrealistic and is above the actual market value of the property should there be a fall in house prices, such as now, then this property can be worth less than the loan it is guaranteeing. 

All mortgage contracts in Spain have a clause by which if the value of the property falls below 20% of the appraisal value the bank may request at their own discretion additional collateral to offset the financial shortage. In practice banks seldom opt to enforce it but they could legally.

In the event the bank seizes the property, it can auction it in a Public Auction.

Public Auctions Mean a Further Drop in Property Prices

As the influx of repossessed properties increases in the near future banks will eventually be forced to go through a Public Auction. In these auctions the value fetched by properties can easily fall below 50% of the market value, which would mean that even if the bank sells the asset in the auction the debtor will still owe the bank the balance of the loan. To this balance the legal fees of the bank’s lawyer and the associated costs of the seizure process must be added.

But wait, I have already paid X% of the mortgage capital during the equivalent period of time!

Well, I’m afraid you haven’t! If your mortgage uses the French repayment system (as most of the mortgages granted by Spanish banks do), then you will only have paid a small fraction of the mortgage capital. The reason is that with the French system you pay interest-only during the early stages of the mortgage, and it gradually shifts to capital-only following a lineal sliding scale. This system allows having monthly payments that are invariable throughout the life of the mortgage.

French vs German Repayment System. Source: De Finanzas

Extent of liability

Following article 1911 of the Spanish Civil Code on signing a mortgage deed you will be held liable with all your current and future assets. The mortgage is only a guarantee subject to the financial loan acting the property or underlying asset as collateral.

The above has huge legal implications which borrowers ought to understand fully on signing a Spanish mortgage deed. This would mean that if you default on servicing your Spanish mortgage, the bank can actually seize the property acting as collateral. If you fall into negative equity it, the bank is entitled to pursue you for the outstanding debt even in your home country.

Unlike in the UK and the US, most of the time handing back the keys to the bank will not stop them chasing you for the outstanding debt.

 

The Six Stages of a Home Repossession

Not all properties end in a public auction, especially in those cases in which the borrower is not in negative equity. The bank may reach an out-of-court-settlement on the matter by means of the borrower basically signing over in a public deed to the bank the ownership of the property. The bank agrees in this deed not to pursue the debt any further in return of the ownership.

In those cases in which this agreement is not possible, the repossession procedure is approximately as follows:

• The borrower falls into arrears - The borrower fails to service their mortgage repayments. Delay interests rates (“interés de demora”) are applied. The bank contacts the borrower and may attempt to settle the matter out-of-court.
• In technical default - This happens 90 days as from the first arrear. The client file is passed onto the bank’s debt collection department which tries in a last attempt to recover the debt. The bank is forced to set aside a provision to offset this potential loss. That is why many banks are open to negotiate before a default because these compulsory provisions that must be deposited before the Bank of Spain undermine the Lender’s liquidity ratios something which banks with the ongoing current credit crunch will try to avoid.
• Foreclosure and notary intervention - Depending on the chances of a debt recovery, 15 or 20 days after the technical default. A registered communication is sent by a Notary Public with acknowledgement of receipt, informing them that the repossession procedure is imminent.
• Repossession order - The matter is brought forth to be trialled. The judge communicates the borrowers of the mortgage repossession. The value of the asset in the public auction can be either the one that is lodged at the Land Registry or else the bank may command an updated appraisal. This updated appraisal will also be useful for the bank to decide on whether it is worthwhile or not to proceed with the repossession as it has high associated expenses.   
• The Court sets a date for the Public Auction - Normally between 6 to 12 months after the start of the Executive Procedure. The judge decides on the date of the auction. If no one bids for the property the bank will keep it.  The bank tries to offset the outstanding loan debt with this auction. However, it may happen that after the property has been assigned to a winning bidder the amount raised is not enough to cover the debt plus all the associated repossession expenses (i.e. because the borrower had run into negative equity). The bank is entitled to pursue the rest of his assets even if abroad.  Should there be a guarantor in the mortgage deed the bank will chase their assets.  The property will now be lodged under the name of the new owner. 
  
• Eviction - In the event the owner is still in the property, after a period that normally spans six months, the Police will arrive at their door step with a locksmith to evict them by force. There are a number of cases in which this may not possible for legal reasons.

What to do if you cannot pay your Mortgage?

If you are struggling to meet your monthly mortgage repayments, and selling your property in time to raise the money to cancel the mortgage seems an impossible task, do not wait until you have fallen into arrears to start negotiating with your bank. After 3 months of mortgage arrears Spanish banks start to take legal action, so even if you manage to reach a settlement with them after said time (something which is very unlikely, as the bank sees you now like a defaulter) you will still have to pay not only the owed amount albeit all the legal expenses borne due to said default.

Negotiations with the lending bank include extending the mortgage period, reducing the interest rate or moving on to an interest-only mortgage for a few years until your economic circumstances improve.  If after applying any of these options, you still cannot meet your monthly repayments, it is better to try to agree the handing over of the keys than to just let the bank unilaterally repossess the property.

Conclusion

Defaulting on a Spanish mortgage is a serious affair that may affect both your assets in your home country and your credit rating as the debt will be against you personally.  If everything else fails, the only option left is to try to negotiate with your bank. Banks are open to renegotiate the lending terms providing you are not in arrears with them.

Discuss this Article

• wwyavrfccv Says:

  Fri, Nov 7th 2008, 06:45

• Mrs Haynes Says:

  Tue, Dec 9th 2008, 16:50

  I understand the implications of reposeesion & I'm currently not in arrears, however I'm struggling to find ANYBODY who will speak English in my Spanish bank to try and help with altrernatives before I fall behind with the mortgage payments.

• aflores Says:

  Sat, Dec 13th 2008, 16:30

  Hello Mrs. Haynes, What should ideally happen is that the property is transferred to the bank against payment of the debt and so the bank would then own the property and the mortgage would be fully settled, ensuring that there will be no comeback. If you believe you will not be able to keep the payments up to date you would need to talk to them to advise them that you may not be paying the mortgage any longer and it is in their interest to take the unit directly from you as opposed to having to go through a repossesion procedure.

• J.Adcock Says:

  Tue, Dec 16th 2008, 08:58

  I currently own property where my ex partner wont pay there part of the mortgage and wont let me sell the property is there anything I can do?Her name is on the mortgage and the escitora there is also a third party on the mortgage but not the escitora.

• MRS Johnson Says:

  Tue, Jan 20th 2009, 12:58

  we are finding it hard to pay our spanish morgage,we moved back to england 1 year ago,and am trying to sell it ,we put alot of our own money in it now the house is only worth 150,000e what should we do should we just cut and run or what im unsure as to what to do?????we have definatly lost the money we put into it,the whole time in spain has just been the biggest mistake we have made.manythanks

• Mr Morgan Says:

  Thu, Jan 22nd 2009, 20:37

  We have been tring to contact our mortgage provider, Caja Murcia, but with out success. I have phoned and E Mailed but with out any reply. I have phoned again and spoken to someone who took my number and promiced to phone back, but never did. Can you suggest a way we can formally contact out bank.

• Lawbird Lawyer Says:

  Fri, Jan 23rd 2009, 16:04

  Dear Sir, No I’m afraid none other than sending them a registered letter (dubbed “burofax” in Spanish) addressed to the bank’s branch where you have set your mortgage repayments with acknowledgement of both receipt and content.

• mr willett Says:

  Sun, Jan 25th 2009, 20:59

  we are not behind with our spanish morgage however we owe the back 60.000 euros but it will not sell for this bear in mind we paid £23.0000 into this property as a deposit. we can not aford the 520euro morgage per month now ! as i have lost my job can you please give us some advice. could we just give the keys back to the bank ! we are in rented property at present , would this affect us getting a uk morgage later on. thanks

• Fraught and distressed Says:

  Wed, Feb 4th 2009, 16:24

  We have been speaking to our back but as the remainning 5% of the mortgage was covered by an insurance company they state that they are incapable of doing anything for us. We seem to be chasing the bank in order to resolve the issue, and receiving nothing in return. Is it advisable to wait until they reposess, or instigate the proceedings? If the house at auction falls into negative equity, and we owe the bank, (is it true that this would effect us in our home coutry?) would we have to declare ourselves bankrupt, and what are the legal implications here? If anyone can assist!!!

• Lawbird Lawyer Says:

  Wed, Feb 4th 2009, 20:09

  Dear Sir/Madam, As per my article yes banks can legally chase you in your home country for the outstanding balance as you are held personally responsible of the loan you accepted. As per art 1911 of our Spanish Civil Code the responsibility is unlimited and you will respond with all your current and future assets. Will your bank pursue you if after the repossession procedure you are left heavily in negative equity? I have no idea. For Spanish banks to pursue you abroad is an expensive procedure so its not all that easy for them. That is why I imagine -being practical as banks are- many will sell off the debt to local debt collecting agencies for a nominal value and waive long and protracted procedures. Because one thing is what the laws says and another very different is how things really work in practice. Besides, will UK Authorities sit idly whilst our banks seize dozens of thousands of properties in the UK leaving owners homeless? Its up to the lender to initiate the repossession procedure. Regards, Raymundo Larraín Nesbitt

• Mike Carter Says:

  Fri, Feb 6th 2009, 19:09

  We have a property in Costa Blanca. I have been made redundant so we are struggling to meet the mortgage. It is on the market but as in the UK houses are not selling at the moment. What would happen if we said to our bank we would like to hand the keys back to you as we cannot afford it? What is the best way forward regarding our situation please?

• mpat Says:

  Sat, Feb 7th 2009, 00:10

  What is dacion en pago.is it repossession?

• Lawbird Lawyer Says:

  Mon, Feb 9th 2009, 16:45

  The purpose of a dación en pago is to waive the repossession procedure on you defaulting. A "dación en pago" is handing over the keys to the lender in exchange of having all debt discharged. The reason borrowers do this is because in Spain the responsibility on your defaulting a mortgage loan is personal and unlimited as per art 1911 of the Spanish Civil Code. Spanish banks can pursue you in your home country if you run into negative equity and the collateral's (the property) value is not high enough to offset the arrears, delay interests, lawyer's fees, associated expenses of the repossession procedure etc.. Please read the only article there is written in English on the dación en pago procedure. Regards, Raymundo Larraín Nesbitt

• john foran Says:

  Tue, Feb 10th 2009, 20:04

  My brother has a property in Spain that he has not paid the mortgage on in 4 months due to him losing his job and seperating from his wife of 10 years, he understands that he will lose his property if he does not come to a resolution with the bank, but there is also a cross charge on my parents house in spain which has no mortgage on it, can my parents lose their house?

• Lawbird Lawyer Says:

  Thu, Feb 12th 2009, 11:40

  By "crosscharge" you mean they were acting as guarantors of your brother's mortgage? In that case on your brother defaulting and the lender repossessing him should the property be in negative equity the lender can indeed go against your parent's property in Spain for the outstanding balance. That is why I never recommend anyone to act as guarantors on signing mortgage deeds because of the huge risk they are committing themselves to, often with their only home, just to please some family member. Please read my article on Bank Repossessions in Spain. I quote myself: The Court sets a date for the Public Auction - Normally between 6 to 12 months after the start of the Executive Procedure. The judge decides on the date of the auction. If no one bids for the property the bank will keep it. The bank tries to offset the outstanding loan debt with this auction. However, it may happen that after the property has been assigned to a winning bidder the amount raised is not enough to cover the debt plus all the associated repossession expenses (i.e. because the borrower had run into negative equity). The bank is entitled to pursue the rest of his assets even if abroad. Should there be a guarantor in the mortgage deed the bank will chase their assets. The property will now be lodged under the name of the new owner.

• Mr Nelson Says:

  Thu, Feb 12th 2009, 21:06

  I have a similar situation with a property in Holland. I fell behind on the mortgage and went into default.I then agreed to give the bank power of attorney to sell the property which they then did. I thought this would be better than allowing them to repossess. The property sold for a lot less than my mortgage so of course I still owe tens of thousands of Euros on it. How would the dutch bank go about recovering money from me. They have an old UK address for me and have no idea where in the world I am. Since the bank cant get hold of me (other than email) is it a good idea to approach them and make an offer. Say offer to pay 20% of the balance in full and final settlement ? How could I make this full and final settlement legal and enforcable so they couldnt come back to me later. Thanks

• Mrs H Says:

  Thu, Feb 12th 2009, 23:30

  My bank manager emailed me in October 2008 and confimed that the bank would take the property back with no further action.Since then he has left and no one else can speak english I have phoned left messages and sent emails to confirm that the bank have agreed to take pocession of the property I dont know what to do as I have emails to confirm the bank have agreed to take the property back any advise what todo next????

• Lawbird Lawyer Says:

  Thu, Feb 19th 2009, 17:49

  Dear Madam, I think you better appoint a lawyer to find out what is happenning with the dación en pago procedure (handing over the keys to the lender). The legal steps to complete a Dación en Pago Procedure are: 1.- The customer must be on time with payments (the repossession legal procedure must not have been initiated), with Community fees and local taxes. 2.- You contact your lenders' branch manager and propose it to them. 3.- The borrower will be required to pay a new valuation (updated appraisal). 4.-If on average 80% of the new valuation of the property cover (debits +13% of the debits like legal expenses) the lender will accept to take the possession of the apartment, cancelling your debits and will waive taking legal action in Spain and in the British courts. 5.-The day of the signing the Deed at the Notary, the borrower will surrender the keys, and leave the property clear of furniture and tenants.

• Mrs Ruskin Says:

  Fri, Feb 20th 2009, 14:30

  I am in arrears by 2 nearly 3 months, but we have paid small amounts as suggested by the bank. The bank have said that we cannot renegotiate the mortgage and to return it would also be very expensive. If the property is valued or sold with negative equity do we then pay interest on that difference and is it common to negotiate the sum owed? Thanks

• Lawbird Lawyer Says:

  Mon, Feb 23rd 2009, 09:04

  Dear Madam, The bank is probably not accepting the dación en pago procedure because you are already in negative equity. A dación en pago is a conveyance procedure it's as if you were selling the property only that you will not receive money for it. So all associated expenses, fees and taxes to a normal conveyance procedure have to be paid. That is why there must be equity in the property to make up for this shortfall as it will be the bank that pays for all this (except the appraisal) which can be offset against the property's equity. In your case the bank will probably end up repossessing you. Your best option wpuld be to sell the property as a non-performing mortgage loan (distressed asset) for the value of the loan so you can walk out clean.

• joanne hill Says:

  Mon, Mar 16th 2009, 08:07

  our Spanish property was valued by the bank at 300,001 euros the property was on sale for 240,000 euros. Since buying the property in September 2007 the value has plummeted to 190,000 euros. Do i have a case for negligence against the bank. I believe i have been subject to very unprofessional behavior from the bank. I believe my property was deliberately overvalued so a 110% mortgage could be sold.

• Lawbird Lawyer Says:

  Fri, Mar 20th 2009, 09:42

  Dear Madam, No, I don't believe you have a case. Yours faithfully,

• Nicky Says:

  Sat, Mar 21st 2009, 18:07

  We too have been caught in the credit crisis. We have two mortgages on two separate properties but with the same bank. Mine and my husband's work has dwindled and this coupled with the high interest rates we have been paying over the last year have left us drained of all money and savings. There is equity in both properties. We have been in talks with the bank for the last 5 months and they are finally lowering the interest rate a little but still the repayments are too high for us. We would be able to afford interest only and keep both properties which is what we would like to do but the bank will not let us. Indeed even though they are reducing the interest rate a little they are now asking for life insurances for myself and my husband which puts the costs up again. If we hand the keys back to the bank can they take our other property and thus make us homeless. On recent valuations there is more than sufficient equity in both properties and we have had them both on the market but they are very few buyers at the moment and we are running out of time. Please can you give us some advice of what we should do next. Thank you

• Lawbird Lawyer Says:

  Wed, Mar 25th 2009, 13:11

  Dear Madam, We've written a detailed article on the dación en pago procedure (handing back the keys to the lender) and submitted it to admin but we are still waiting for them to publish it... When they finally do I'll post the link to it. In the meantime, you can read a detailed reply on this matter in this thread.

• mrs Brewer Says:

  Sun, Mar 29th 2009, 20:30

  Hi i have a morgage in spain of 81,000 euros my property is up for sale for 99,000 euros which i have just recently reduced. I desperatly would like to buy a property in England but handing my keys back in spain, would that blacklist me in England for a morgage?

• Lawbird Lawyer Says:

  Mon, Mar 30th 2009, 07:41

  Dear Madam, No, it will not affect you in the least. Please read our featured article on Dación en Pago (handing back the keys): The Dación en Pago Explained - 28th March 2009 What will affect you is if the Spanish lender repossess you. In that case not only will you be blacklisted in ASNEF, RAI, and Experian but also they may chase you in the UK for the outstanding debt or elsewhere.

• L palmer Says:

  Thu, Apr 9th 2009, 20:34

  We like many can no longer afford our spanish mortgage, it is in negitive equity . Paying this mortgage in spain is resulting in us also being in difficulties here in the uk,we have contacted the consumer credit counselling service . We are a month behind with our mortgage in spain an we have not paid welth tax an community fees !!!. Our house is mortgaged in the uk an is specialy addapted for our handicapped daughter so i am scared of losing it if they come after us here in the uk, what can we do .

• spanish resident Says:

  Thu, Jun 4th 2009, 14:56

  i am english and a spanish resident and am being repossessed, the property is in negative equity, if i return to the uk will the spanish bank persue me there?, i have no uk or spanish job, and no assets in the uk. not sure what the spanish bank can do and surely noone (another bank) will buy their bad debt and persue me due to me having no assets at all, and what can a debt collector do when i have nothing for him to collect? like mrs johnson, worse mistake of our lives!

• bill Says:

  Sat, Jun 6th 2009, 14:03

  Dear Sir/Madam,we have not paid our mortgage for over 1 year now,but have still not heard from our bank or any other authority.we approached our bank months before we saw ourselves not being able to keep up the repayments.our bank manager said he was not interested,and would personally reposses our house.We have since found out ,the mortgage was for a vivieda,we own a nave.The bank will not speak with us now,but still no letters.HELP

• Lawbird Lawyer Says:

  Mon, Jun 15th 2009, 08:09

  Dear Mr Palmer, That's up to your Spanish lender. They will decide on whether they pursue you or else sell on the debt to some other company, such as a debt collecting agency. Normally Spanish lenders do not pursue abroad for small amounts as its expensive for them and would be hardly worthwhile. It all boils down to the amount outstanding owed to them. If its high enough it will be worthwhile for them to pursue you abroad or else sell on the debt to someone local who will. If your UK property already has a mortgage against it, much of the equity is already compromised. So the Spanish lender would just place an additional charge on it. If they repossessed it it would be your UK lender who would obtain the lion's share as they were first and have priority. So it makes sense for the spanish lender to just wait patiently until you sell it on. From the sales proceeds, the buyer will have to pay them what they are owned.

• Lawbird Lawyer Says:

  Mon, Jun 15th 2009, 08:21

  Dear Spanish resident, You may not have assets now but in time you will. i.e. inheritance. The Spanish lender will have you blacklisted in Experian and others barring you the possiblity to acces UK mortgages. The dealine to pursue the mortgage debt is 20 years. However, if the lender within those 20 years communicates the debt or tries to contact the borrower the deadline is renewed, each time. So basically, unless you are very lucky, they will pursue you for the remainder of your lifetime. And quite certainly at some point or other you will have assets.

• Lawbird Lawyer Says:

  Mon, Jun 15th 2009, 08:35

  Dear Sir, The bank manager will repossess the nave acting as collateral. If that doesn't suffice, and you slip into negative equity, you will be held liable with your remaining assets, whether located in Spain or elsewhere. What you must understand is that in Spain, unlike anglosaxon countries, when you take on a mortgage loan your responsibility is personal and unlimited with all your assets, both now and in the future, on you defaulting the mortgage loan whether for a dwelling, nave industrial, rustic plot of land or whatever the case may be. If the collateral makes up for the owed amount that's fine and the debt will be fully discharged. Albeit if it doesn't, even after they've repossessed the collateral, they will chase you for the outstanding difference which mounts up every day with the default compound interest which ranges on average 25-29% p.a. In every Mortgage deed you have the exact tailored default percentage apllicable to your own loan. Please read my article which starts off this thread and explains the unlimited responsibility concept ex art 1911 of the Spanish Civil Code. Yours faithfully, Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Mon, Jun 15th 2009, 17:06

  As this matter of collecting debts in the UK or in the ROI from non-performing mortgage loans is becoming increasingly important, it's now under the spotlight of the Spanish financial press: La crisis inmobiliaria española llega a los juzgados británicos Expansión. Publicado el 13-06-09 , por Roberto Casado. Londres We'll write a blog post shortly specific on this matter.

• Manny Says:

  Thu, Jun 18th 2009, 21:15

  Dear Sir or Madam My daughter has handed in the keys of her property in Spain to the bank. She owns her home in England where she lives with her son. Would she be able protect her home in England from the bank in Spain if she were to put it in trust for her son? If so, are there any drawbacks/negatives in doing so and could it be changed at a later date? Many thanks!

• Lawbird Lawyer Says:

  Mon, Jun 22nd 2009, 09:49

  Dear Sir/Madam, This query regarding "putting it in trust" should be asked to an English lawyer as it relates to English law. If your daughter has followed a dación en pago procedure and her debt has been fully discharged in Spain before a Notary public signing a deed, then there is no reason to fear the Spanish lender. The debt has been settled already. If your daughter however just handed the keys over at the bank then she has a reason to be concerned as the debt is still outstanding and her liability will be personal and unlimited.

• Michael Says:

  Tue, Aug 25th 2009, 15:15

  Dear Sir I have a house with Hipotec in Spain. I am not in negative, however it has come to my attention that besided a number of problems/errors when I purchased the house some 3 years ago, the bank have not registered the hipoteca in the notary. It is named in the scriptura. If I fall into negative, then as I understand it the Bank can NOT reposses the house as they have not notarised the hipoteca.

• Lawbird Lawyer Says:

  Wed, Aug 26th 2009, 07:32

  Dear Michael, What you meant to write is that the Mortagge Deed had been correctly signed at the Notary but for some legal reason it has not been lodged at the Land Registry and registered against your property. This happens more often than people think. It normally has to do with the Registrar not accepting some clauses in the mortgage deed. So the Mortgage deed has to be amended to be re-registered at the land registry or else the Notary files a complaint against the Registrar which has to be settled. The bank can still repossess the property regardless of this as you signed a binding agreement with them, the notarial Mortgage deed. The problem is that if someone wanted to but this property from you they would see no mortgage against it as it would effectively be free of charges. In any case this buyer would be protected because he's buying in good faith. Yours faithfully,

• Mrs Smith Says:

  Fri, Sep 4th 2009, 15:19

  I am being repossesed due to none payment of my mortgage for a year. I did go to my bank manager and asked for interest only as I am resident in Spain and understood that they would do this, this was before I was in trouble. She said she would let me know. After a while I rang again and was told she was still waiting. I did not pay anything to the bank as it would have eaten up the lesser money that I had. I then received a telephone call from the bank recovery saying they would embargo my business. I went to see him and he said I must come up with 10k as they were calling in my loan and credit card in full. I got him the 10k although it was a week late and he told me I needed more. To cut it short I took my money away and tried to make contact with my bank manager via e mail. They did not reply so I sent a recorded delivery to the head office, still no reply in the meantime I had to go and collect the court papers and was told the case was in acto. I am thinking of going to court and defending myself, on the grounds that the bank did not respond to any attempt to resolve this situation. Is this possible? Many thanks

• Lawbird Lawyer Says:

  Mon, Sep 7th 2009, 07:37

  Dear Mrs Smith, No, I'm afraid that is not sufficient grounds to file a law suit. You would likely lose and be spending good money after bad. Changing to interest-only means that you are requesting that what you agreed in your Mortgage Deed needs to be amended. On signing a Mortgage Deed it is a binding contract for both parties. It is up to your lender if they accept or not. It used to be common that Spanish lenders did but only for 1 or 2 years as a teaser. Foreign lenders even offered up to 15 years interest-only (HBOS). Post-credit crunch, banks have thier own problems and seldom accept it. I've only seen a few cases recently in which they have; the majority of requests for interest-only are now turned down. Unfortunately now its too late and as you write, you will be repossessed by them. Yours faithfully, Raymundo Larraín Nesbitt

• Mr Brown Says:

  Thu, Sep 10th 2009, 13:33

  I was sold a reform by an estate agent who subsequently arranged a builders quote and a project manager. There is a mortgage of Euro 49,000. Separately, I spent a considerable amount of cash doing it up and the build quality is not good. However, working abroad, i have never lived there so the property is also looking jaded. It now transpires that the village is infested with termits and my property is affected. I would practically now have to rebuild a second time (Euro 45,000) with concrete floors (as opposed to wooden floors etc). I am reluctant to do so and am thinking of handing over the keys in desperation. Do i have any comeback against agent / builders for recommending wooden floors in an area known for termites ? Is termite treatment an alternative ? Is there an honest builder in Spain !? Separately, can I transfer title of my UK property to my niece to try and escape the hunt for assets ? Can the Spanish Banks go after offshore bank accounts ? Sorry for all the questions Mr Lawbird. This site is so informative. Keep up the good work.

• Lawbird Lawyer Says:

  Fri, Sep 11th 2009, 13:17

  Dear Mr Brown, Thank you for your kind words. I would advise you treated the wood with anti termite rather than going on a suing spree against estate agents or developers. You would likely lose. Spanish lenders can pursue you abroad on you defaulting on a mortgage loan for the shortfall, yes. You are personally and unlimitedly responsible for a mortgage loan with all your assets both now and in the future wherever they may be located as per art 1911 of the Spanish Civil Code and as per the Mortgage Act. If your money is safely hidden away in off shore bank accounts, no one can pursue it. If you hold assets in the UK, they can pursue them and are in fact already doing so: forced complete ( 1 2) Unregistered chased to complete abo07 What remedies does a developer have to enforce completion Unregistered Can we be chased by the bank after arranging a Dacion en Pago? Unregistered Will i lose my uk home Unregistered Property was bargained away and we are being chased for the shortfall. Please help! Wendy That's the whole purpose of this website, to reply to Spanish legal queries, no need to apologise. Yours faithfully, Raymundo Larraín Nesbitt

• Mrs Hoos Says:

  Thu, Sep 24th 2009, 20:25

  We have an apartment in the Costa Blanca and we are struggling to repay the mortgage on it, we are not behind yet. The builder went bust and the building is unfinished so we are not able to rent it out or sell it as it is. Could we arrange a Dacion en Pago? Also our solicitor signed for the property on our behalf, we had given her power of attorney but had not given her our permission to complete on the purchase. Also we have never been to Spain to sign again for it in person. Is there any way we can give this property up without having our home in the UK taken away from us? Please help us we are desperate.

• Lawbird Lawyer Says:

  Fri, Sep 25th 2009, 07:17

  Dear Mrs Hoos, You can follow a dación en pago de deuda providing: 1.- The property is not in negative equity 2.- The bank has not initiated a repossession procedure. You can read about the dacion en pago procedure in more detail in my article: The Dación en Pago Explained - 28th of March 2009 Please contact us if you want to hire us for this legal service. Yours faithfully, Raymundo Larraín Nesbitt

• Delboy Says:

  Tue, Sep 29th 2009, 07:34

  I have a property in Vera Almeria and we have a 2 bedroomed apartment which was valued at 185000 euros but we would now be lucky to get 100,000 for it in the current climate. Someone has actually offered us 100,000 euros cash, but because we have a mortgage of 140,000 with arrears, the bank are refusing to accept the offer. I'd heard that new rules by the bank of Spain allow spanish banks to only provision for 70% of a loan in arrears. Surely then it would be in the banks interest to accept this offer. But they seem to want to proceed with repossession and hope to get more from its auction value which I find unlikely. I also read that the EU are taking a dim view of the way spanish banks have overinflated their bank valuations in the past and I believe the bank of Spain are insisting that banks update their valuations. Surely there must be some way that the EU can demand that banks take some financial responsibility for the gross negative equity that many spanish property owners now find themselves in! this would be classed as fraud in any other country!!

• Lawbird Lawyer Says:

  Tue, Sep 29th 2009, 11:05

  Dear Sir/Madam, I will not be sucked in to the issue on whether Spanish banks ought to be held accountable or not for their actions. It is not for me to judge and besides it's totally off the point. Regarding your legal query, I've bought properties for clients in which the vendors sold below the mortgage value. Naturally the cheque I paid the vendor was solely in the lender's name and the vendor had to fork out the outstanding difference to their own bank prior to me purchasing the property. So it can be done. But then, how many vendors can afford to make up for the mortgage's shortfall (negative equity)? Very few and they have to be very desperate under threat of a bank repossession. Banks have instructed their valuers to "undervalue" properties following a nudge from the BoS from 2007. So now we've swerved from one opposite (overvaluing) to the other (undervaluing). Many properties are now being priced ridiculously below their intrinsic market value. But this on the other hand has created huge buying opportunities for those who are cash buyers in the midst of a liquidity shortage. Indeed today is a tough buyer's market. Yours faithfully, Raymundo Larraín Nesbitt

• el tel Says:

  Tue, Sep 29th 2009, 14:37

  There is a house on my complex which the owner went back to the UK and after 2 lots of squatters had used the house we now find the house has been trashed completely by the last squatter. The is paint and excrement all over the walls and ceilings and floors. The house was mortgaged by Santander but the lady who left to go back to the UK 2 years ago told them of her intentions and did not want anything to do with the house. Any advice would be welcome as the house still remains trashed and in a very unhealthy condition with a broken window. The President and administrator say they can do nothing about this health hazard its up to the bank.

• Lawbird Lawyer Says:

  Tue, Sep 29th 2009, 14:57

  Dear Sir/Madam, It's really a private property so they cannot -legally- access it. A different matter is the compliance with local health ordinances. You can file a complaint before the Town Hall and they can fumigate in extreme cases the premises for Public Health. The bank will repossess the proeprty evenatually. Law courts are now clogged with repos. They are taking an average of between 2-3 years, in some cases even more. Once the bank takes it over officially it is their duty to keep the property in good working/habitable conditions. Besides the bank will have to contribute and pay their share of the Community of Owners, just like everyone else. Yours faithfully,

• jacqui Says:

  Fri, Oct 2nd 2009, 16:02

  I have a house in spain which I have had difficulty making the payment. I have missed the 180 day deline because I did not find a tenant until the time had passed. The bank reduced the payments but i still could not get the rental amount to cover this. I have made offers to clear the arrears and keep up regular payments but they want accept this either. I am now at the point where I don't know to do. Can I still hand back the keys and will they chase me for any outstanding amount. My Mortgage is 5000,000 I know the value of the property has gone down to around 450,000. I own property in the uk can I put this is in trust to someone so that the spanish bank can not force me to sell.

• elgordo Says:

  Sat, Oct 3rd 2009, 09:19

  When people just leave a property and the banks take no interest for years I believe a comunidad can only claim the comunity debts for the current year and the preceding year. If this is correct then persons who build up years of debt will walk away virtually scot free or the new owners will only be responsible for the 2 years of debt I mentioned above. Please confirm.

• Lawbird Lawyer Says:

  Mon, Oct 5th 2009, 10:43

  Dear Jacqui, You can no longer hand back the keys to your bank (known in Spanish as "dación en pago de deuda") as your property is already in negative equity, meaning you owe your bank more than what it's worth. Additionally you write that you have overrun an 180 day deadline. I have no idea where you get that from. Banks normally do not start legal action against you until after 90 days or 3 months in arrears. Please read my detailed article on the matter which started off this thread as well as some related queries: Bank Repossessions in Spain: A Legal Perspective - 25th June 2008 What are my options if I have fallen in arrears on my Spanish mortgage? Property Law - 18th of November 2007 We are in 3 months of mortgage arrears with a Spanish bank for two properties the developer have not completed properly. What are our options? Property Law - 16th of September 2007 However, banks may start repossession procedure with only one month in arrears if they choose to as per the Mortgage Deed signed with them. You are not technically in default until after the 90 days in arrears which is why they normally wait so long. Some people mistakenly think that banks have to wait the said 3 months when its not the case, although in general they do wait. At this point in time on you being in arrears of six months your bank has probably started a repossession procedure against you. The ability of a lawyer to help you in such a case is honestly next-to-none. The reason is simple. You both signed a Mortgage deed (contract) which is mutually binding. On you breaching it (non-payment) the consequences are laid forth very clearly on it. Almost the only thing that can be done at this stage is come to an agreement to stop repossession which entails you paying all that's owed to your bank: 1.- Amount in arrears= six months 2.- Penalty interest on the 6 months arreas ranging from 18-30% compund anual interest 3.- Lawyer's fees for the repossession procedure (circa 10,000/15,000€) 4.- Court agent's fees for the repo 5.- Court's associated expenses for the repo You will be expected to pay all the above in lump sum upfront to stall successfully the legal procedure against you. If you fail to come up with all the requested funds they will continue the repossession. As per art 1911 of the Spanish Civil Code you will be held liable with all your assets, both now and in the future, for the outstanding balance owed to the Spanish bank after the repossession procedure is over. Meaning they will chase in the UK or elsewhere and place a charge against any assets you may hold in Spain or elsewhere. It may take years but they will eventually catch up with you; only that now the owed amount will be much higher due to the anual compound interest of 18-30%. That is why it's critical that one isn't repossessed in Spain.- it's a red line that, once crossed, will haunt you for the rest of your life. Which is why I always recommend that in lieu of a repossession procedure one hands back the keys to your lender to avoid it. Unfortunately in your case, you waited too long and you were already in negative equity. Yours faithfully, Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Mon, Oct 5th 2009, 10:53

  Dear "Elgordo", Yes that's the case. Please read my article on the matter of Spanish Commonholds or Comunidad de Propietarios: Comunidad de Propietarios: Avoid Problems with Your Neighbours in Spain - 26th June 2009 A quote from my article: Owners’ Duties Section 9 rules them in detail. The main duty will be, of course, to contribute to the maintenance and financial upkeep of the Community of Owners. Failure to pay the community fees will result in the Community of Owners placing a lien against your property and possibly auctioning it off. This legal procedure in Spain works surprisingly efficiently. You have been warned! . . . On buying a resale in a community, the new owner will be held liable for the prior owner’s communities’ debts for the current year of transfer of ownership as well as the natural year immediately precedent (art 9 e). The property itself will be burdened with a lien for unpaid communal debts. Which is why under law, the signing of the deed of transfer of ownership requires a Communities’ certificate stating that communal fees are up-to-date for that unit, signed by the communities’ administrator. The purchaser can however waive this requirement voluntarily. Yours faithfully, Raymundo Larraín Nesbitt

• Mr H Says:

  Thu, Oct 22nd 2009, 06:31

  I have 3 mortgages in costa del sol I am finding it increasingly difficult to fund The rentals are much reduced and in 1 case a tenant has simply not paid for 6 months I believe there is enough value in all the properties to hand the keys back What costs are involved , should I use a lawyer to do this process?

• Lawbird Lawyer Says:

  Thu, Oct 22nd 2009, 09:23

  Dear Mr H, It is not mandatory to use a lawyer on following a dación en pago. However I warn you there are many reported cases of borrowers who on not appointing a lawyer, to save themselves money, were duped into thinking they were signing a dación are now being chased by their lenders in the UK and elsewhere. A fine of example of such cases are the following threads: Can we be chased by the bank after arranging a Dacion en Pago? Unregistered Handing over keys - Mortgage arrears Unregistered After having witnessed such cases I can only strongly recommend that you appoint a lawer to act on your behalf and represent you in a dación en pago. You can contact us if you are interested in hiring us for this legal service. The Spanish name for "handing back the keys" to the lender is called "dación en pago". Please read my articles on the Dacion en Pago Explained and the Dación en Pago Procedure for more details, the only ones written in English on the matter. All it is, is that your lender agrees to buyback the property from you and in exchange they will write-off the outstanding debt having it fully discharged. You will not receive any money. This is formalised by means of signing a Deed at a Spanish notary and you surrendering the keys to them. The reason people do this is because on you defaulting servicing your Spanish mortgage the lender can repossess you. Please read my article on bank repossessions in Spain. If after they have repossessed you the property is left in negative equity, meaning you owe the bank more money than what the property is worth, they can actually pursue you abroad in your home country. In other words, unlike the US, you are personally at fault on owing money to the Spanish lender as per art 1911 of the Spanish Civil Code. The property itself, the collateral, was only guaranteeing the bank loan. Post repossession you will be held personally liable with all your assets, both now and in the future, for the difference between what you owe the bank (plus the repo associated expenses, lawyer's fees, default interests etc) and what the property is now worth after the full repossession procedure is over. The same thing happens in the United Kingdom. That is why many defaulting borrowers in lieu of being repossessed would rather either sell the non-performing mortgage as a distressed asset (of which there are now many websites available) or else follow a dación en pago procedure if they are unable to find a buyer in time. For a dación en pago to work out, two things are required basically: 1.- The property must not be in negative equity. 2.- Your lender must not have started a repossession procedure against the property. Basically the outline on how it works is as follows: 1.- The borrower must be on time with payments (the repossession legal procedure must not have been initiated), with Community fees and also with local taxes. 2.- You contact your lenders' branch manager and propose it to them. 3.- The borrower will require it to be reappraised. You will be expected by your lender to pay this in advance. On average it's approx 350€. 4.- If on average 80% of the new valuation of the property covers (debits +13% of the debits like legal expenses) the lender will accept to take the possession of the apartment, cancelling your debits and will waive taking legal action both in Spain and at the British courts. 5.- The day of signing the Deed at the Notary, the borrower will surrender the keys, and leave the property clear of furniture and tenants. It is not compulsory to hire a lawyer for the dación en pago. What is compulsory is that you appoint a translator to act on your behalf if your command of Spanish is low. However, we just cannot stress enough how important it is to appoint a lawyer who will act both as a translator and also verify that indeed your debt with the lender is being effectively fully discharged on you signing the Deed. Besides your lawyer will be able to negotiate with the lender as some banks will try to make borrowers pay for some expenses. The Notary is not there to give you legal advice as they act impartially to either party. Lawbird Legal Services offers this legal service at a flat fee of 1,392€ (16% VAT already included) per property. Depending on where your property is located within Spain, further travelling expenses may be applicable. We advice you contact your lender first prior to hiring us and see if they accept the dación en pago. The reason is that the above legal fee is a retainer fee and will not be refundable regardless of the outcome. So it's a good idea to first make sure the bank will accept the dación en pago before you hire us. If you think they are dragging their heels and weeks go by without feedback it might be a good idea to hire us to help push the matter through. Yours faithfully, Raymundo Larraín Nesbitt

• Robin Says:

  Thu, Oct 22nd 2009, 10:28

  HELP!! Necesito ayudar urgente!! I have a property in Spain which has a Hipoteca of 300k euro. I cannot rent it out as it has structural problems with the roof and windows and floods every winter. A perito has advised 15000 to repair. I am claiming the costs for repair to the Community. A court date has been set for March 2010. I cannot pay the hipoteca. I have asked the bank - Banco Halifax to take the keys in lieu. They made a new tasacion of 400k euro, so the property is not in negative equity. I asked for a copy of the tasacion but they refused. The current debt is only 750 euros but it will grow as I now have no work. The bank has refused to take back the property en pago en dacion del dueda. Instead, they call me from the UK 4 TIMES THIS WEEK TO DEMAND THE MONEY AND THREATEN COURT ACTION. It is very stressful. I have written to Halifax to explain the situation and ask to be released in view of the 100k positive equity but the just refuse and are now aggressive. What a mess! I have been trying to sell it for 2 years. Avoid Spainish property and avoid Banco Halifax - its like dealing with the devil! Can you help? Gracias y espero tu respuesta.

• Lawbird Lawyer Says:

  Thu, Oct 22nd 2009, 10:44

  Dear Sir/Madam, I think your case is similar to this other one: Buildings Insurance Thu, Aug 27th 2009, 09:20, (3 Replies) Yours faithfully,

• Robin Says:

  Thu, Oct 22nd 2009, 12:59

  Gracias We gave up with the insurance a long time ago. As the property has 100k of positive equity (based on the banks own tasacion in June 2009) why wont they take it back - how do we proceed to force the bank under Article 1175 of the Codigo Civil. Does it work?

• Lawbird Lawyer Says:

  Thu, Oct 22nd 2009, 13:35

  Dear Sir/Madam, You cannot force a bank into accepting a dación en pago unless the case is clear and your case isn't, in my opinion: The Dación en Pago Explained - 28th March 2009 What Happens if the Bank Refuses to Accept a Dación en Pago? Can I Challenge It? Yes you can, but being practical we wouldn’t recommend it. I would consider viable this option only if the bank had turned the proposal down unjustly when there is clearly more than enough equity to offset it against all the expenses. Note that it is pointless to challenge their refusal if it’s apparent you are in negative equity. It will be expensive, time consuming and fruitless. Besides you are overlooking the fact that they've already initiated a repossession procedure against you, so you are barred from following a dación en pago anyway: How does a Dación en Pago Work? For the lender to accept it two things are required.- 1. The property must not be in negative equity. 2. The lender must not have started a repossession procedure against the property. You don't fulfill either of the two points in my opinion. You are making the mistake of taking for granted you have 100k locked in your property based in the June appraisal when it simply may not be the case. In my experience getting along with banks, speaking to them, writing to them explaining the delicate financial situation you're undergoing and trying to reach an amicable solution is crucial. You must prove you really are making an effort. People who work at banks are human after all and they get into deep trouble as well when borrowers default on their loans leading to layoffs. Banks just loath clients who go missing in action and then request for help at the last moment, months later with huge arrears. I'm not saying this is your case, I'm just generalising. A dación en pago is a win-win for both lender and the struggling borrower who has no other option left. In your case your bank is a Brirish lender banking overseas. They know for fact you have UK assets. Yours faithfully, Raymundo Larraín Nesbitt

• Robin Says:

  Thu, Oct 22nd 2009, 13:57

  Raymundo Many thanks for your advice. However, 2 points are not quite correct. 1. There is equity based on the banks tasacion. Who else can value a property in this market! 2. The bank have not commenced a legal process. We are in arrears but will pay these next week. The Bank has confirmed this is OK. I know your comments were a generalisation, but in our case we have not gone missing! We have been negotiating with Halifax for over 1 year and they know our financial situation. They also know that our previous rental clients broke the contract because of the flooding and we are taking the Community to court for the loss of rental income under our 2 year contract. We have asked the bank to join our plieto against the Community but they just dont want to know. They just want their money! We have no UK assets. If we cannot get the bank to accept the biene then we either have to walk away or go to the courts with an action against the bank. Un saludo Robin

• Lawbird Lawyer Says:

  Thu, Oct 22nd 2009, 14:26

  Dear Sir or Madam, Let's go over these two points so as to clarify. The appraissal you have is not specific for a dación en pago, unless you stand me corrected, which is always lower than a normal appraisal value for conveyancve purposes or even for applying for a mortgage loan. So if the valuation came at 400k in June, for a dación it may have been as low as 350k. You do not realise that bank valuations differ depending on what they are needed for. Secondly your roof has damages that are worth at least 15,000€ in your own words, if not more. These have to be deducted from the value as well. How long will they atke to be repaired? Thirdly for a property worth 350k the expenses and costs arisen from the acceptance by the bank of a dacion en pago can easily be above 30,000/35,000€. So: 350 -15 -30 = 305 Outstanding mortgage is equal to 300,000€. Taking the role of the Devil's advocate, in my opinion there is not enough equity to warrant accepting a dación en pago. You haven't mentioned how much in arrears you already are in which would also have to be factored in the above valuation deducting it. Besides the defalut interest rates applicable. If more than 3 months have gone by in arrears then lawyer's fees may also be applicable to the tune of 15,000€. You must also factor in the maintainace anual costs this property incurs in (IBI tax, Garbage collection, Community Fees etc.) until the bank actually unloads it from its books selling it on. Whan you've factored in all the above it comes as no surprise why your lender has turned down a dación. Banks are not evil, it is in their best interest to accept a dación en pago rather than following a long and winding repossession procedure as explained here: THE “DACIÓN EN PAGO” EXPLAINED - Levante Lifestyle, 23rd April 2009 CONCLUSION A dation in payment is a win-win for both parties really. The borrower is free at last and has managed to secure successfully his assets whether in Spain or abroad from the lender or any law firm or debt collection agency they may hire to pursue the outstanding debt. The lender on the other hand will now own the property outright and will have successfully waived a lengthy, protracted and expensive court procedure (repossession), without having to apply for the mandatory provisions before the Bank of Spain to make up for this dubious loan which affects its liquidity ratio. A repossession procedure lasts two years minimum, and may easily entail for the bank expenses running up to 20 per cent of the property’s value. These provisions set aside by lenders are being looked upon closely by credit-rating agencies post credit crunch and may ultimately affect their share value. A dación en pago is not a God-given right. In your case it seems reasonable they've turned it down. Maybe some lawyer will be keen on taking your case suing the bank because they've turned you down. My opinion is that you will be wasting your money in a case like yours. I take it you are aware that on losing a court case you may also have to pay for the other party's legal fees besides all the legal expenses. So losing a litigation case can leave you easily 20,000-25,000€ out-of-pocket. Litigation is a double-edged sword and must be used only as last resort always and very carefully. Indulging into reckless litigation will only be detrimental: You Have a Strong Case… NOT - Wednesday, October 1st, 2008 A different matter is if you have a 600k property with a mortgage loan of 200k and they turn you down for a dación en pago. We would gladly represent you in such a case which you would be bound to win. I'm sorry but you wanted our opinion and we've given it to you. Anyway, our opinion is non-consequential, what matters here is what your bank, specifically their risk assessment department, makes out of it. Yours faithfully, Raymundo Larraín Nesbitt

• Robin Says:

  Thu, Oct 22nd 2009, 14:46

  I really appreciate the response and time you have given to my problem. The tasacion was for a Dacion, so to use your example the equity would be 400 -15 -30 = 355 less 300 hipoteca or 55 equity. It could be done but as you say, its a decision of the risk assessment department of a banco rota bank now owned by the UK Government! My proposal. Pay the mortgage until the court hears the claim against the Community in March. There are debts of 25k on the community fees and IBI (so the 55k equity is actually 30k less the fees due until the bank can sell it). If the court awards damages against the Community then I have to carry on paying the hipoteca until the market improves in probably 3-5 years. If we loose, well, it will be a sad way of saying adios to España! No easy solution - I guess there are thousands of others in similar situations in Spain. Good luck to all of you and like me, think very hard about buying overseas property in future.

• Lawbird Lawyer Says:

  Thu, Oct 22nd 2009, 14:48

  If the appraisal was specific for a dación then it may be different. How much are you in arrears and since when?

• Mrs N Fogolin Says:

  Sun, Nov 1st 2009, 16:21

  What a great and informative website. We currently have 2 Spanish mortgages and with the fall in the pound have found it very difficult to keep our heads above water. We have spoken about the prospect of handing in keys, but as both properties are in negative equaty as i have learned from this site, this is not an option. So all i can do is wish everyone a decent outcome to their problems as what goes up must come down and vice versa. We are going to try to hang in there and keep paying. We are blessed with a communicative bank and have a good relationship with them. Spain is not synonymous with competition, maybe now is a good time to change their strategy as its going to bite them as it has done its clients eventually.

• Lawbird Lawyer Says:

  Tue, Nov 3rd 2009, 08:28

  Thank you for your kind words. Yours faithfully,

• Altin Says:

  Tue, Nov 3rd 2009, 15:33

  I have a property in Cullera, Valencia, Spain and the court has set an auction date for 28th Sept 09, but there were no bids for the property. Does that mean i can return to live in the property until the bank sells it? Or is the property considered to be repossessed by the bank and hence no longer available to me?

• Lawbird Lawyer Says:

  Tue, Nov 3rd 2009, 16:00

  Dear Sir, You can live in the property until the court's bailiffs come to evict you along with police agents and a locksmith. Your lender will now adjudicate itsef the property for 50% of teh appraisal value and will pursue you legally if there's any shortfall on what's owed to them after the repossession procedure is over as per the article which starts off this thread. As explained in other threads, almost in all public auctions no-one is bidding and lenders are being forced to adjudicate themselves the repossessed dwellings. Yours faithfully,

• Unregistered Says:

  Tue, Nov 3rd 2009, 16:33

  Thank you for the prompt reply. Generally, how long does it take for the lender to adjudicate the property to themselves and for the police/bailiffs to evict. The article above says approximately 6 months from the public auction date. Is it correct to estimate that i can live at the property for approximately 6 months as of 28th Sept 09 (public auction date)? thanks

• Lawbird Lawyer Says:

  Tue, Nov 3rd 2009, 16:40

  Or maybe even longer. Spanish courts are now clogged with repossession procedures and these are painfully slow. It really depends on where the property is located which translates into the law courts activity. Those properties located in areas awash with repossessions (i.e. coastal areas) you can reasonably expect them to take longer whereas as properties located in the mainland courts may be more expeditive. Those timelines I gave in my article are to be used as basic guideline only. The same case can take longer or not depending on the court that will hear it. Nowadays a full repossession procedure is taking on average, from start to finish, between 2-3 years. And there are increasing reports of taking even longer now due to the massive workload the credit crunch has brought about in legal court procedures (lawsuits, repos etc.) Yours faithfully, Raymundo Larraín Nesbitt

• John Says:

  Wed, Nov 4th 2009, 09:30

  Hello, the electricity board have cut off the supply as i could not afford to pay the bill. How do i go about re-instating the electricity if i can only afford to pay a little amount? Is there any government assitance with mortgage payments similar to mortgage interests payments in the UK? thank you

• Lawbird Lawyer Says:

  Wed, Nov 4th 2009, 09:32

  Dear Sir, Yers there's a programme but if your bank is in the process of repossessing you, you do not qualify. Besides, very few people can actually qualify for it. There's simply nothing you can do about the elctricity unless you pay the outstanding debt in full to the utility company.

• Unregistered Says:

  Wed, Nov 4th 2009, 11:42

  The bank have started possession proceedings, the property was subjected to a public auction but no bid was made. The bank have now started possession proceedings. What i'd like to ask is that if i live in the property until it is repossessed - will I have to pay the monthly mortgage payments? Or do monthly payments stop once bank starts possession proceedings and i only owe them the debt? thank you

• Lawbird Lawyer Says:

  Wed, Nov 4th 2009, 11:46

  Dear Sir or Madam, The repossession procedure is taking place because you defaulted on your monthly mortgage repayments. It's rather pointless at this moment in time, post auction, to service your mortgage.

• mrs jones Says:

  Thu, Nov 5th 2009, 21:02

  Hello I could not afford to pay my mortgage in Spain, after I returned to the U.k I only paid half of the monthly amount I tried to negotiate nterest only but thet would not have it. I finally told them in Aug 2008 I couldnt pay anymore. I have not heard a word form them since, untill monday eve 2nd Nov 2009 at 5.30 GMT, An Englishman called and told me he was calling from my mortgage company and wanted to assist me in trying to sell the property, I told him I was driving and couldnt What do you make of this? do you think it was a debt collector? and why do you think they havent contacted me in over a year.

• Mrs Jones Says:

  Fri, Nov 6th 2009, 09:13

  sorry I meant to say that, I was driving and couldnt speak at the moment.

• Lawbird Lawyer Says:

  Fri, Nov 6th 2009, 10:36

  Dear Mrs Jones, It would come as no surprise on them being a debt-collecting agency. Many people are already reporting receiving threatening leters from UK law firms or UK debt collecting agencies as a result of having defaulted on their Spanish Mortgage or else not having completed on a Spanish off plan property when the First Habitation Licence has been attained. Many people were in a state of disbelief thinking they could get away from it all flying back to the UK leaving the Spansh debt behind. Sadly, this is not the case. Or they were either naive or ill-infomed. Many weren't even aware that on signing a Spansih mortgage you are held personally and unlimitedly liable for the loan with all your assets, both now and in the future. And that includes those in the UK as well. One must realise is that a full repossession procedure in Spain is taking now an average of between 2-3 years as law courts are clogged. Many people thought they were safe as 1 or 2 years had gone by since returning from Spain and they had not heard a word from their bank. And then one day out of the blue you receive a nasty recorded letter or else a phone call from a UK law firm or from a debt collecting agency demanding payment on behalf of the Spanish lender or developer with all the accrued interests. Through our legal articles and blogs we endeavour to create awareness on this issue, and many others, to avoid borrowers or off plan purchasers getting themselves entangled in further legal and financial problems. Yours faithfully, Raymundo Larraín Nesbitt

• Paul Says:

  Mon, Nov 9th 2009, 19:39

  Hello, We have a 100.000e mortgage of which we now only owe 93.500e we live in the house here in Spain. But as from tomorrow we will be 3 months in arrears with our mortgage apart from a small payment of 300e which we managed to pay during the last 12weeks. the house has been on the market for a while and has now been reduced to 140.000e we received an email to day from our bank as follows: Hello, Tomorrow you will have 3 monthly repayments of the mortgage unpaid, this means we can not stop repossession any longer, because of the new mortgage law we have to present all documentation to judgement, as a provision of funds for the barrister to carry on the claim we will charge you around 5.000 Euros and this amount of money will be included in the debt, as you know with the new expanish law your mortgage is being considered as a high risk mortgage and the procedure to reposses the property will be express. As the market is down, in a possible auction the bank will not cover the total amount on debt, threfore you will end up loosing your property and you will still be a debtor for rest. From now on we will no longer have your file in our branch and all documentation will go to our Juridic department, we will not have information in the computer in our branch and everything you want to do will have to be done in our headoffice and with their permission. I am sending a copy of this e-mail to our juridic department called USRI ... A family member has offered to loan us 800e to give to the bank. If I make this payment tomorrow would they still be able to carry out the repossesion? we are worried sick because we have no other money nor property. We can not go back to the UK as we have no were to go, also my wifes 85year old mother lives with us who is unwell, so you can understand my mother -in-law's safe care and keeping a roof over her head is very important to us but also very worring. The monthly mortgage payments are 570e but i have no work now. what should i do? sorry this is so long but were at our wits end with worry and do not know were to turn. We think we have someone interested in buying the house from us but all we seem to lack is . The bank is awear that we are trying hard to sell it, also our estate agent has been intouch with them to inform them that he thinks the house will sell soon because it is now well below the market value. if they start the proceedings tomorrow will we still be able to sell it if this person wished to purchase it? and if we paid them 800e would this hold them off for a month or so? many many thanks for this excellent website. kindest regards Paul & Family

• Lawbird Lawyer Says:

  Tue, Nov 10th 2009, 12:21

  Dear Sir, First of all let me start by writing that I regret what you must be going through. As per my article on bank repossessions from last year 2008 which starts off this thread, banks normally wait 3 months to start repossession proceedings, but not always. There's an article on the Spanish Sur that was printed yesterday Monday on the matter of what happens to a borrower when they stop paying their Spanish mortgage: http://www.diariosur.es/20091109/malaga/pasa-dejo-pagar-hipoteca-20091109.html You can at anytime, prior to the court hearing, pay waht you owe, the outstanding balance which will be after 3 months are over: 1.- Lawyer's fees: normally between 8,000 -12,000€ 2.- Court agent's fees: approx 3,000€ 3.- Arrears 4.- Compounded delay (penalty) interest on the arrears You have to pay all the above lump sum to successfully stall the repossession procedure. Any attempt or suggestion to your lender to pay in installments will normally be turned down on exceeding 3 months in arrears. I'm afraid the 800€ will just not do to stop teh repossession. Please read other similar queries to yours: We are in 3 months of mortgage arrears with a Spanish bank for two properties the developer have not completed properly. What are our options? What are my options if I have fallen in arrears on my Spanish mortgage? Yours faithfully, Raymundo Larraín Nesbitt

• Unregistered Says:

  Tue, Nov 10th 2009, 16:12

  Hi - we have a two year tenancy on a property. We have paid the rent but have just found out that the owner has not paid the mortgage or a loan he had taken out for over a year. There has been a court hearing and an annotation of pre-embargo for the loan amount and costs was registered in April this year. Is this repossession proceedings or is it just to secure the loan against the house? Would the two be done together. No date has yet been set for first auction. As tenants, can we be evicted and, if so, will we be given any notice? As no date has yet been set for first auction, how long do you think we may be able to stay in the property? I am worried as we have only just paid for the second year's rent.

• Lawbird Lawyer Says:

  Tue, Nov 10th 2009, 16:28

  Dear Sir or Madam, You cannot be evicted on a repossessed property providing you continue to pay the let, don't worry. As a tenant you are (over)protected by law (Art 13 of Spain's Tenancy Law). I take for granted you have already lodged your tenancy contrcat at the land registry where this property is located. You will be considered a long-term tenant (5 years). You may be offered to leave the property for a suitable settlement. It will be up to you to accept the offer. Yours faithfully, Raymundo Larraín Nesbitt

• unregistered Says:

  Wed, Nov 11th 2009, 07:53

  Thank you for the assurance however, we have not logged the tenancy contract with the Land Registry as we were not aware it was possible or necessary. Will this mean we are not protected or can we register it now?

• Lawbird Lawyer Says:

  Thu, Nov 12th 2009, 10:36

  You're welcome. It' doesn't mean you are unprotected, it only means it's more advisable for your best interests, specially if there's a risk of someone buying the property in the future from your landlord. Long-term contracts should be lodged at the land registry, it's always advisable so that third parties cannot allege they were unaware of this. You have a specific sub-forum on Landlord and Tenant issues over here: Landlord / Tenant Issues Yours faithfully, Raymundo Larraín Nesbitt

• David Lightbown Says:

  Mon, Nov 16th 2009, 06:09

  A very informative site. I have talked to 2 banks for friends of mine who have problems and I found them helpfull but being able to talk to them face to face was the key. I have had a call from another person who has asked me to speak to his bank and the information on this site will help me help him Thankyou PS I am aware that a little knowledge can be dangerous

• Lawbird Lawyer Says:

  Mon, Nov 16th 2009, 08:55

  Dear David, Thank you for your kind words. That's why I've posted over and over again that it's important to build rapport with your bank. You must meet them in person, speak to them, let them know of your financial situation and that you are willing to help not to just walk away of the problem. Banks greatly appreciate this and can return the favour through interest-only, waiving commissions, daciones en pago de deuda (handing over the keys to the lender) etc. Your bank is not the enemy, it's the debt incurred. It's extremely helpful to get along with your bank always. Yours faithfully,

• K.B. Says:

  Wed, Nov 25th 2009, 22:26

  Dear, We are British homeowners (in Spain). WE have two properties in Spain, both on mortgage, my husband was made redundant in June, we went both to the first house bank (they are in different bank) and we have given the Manager the paper for redundancy, he put it on his desk and I was quite sure he will do nothing of it. lately we started being harrassed by the branch manager to pay four remaining quotes since July. My husband tried to explain he lost his job but at the end he went to Spain for the second time today to up to them sign a remortgage, firstly as they are very far from were my husband is, he asked the ''Manager ' to explain to him and send him in writing how much shall we be paying exactly after the 3 years of temporary remortgage they are giving us (I dont unserstand why it has to be 3 years and not a remortgage as normaly should be as we are only 40 yrs old and this house has been mortgaged for 15 yrs only and given ur age we can extend upto 35 years if Iam not wrong. Anyway, the manager showted at him that she cannot give him anything in wirting and told him anyway he has to come back in January to sign they cannot do it now (we do have all her emails anyway abt the situation and the different stories she was saying so far) my husband said he cannot go back as he has a job offer for january, she distroyed the documents she has to give him to sign and told him to go to court... I was very surprised when he called me and told me how they behaved, i called her and she said i cannot talk to you , we have wasited too much time on you.... and hangged up the phone on me. Very professional though... Anyway, Iam worried we leave the situationas it is because they are not giving us any choice and they will start chasing our other property for debts against the first one... please hel,,,, we are so confused. Regards K

• Lawbird Lawyer Says:

  Thu, Nov 26th 2009, 10:37

  Dear Madam, I'm sorry to hear your case which sadly has become commonplace. Your lender is now probably going to repossess your Spanish property. If there's a shortfall after they've repossessd you they may pursue your UK assets as well. It's similar as to how it works out in the UK: Banks still chasing families for mortgage debts after repossession The details on how this works in Spain are explained in the article that starts off this thread. Yours faithfully, Raymundo Larraín Nesbitt

• Martin and Adrian Says:

  Mon, Dec 7th 2009, 11:38

  We have two mortgages in spain one on each different property. For over 12 months now we have not paid any mortgages because we have tried to negotiated with our bank (Bano Popular) the way forward they have for 9 months given us false hopes and we complete on Wednesday on the sale of one property. We sold the property at 229,000 euros and had a mortgage of 150,000 euros but unknown to us the bank has taken some mortgage of our 2nd property and put on the first property with arrears and the buyer is having to pay they extra another 24 thousand euros we have lost all the profit and our buyer is paying in total aroun 252,000 euros. We do not get anywhere with the bank and feel let down the other property is in profit and we only now have 169,000 euro mortgage we cannot service this mortgage and we have asked for a complaint form for at least 9 months whioh they keep refusing to give us one. Is there anything we can do. We have lost everything like many others but want to stay in spain as the uk in our view is finished.

• IzzyM Says:

  Tue, Dec 8th 2009, 12:04

  My neighbour was about to be repossessed on two houses in this village, so she sold off all the contents for next to nothing before leaving for the UK. However, she also ripped out all the bathroom fitments, sold all the internal doors and frames, a complete fitted kitchen that the builder had installed, and all the swimming pool housing contents. The bank doesn't know the extent of the damage yet as there is a fiesta here just now. I am interested to know what kind of penalties she will face?

• IzzyM Says:

  Tue, Dec 8th 2009, 15:50

  Also, I have just witnessed the descruction carried out in the second house, an old townhouse, it has been vandalised, there is no other word for it, everything, cupboard, doors, chimneys, bathroom fitments, have had a sledgehammer taken to them. It's ruined. The other house was new - only 6 years old but has been reduced to bare shell, still with external walls, windows, and doors only. I am worried because this lady plans to return in a few weeks to collect the payments owed for the last of her belongings that she left with a friend to sell. Is this damage considered 'criminal'?

• deblew Says:

  Sat, Dec 12th 2009, 16:18

  My parents live in Spain permanently. Their property is worth approx 300,000 euros in today's market. They have a small mortgage, 25,000 Euros, but as retired folks have minimal income. They are now struggling to meet the monthly payment of 400 euros. They have approached the bank who refuse to let them go on to interest only payments. They are looking at Equity release but cannot get this whilst they have a mortgage. They feel their only option is to hand the keys to the bank. Can you suggest any alternatives?

• doris Says:

  Sun, Dec 20th 2009, 15:53

  Thank you for this informative site. A friend of mine is in a similar situation and having defaulted on payments for over a year, he was niave to think that the bank would just repossess the house and that is all. As I have read from here, since he has defaulted he can no longer just hand over the keys. What is your best advice regarding this? He has received a letter from a UK based debt collector offering a 20% discount if the debt is cleared within 30 days... does that mean the debt has been sold from the Spanish bank to a debt collector now? I'm not sure if that means repossession is in progress? I believe the mortgage sum outstanding is not massive (around €70,000) although it is significant. If he has no means of paying this, will the debt collector (whether acting on behalf of the bank) accept repossession??

• Lawbird Lawyer Says:

  Fri, Jan 8th 2010, 10:53

  Dear Martin and Adrian, You can write a complaint and send it to their Complaint´s Department. If they are not forthcoming with areply you can then lodge a complaint before the Bank of Spain on your matter. In this case their complaint´s department is centralised in Madrid: http://www.bancopopular.es/popular-web/atencion-cliente.htm Yours faithfully, Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Fri, Jan 8th 2010, 10:56

  Dear IzzyM, That falls to the bank to pursue it or not. Some and some don´t. Yours faithfully,

• Lawbird Lawyer Says:

  Fri, Jan 8th 2010, 12:56

  Dear deblew, It would seem your parents can only return the keys to their lender as they have no other option. The procedure to follow is explained clearly on this thread which has links to the article explaining it in even more detail: handing over the keys to the bank - 24th February 2009 Unregistered Please contact us if we can further assist your parents on this matter. Yours faithfully,

• Lawbird Lawyer Says:

  Fri, Jan 8th 2010, 14:37

  Dear Doris, You´re welcome. As I've written in many replies, Spanish lenders at times sell on these debts to local debt collecting agencies for anominal value (i.e. 70% of teh debt) who will then pursue you. You can reach an agreement with said companies to pay in installments. Following your query, if they are offering him/her that option it´s because probbaly repossession hasn´t concluded or hasn´t even started yet. They may have already started the repossession procedure however. Even when a repossession procedure has been initiated you can still clear all the arrears. You normally have 18-24 months until the auction. If you clear it before the hammer goes down you can successfully avoid the repossession. But you will now have to come up with all the following: 1.- Lawyer's fees: normally between 8,000 -12,000€ 2.- Court agent's fees: approx 3,000€ 3.- Arrears 4.- Compounded delay (penalty) interest on the said arrears You have to pay all the above lump sum (no installments) to successfully stall the repossession procedure. Prior to initiating the repossession procedure a debt collecting agency may contact you, such as your friend´s case, to offer him/her to repay the debt in installements. My advice, as always, is to do everything possible to avoid this repossession scenario. You must draw the red line at this point to avoid yourself a financially compromised future. Yours faithfully, Raymundo Larraín Nesbitt

• Stefan Says:

  Wed, Jan 13th 2010, 00:26

  What a great help this website has been. I was stung 5 years ago with didgy English estate agent. Paying well over the odds. But my question is like most others, I have a property in Spain and with the Pound being so weak the mortgage payments willbecome difficult after March. I saw this coming back in august 2009 and went to see the bank manager. He is a nice guy, we communicated on his computer using bablefish. He said I could lenghthen the mortgage but the cost would be 2,000 euros. That seems alot. My house is up for sale and I just want an interset only until the house sells. Are there no such things as interest only mortgages if you are struggling or is it up to the managers discretion? Incidently after our meeting he took me across the road and got me half drunk. So not all bad. PS- To everyone out there stick in an follow the advice on here, in a weird kinda way its nice to know that we are not alone with our worries and concerns.

• Lawbird Lawyer Says:

  Wed, Jan 13th 2010, 09:09

  Dear Sir, Thank you for your kind words. It's at the lender's discretion to give you interest-only, yes. It is not compulsory for them to offer it. Have you read my blog post on swapping over to interest-only? Spanish Mortgages: No Tax on Term Extension or Swapping to Interest only Friday, June 26th, 2009 Yours faithfully, Raymundo Larraín Nesbitt

• Richard Linda Says:

  Tue, Jan 19th 2010, 11:39

  I have an apartment in Murcia with a loan from Cajamurcia. I have lost my job and asked Cajamurica to take back the apt under the 'Dacion en Pago' procedure as discussed here. They have not started repossession procedures, I am not in arrears and the apt is in small positive equity so met all the criteria you discuss but they they have refused saying that I needed to have paid back 15% of the capital before they consider it. What can I do now?

• Lawbird Lawyer Says:

  Tue, Jan 19th 2010, 11:49

  Dear Sir, A debtor is in his legal right to request that his lender accepts assets (an apartment in your case) to fully or partially discharge your mortgage liability. If your lender is refusing your petition, you have no option other than to hire a lawyer and challenge them at court enforcing your rights which are enshrined by our Civil Code. With even more reason if the apartment is in positive equity. Yours faithfully, Raymundo Larraín Nesbitt

• Reberto Says:

  Wed, Jan 20th 2010, 12:36

  Hi, I have a spanish house and this was bought by myself and my partner in 2006 - We since split up, and although the mortgage was in both our names, I was left paying the bill. I could not afford to pay all the mortgage but did so as long as possible then reducing to half which was affordable, but without her contribution it was not possible to keep this up for long and thus got further into debt. Eventually I sent a recorded letter and email to the spanish bank saying I could no longer keep up the payments and asked them to take the properity in exchange of the outstanding debt, this was early 2008, I have heard nothing since, no chasing of debt, no emails no calls until today I recieved the following message. We have just been advised via a telegram that the Bank is starting court proceedings to repossess your property in Spain. We are not sure you were told about it as we were the proxy at the time of the purchase. This is sent for information only. I would be willing to settle the debt, but wonder how much this would be as they Value on the villa at time of purchase was 159000 euro's and the mortgage left owing was 109000, does that mean if they sell in auction they cannot go below 50% of its worth or its mortgage or does it get revalued, and will they accept me paying half the deby left owing as this was in joint names?

• Lawbird Lawyer Says:

  Wed, Jan 20th 2010, 14:45

  Dera Sir, I refer you to post 93 on this thread which explains what you have to pay now to avoid a repossession. It doesn't matter if you owe all, half or 1% of the property; you are liable for the full amount of the loan jointly or severally with your ex-partner on defaulting. You will be expected to pay in full lump sum the breakdown detailed in post number 93 if you are to stall successfully the repo. Failure will result in you being repossessed. In which case, as explained in my article which starts off this thread, in no-one bids in the public auction the value of the property will drop 50% as per our Civil Procedural Laws and your lender will adjudicate itself the property. If there's any shortfall between what you owe and the value fetched by the property in the auction (very easily) you will be held personally liable with all your assets both now and in the future. As I also explain in this very thread on repossessions, no-one is bidding in these public auctions (unless the house is in a prime location i.e. beachfront) because the mortgage liability on these overvalued assets frequently exceeds the value itself of the underlying asset defeating the whole purpose of acquiring it. In other words, a flat that is worth 120,000€ has a mortgage on it for 175,000€ so no-one will want it because you cannot resell it and make a profit. Even professional bidders are out of the picture. That's why banks have set up all these real estate agencies that I reported back in early 2008: Pssst! Looking For Cheap Spanish Property? - October 5th, 2009 by raymundo Lenders need to get rid of their property portfolios and now they are targeting foreign institutional investors than can shift hundreds of properties for sizeable discounts. Yours faithfully, Raymundo Larraín Nesbitt

• maggie Says:

  Mon, Jan 25th 2010, 19:17

  We have been lucky to sell our holiday apartment in spain, which we purchased 8 years ago. We are being paid in euros which we will deposit in our english bank where we live. Are we better off financially by the Euro being strong against the pound, whereas 8 years ago, the euro was weak. Thank you for your help

• Lawbird Lawyer Says:

  Tue, Jan 26th 2010, 08:49

  I'm glad I was of help to you Maggie. That is an advantage that few vendors spot. You can actually offset the loss of lowering significantly the price of your Spanish property as you are being paid in hard currency (Euros) which you can then change at a superb exchange rate over to GBP. So you can actually walk out even or even make a tidy profit on the sale. Kind regards, Raymundo Larraín Nesbitt

• Jon Says:

  Thu, Feb 4th 2010, 15:41

  I have a friend who has/ had 2 property’s in Spain both of these has not had any mortgage payment made for over 2 years now, They have tried to sell one of the property’s to clear a large amount of the outstanding mortgage but the bank blocked the sale saying all or nothing. The second property was never finished by the developer as they went bust taking the up front money with them. There has been very little communication from the bank regarding the outstanding debts. Reading your post’s this seems a bit strange when you consider the time that has past since any payment has been made. You say that the Spanish banks will take action in the UK to reclaim any outstanding amount, this now hits another point. My friend’s house in the UK was also in mortgage arrears and was repossessed middle of last year. Both her and her partner have separated financial problems being one of the causes for the separation Nether my friend or her ex partner have any valuable belongings, she is in rented accommodation and her partner is now living with his mother. There is outstanding debt in the UK for the repossessed property plus additional unsecured debts that where run up. Nether one of them shot of a lottery win or similar are or will be in a position to make repayments to ether the British or Spanish creditors. The question is how long can the proceedings go on for, what happens if payment can not be meet?? Thanks Jon

• Lawbird Lawyer Says:

  Thu, Feb 4th 2010, 16:28

  Dear Sir, The statutory limit is 20 years. However this is a prescription limit. Meaning that if the lender at anytime within those 20 years (Art 1964 SCC) sends you a registered letter demanding payment of the debt, or chases you through the law courts, the clock start ticking again (Art 1973 SCC). And they will do this again and again as they are relentless. They hire law firms that make sure the 20-year limit is never overrun. On my first job as a lawyer I was chasing up mortgage debts from 1987! This is done because over your lifetime you may come into money as it's foreseeable you will inherit at some point or other in the future, at least most people do statistically. Some people learn to live without having anything under their name so as to avoid them. In any case no-one can jail you for having debts in Spain. Yours faithfully,

• Jon Says:

  Thu, Feb 4th 2010, 17:32

  Thanks for your help your info is very helpfull. One other thing that concerns me is what would happen if i was to treat my friend to a holiday in spain, is the fact that a debt and court procedings are outstanding going to be picked up at pass port control ? would she be taken to the nearest police station / court to answer questions on the matter? Thanks again Jon

• Lawbird Lawyer Says:

  Fri, Feb 5th 2010, 08:37

  Dear Jon, You are welcome. No, that's exactly why I added the line that you can no longer be imprisoned in Spain because of running up debts. Your friend can book a flight and come over to Spain to enjoy the sunshine. She won't have any problems at customs nor will she be dragged off to the nearest Police station. Yours faithfully,

• mea kerr Says:

  Fri, Feb 5th 2010, 11:38

  We are now 4 payments behind on our mortgage in the Canaries. The bank has said they need at least 2 payments to stop the file going to the legal dept. We have struggled with the mortgage for just over a year. We have been in contact with the bank via e-mail throughout this, often telling them how much and when the money will arrive. The problem is we stopped paying communidad to try and keep up the mortgage payments, we now also owe €5000 communidad and cannot meet any payments with the bank. If the bank refuse to let us hand the keys back what is the best course of action we should take? Kind Regards

• Lawbird Lawyer Says:

  Fri, Feb 5th 2010, 12:06

  Dear Ms Kerr, I copy you in my article: Advice to Struggling Mortgage Borrowers in Spain -14th April 2010 Levante Lifesyle Magazine http://www.eyeonspain.com/forums/posts-long-5402.aspx - 3rd September 2008 Eye on Spain Advice to Struggling Mortgage Borrowers in Spain Raymundo Larraín Nesbitt 3rd February 2010 Introduction Following-up on my article of 2008 on Bank Repossessions in Spain ex-pat landlords are still struggling to remain afloat in 2010. It is important to clarify that a property on being repossessed still belongs to you, not to the lender. You are the one that appears lodged at the land registry as the title owner. On defaulting a mortgage loan the debt goes personally against you. You will be held liable with all your assets, both now and in the future, following art 1911 of the Spanish Civil Code. This is a General legal priniciple in Spanish law.- Personal and Unlimited Liability. The above has huge legal implications that most foreign borrowers were not aware of at the time of signing their Spanish mortgages. It means that if the property has slipped into negative equity (i.e. house price fall, or after a repossession procedure) then the outstanding balance is owed by yourself. This debt is pursuable even in your home country against your assets held abroad. As explained in my article on Spanish repossessions, if no-one bids for the property in the public auction the lender will be forced to withhold it for 50% of its appraisal value. Meaning you will owe the outstanding balance plus the repossession expenses incurred (lender’s lawyer’s fees as well as court agent’s fees). The latter will be added to your debt. Post credit crunch it is renowned that professional bidders have vanished into thin air as credit is hard to come by. Bidders are required to lodge before a law court auctioning off the property 30% of the appraisal value. Given the current grim financial environment we can safely assume that in most cases properties being repossessed and auctioned off will end up in lender’s property portfolio. Which explains why lenders have been busy incorporating real estate divisions to get rid of their excess property stock. Spanish banks can and are already chasing-up debts in the UK or elsewhere against any assets you may hold in your home country. They may outsource this work to local UK law firms or else debt-collecting agencies or else simply sell the non-performing mortgage to specialised companies for a fraction of the nominal value. The latter will then chase you. Lenders will not hesitate to send you threatening letters with the hope of avoiding a protracted repossession procedure. In practice, it will fall down to the amounts owed. It's true that this is often an expensive process for Spanish lenders so they may be reluctant to follow it. Bear in mind the default interest rates agreed within your Mortgage deed normally range between 15-30% compound interest p.a. (not simple interest!). So the debt will mount exponentially over time very quickly. Walking away from your Spanish debt is not an option for most people as it will come later on to haunt you in life. Not to mention that your credit rating in Experian and other credit-rating agencies will be ruined. Some borrowers in arrears, unable to meet their financial commitments, have simply handed over the keys to their lenders in the hope this would discharge them from their debt liability. Crass error. In Spain to hand over the keys to the lender it must be done through a formal procedure at a Notary public which involves signing a deed relinquishing ownership in exchange of being fully discharged from the mortgage liability. This is known in Spanish as “Dación en Pago de Deuda”. Spanish banks are very surprised at this new phenomenon dubbed “jingle mail” and have been caught completely off-guard because they are used to dealing with Spanish borrowers who no matter what service their mortgage on time even if they have to live on bread and butter. Whereas many foreigners have been walking away as if this was the US thinking no further legal consequences would arise from turning their backs to the problem. The ability of a solicitor to act on your behalf on this matter is honestly very limited. The ongoing credit crunch doesn’t make it any easier as Spanish banks themselves are increasingly struggling to secure finance lines from abroad. The Bank of Spain is bound to pass -again- more stringent regulation in 2010 forcing Spanish lenders to increase provisions set aside for defaulted loans on dwellings from 20% to 30% after one year in their balance sheet. In my opinion this new regulation will have as collateral victims foreign struggling mortgage borrowers as Spanish banks will from now onwards grow increasingly wary of caving in and accepting a dación en pago de deuda (handing over the keys in exchange of the debt). Historical low interest rates have held at bay repossessions in Spain after they had reached an all-time high in 2008 when the Euribor rate (to which most Spanish mortgages are referred to) peaked on October 2008. If interest rates are once again raised later on in 2010, as experts forecast, in the hope of a market recovery we may face –yet again– a new tidal wave of bank repossessions. Tips to struggling mortgage borrowers: 1. Switching to interest-only. This can be arranged whilst the property is put up for sale or just to weather off the storm meanwhile. This option has become increasingly difficult post credit crunch as Spanish banks seldom grant interest-only and if they do, it's really just as a teaser for two years. 2. Extending mortgage repayments an additional number of years. The drawback is that on doing so the amount of interests you pay on the long run is increased dramatically. So it's only an option for those who are left with no other really. The Government is now allowing this change free of charge to struggling mortgage borrowers providing they are resident and the property is their permanent dwelling. Borrowers will not pay for Notary or Land Registry fees on following it. 3. "Dación en pago". This is basically handing over the keys to the lender and signing a deed at the Notary whereby the lender commits itself not to chase you for the debt and consider it discharged for good. Two things are required, the property must not be in negative equity and ideally there should be, as rule-of-thumb, 20% equity so as to offset the lenders’ expenses on taking over the property. It doesn’t matter if you are in arrears, what does matter is that the repossession procedure must not have been initiated by the lender. This is harder than people think because due to the easy credit of the last years the Loan-To-Value of properties was really high, too high in fact, hence all the bank related problems we keep reading with massive writing-offs. People borrowed far too much and now their properties may have fallen below what they borrowed against them. Should this happen the lender will be very reluctant to agree to this "dación en pago de deuda" because the collateral now will have few equity. 4. Selling the property as a distressed asset. If you have already run through the numbers and you are convinced that you will no longer be able to service your mortgage, rather than defaulting and being repossessed, you should very seriously consider selling the property as a distressed asset. The catch again is that the property should not be in negative equity. The more it is the least likelihood there will be anyone interested in it as they in turn are regarding the purchase as an investment and the numbers need to stack up to make it worthwhile for them. 5. Applying for debt consolidation. There are many financial companies offering this service. Basically what they do is group all your debts with different lenders (from credit cards, your mortgage loan, personal loans etc) with only one lender who then extends the loan repayments. The consequence this has is that your monthly repayments are cut down significantly making them more affordable. However the drawback once again is that on extending the financial commitments you will pay more interest on the long run. Contd. below:

• Lawbird Lawyer Says:

  Fri, Feb 5th 2010, 12:08

  6. Swapping over the mortgage to a new lender. Many lenders are now offering to take on existing mortgages paying all the transfer expenses. These lenders normally require the property was bought prior to 2003. In addition, for those who hold collar clauses, swapping over to another lender offers the opportunity to get rid of these bothersome clauses and take advantage of the low interest rates. In Conclusion My advice is to draw a red line on a repossession procedure. You should try to avoid this scenario at all costs. As the debt goes personally against the borrower in Spain, you may live a nightmare with debt-collecting agencies, banks or lawyers knocking at your door for years to come. As the compound default interest is fairly high this will be tagged on to what you already owe creating a debt spiral. Please note the information provided in the above article is of general interest only and is not to be construed or intended as substitute for professional legal advice. Related articles: • Spanish Mortgages: No Tax on Term Extension or Swapping to Interest only – 26th June 2009 • Spain’s Senate Petitions Government to Suppress "Floor Clauses" - 23rd of September 2009 • 10 Common Abusive Clauses in Spanish Mortgage Loans – 4th of June 2009 • The Dación en Pago Explained -28th March 2009 • Sterling Plunge: Not All Doom and Gloom -4th January 2009 • Steep Drop in Euribor Translates into Cheaper Mortgages -31st December 2008 • The Dacion en Pago Procedure – 21st November 2009 • Cannot Keep Up Repayments on your Spanish Mortgage? Not All is Lost. -9th November 2008 • What are my options if I have fallen in arrears on my Spanish mortgage? -18th November 2007 • We are in 3 months of mortgage arrears with a Spanish bank for two properties the developer have not completed properly. What options do we have? -16th September 2007 Lawbird Legal Services is a law firm with broad experience in Litigation, Corporate and Spanish Property Law. Yours faithfully, Raymundo Larraín Nesbitt

• mrs lewis Says:

  Tue, Feb 16th 2010, 14:21

  We are currently having our home repossessed in spain we have children. Can we legally be evicted. many thanks

• Lawbird Lawyer Says:

  Tue, Feb 16th 2010, 14:55

  Dear Madam, That will not thwart the procedure.

• Stefan Says:

  Sun, Feb 28th 2010, 19:08

  Hi, I mentioned a couple of months ago about extending my Spanish mortgage but the bank wanted 2,000 euros. Their bank manager is off ill and the person who my friend spoke to (She is a lawyer from Peru) so speaks fluent told her that is was not their problem and they had their own clients to deal with. I spoke to santader bank in London a nd they have tried to help but with little success. I have sent a number of bank statements, my business accounts etc to the bank of Valencia whO I bank with. My question is you said previuosly that there was a blob about not paying tax on extended mortgages and interset only mortgages, i could not find the blog but I just want to know shoukld I have to pay tax on another mortage again and will I have to pay Santander bank for leaving them? I have been with them for 5 years and don't think there is a tie in penalty now. Also, I do not know if it would be better to have a mortgage with just the banks normal interest rate or the Eurebor? is it still low? Many Thanks

• Lawbird Lawyer Says:

  Tue, Mar 2nd 2010, 10:32

  Dear Stefan, Many queries. I wrote a blog post in June last year on the points you raise: Spanish Mortgages: No Tax on Term Extension or Switching to Interest-only -June 26th, 2009 Spain’s Tax office has replied within the last month two binding legal queries which shed some light onto the taxation of the amendment of mortgage terms ("novación"). On the first reply of 25th of May, the Dirección General de Tributos (DGT) clarified that switching to interest-only will no longer attract Stamp Duty. On the second reply of 10th of June, the DGT has stated that changing the mortgage’s reassessment date will no longer pay Stamp Duty either. It would be regarded as exempt following art 9 of Law 2/94. E.g. a borrower changes the mortgage resetting from once a year to a quarterly basis. Regardless if the borrower chooses one or both options they will not attract tax. Also, a lender cannot lawfully charge more than 0,1% to extend mortgage repayments. This is welcome news indeed for struggling mortgage borrowers that will now have more options available to them without being taxed on choosing them. Reducing citizen’s tax burden is always the right path on the road to financial recovery. The Spanish Tax Office itself has replied to this query in a binding reply. Ther are no taxes to be paid on switching to interest-only or changing the reassesment date of your mortgage (Euribor rate revision), period. Another matter are the notary and land registry fees due on the mortgage loan amendment ("novación"). Regarding extending a mortgage loan a lender, by law, cannot charge lawfully more than 0,1% of the pending capital redemption. That is the maximum they can charge the borrower as commission. Another matter -again- are the Notary and land registry fees borne which you will have to pay as it's natural, not your lender. They are specified in art 8. Law2/1994 rules on this, as per my blog post herein above. Concretely in its art 10: Artículo 10. Comisión por ampliación del plazo del préstamo. (commission for extension of mortgage loan) En las novaciones modificativas que tengan por objeto la ampliación del plazo del préstamo, la entidad acreedora no podrá percibir por comisión de modificación de condiciones más del 0,1 % de la cifra de capital pendiente de amortizar. (maximum of 0,1% of the amount pending redemption) Regarding your last question, on whether it is more advisable that your mortgage loan is referred to the Euribor rate, as most Spanish mortgages are, or else to the "banks normal interest rate" I advise the former. It is renowned that in view of the Euribor having hit a historical all-time low in 2010 banks are now trying to push alternative benchmark interest rates on new mortgage loans. You can be sure they are not doing this so borrowers benefit, quite the opposite, these new referral rates happen to be always higher than the Euribor. Bottom line, stick to Euribor rate if you you want to pay less. And to close, you as a Consumer have a right to obtain always a full breakdown of expenses itemising exactly what you are being charged for. Yours sincerely, Raymundo Larraín Nesbitt

• Stefan Says:

  Wed, Mar 3rd 2010, 03:34

  Hi Raymundo Thanks alot for your clear explanation. That has been very helpfu. There is one more querie if I may ask and that is If I leave Sanatnder to go to the Bank of Valencia (As Santander do not offer mortgages with the eurebor) will I have to pay taxes if I remortgage with another bank or only avoid them if I stay and extend lenght of term with current lender? Many Thanks Again Stefan

• Lawbird Lawyer Says:

  Wed, Mar 3rd 2010, 08:54

  You are welcome Stefan. Many banks are now offering clients to switch lenders and they are the ones that pay for everything, so it's gratis for you. Are you aware of such offers? Why don't you talk to an experienced mortgage broker on this? They can point you in the right direction. If you remortgage with another bank you will of course be expected to pay tax, yes. That's why you must run thorugh the numbers carefully and verify it interests you to jump ship. Regards, Raymundo Larraín Nesbitt

• mr singh Says:

  Tue, Mar 16th 2010, 12:26

  Dear Stefan, what is the current 2010 stance/policy of Santandar bank on persuing UK lenders who default on spanish mortgage? I am upto date but in 3 months will not be able to keep up payments.The property on a golf resort should just about the value of the mortgage .I was going to let the bank have 3 month advance notice and ask them to cancell mortgage and take the property back as the they can still i think break even.What do you think?

• kelly Says:

  Tue, Mar 16th 2010, 13:44

  we have been offered a dacion en pago on our property, we are now awiting the study. last september we had a re mortgage our bank valued our property last september at 328,000 euros which to me is way overpriced we have a mrtgage of 175,00 and we are hoping the dacion will cover this. I have been told that by law in spain banks cannot drop the valuation of a property by less than 20% in the same year is this correct? i would really like some advice on this thanks

• Lawbird Lawyer Says:

  Wed, Mar 17th 2010, 08:28

  Dear Sir, I'm sorry, I do not know to what law you are referring to. Yours faithfully,

• Lawbird Lawyer Says:

  Wed, Mar 17th 2010, 09:36

  Dear Sir, You have made the mistake of not hiring a lawyer to hand over the keys to your lender through a formal procedure known as "dación en pago". This procedure is explained in my articles: The Dación en Pago Explained - 28th March 2009 The Dacion en Pago Procedure - 21st November 2008 I always recommend everyone to hire a Spanish lawyer to ensure the mortgage liability is discharged in full, which isn't your case. You have made the same mistake as these other borrowers: Can we be chased by the bank after arranging a Dacion en Pago? - by boabster Property was bargained away and we are being chased for the shortfall. Please help Wendy The above people thought or were mislead into thinking they were doing a dación en pago. They in fact gave POA to their banks who sold the properties on at BMV. The outstanding debt is till owed to the bank and the liability is personal and unlimited meaning the lender can pursue in the future the borrowers for the shortfall. Or they can simply sell on the debt to some debt-collecting agency in the homecountry of the defaulters. To stop the bank from pursuing you further you would have to sign a deed at a Notary where the debt is released in exchange of you paying what's owed. Yours sincerely, Raymundo Larraín Nesbitt

• Nigel Says:

  Thu, Mar 18th 2010, 10:48

  Thanks for the useful info and hopefully you can comment on the following. I am in the process of being repossessed by a bank on Gibraltar for a house I own and that is registered here in Spain. Unfortunately I now have no way of paying the mortgage, which is c30.000 in arrears and with negative equity currently running around €250.000. I have no assets here or elsewhere. My only option, it seems, is to declare myself bankrupt. Is this a possibiity in Spain? If not I won´t be able to live with the constant chasing from banks, lawyers, debt recovery agencies etc as you have noted in many posts above. In that case i will mover back to the UK, declare myself bankrupt there and be discharged after 2 years. A bad credit file would be a good thing after the current nightmare.

• Lawbird Lawyer Says:

  Thu, Mar 18th 2010, 12:14

  Dear Nigel, Filing for individual bankruptcy is possible following Spain's Insolvency Act of 2003. However this is seldomly advisable for individuals. First of all it is devised for affluent individuals, which helps explain why so few families in Spain have applied for it (couple of hundreds only). Secondly you will be expected to pay in the region of €20,000 lump sum for it to be considered which obvioulsy defeats the whole purpose of "filing for bankruptcy" for most individuals. If they had €20,000 to spare they would logically not be in need to file for it. Spain's lacklustered Insolvency Act has been undergoing heavy criticism from lawyers and judges and was partially amended in 2009 and will be amended soon yet again. So bottom line, we do not recommend you to follow this option in Spain. Yours faithfully, Raymundo Larraín Nesbitt

• John Rodger Says:

  Mon, Mar 22nd 2010, 14:34

  I have signed a guaranor form foir a friend on some properties in Spaina nd now the person can not afford them. The guaranor was signed in a UK lawyers form who does not do international law. If I have signed this guaranor form in English does this mean it is valid in spain or is it that just spanish versions are valid ? THis is for 350,000 so obviously I do not have the money to pay. I heard I had to go to spain to be liable as if I did not attend any court hearings it was then not valid .... please can you confirm these points for me please. Lastly do you also act in other parts of spain i.e. Majorca or Tenerife or not. Thank you very much

• Lawbird Lawyer Says:

  Mon, Mar 22nd 2010, 15:46

  Dear Sir, We act nationwide, yes. Can you please contact us and scan and e-mails us what you've signed regarding the Spanish mortgage. Normally a guarantor is included in the Mortgage deed itself signed at the Notary. As you are probably already aware, when you act as a guarantor of a Spanish mortgage if the principal borrower defaults on the loan, a guarantor is held personally and unlimited liable with all his assets both now and in the future for the full amount of the loan. Yours sincerely, Raymundo Larraín Nesbitt

• Paul Nelson Says:

  Wed, Mar 24th 2010, 20:19

  I have a property in Spain which I no longer live in. My ex partner is still living in the property and has stopped paying the mortgage as she says she can no longer afford to. We are both on the deeds and I am pretty sure that the property is not in negative equity, (150,000 euro mortgage left) and property worth about 300k. If the bank does go ahead to repossess the property and sells it at auction for a a profit am I entitled to half of the remaining proceeds and if so how do I go about obtaining them? Thanks for your help

• Lawbird Lawyer Says:

  Thu, Mar 25th 2010, 08:40

  Dear Paul, If the bank goes ahead and repossess it it will probably adjudicate itself the property as no one is bidding for properties nowadays post credit crunch unless it's regarded as prime real estate for which there is always a market. Meaning there wil lbe automatically a price drop of 50% of the appraisal value as explained in my article on bank repossessions in Spain which starts off this thread: Excerpt: Public Auctions Mean a Further Drop in Property Prices As the influx of repossessed properties increases in the near future banks will eventually be forced to go through a Public Auction. In these auctions the value fetched by properties can easily fall below 50% of the market value, which would mean that even if the bank sells the asset in the auction the debtor will still owe the bank the balance of the loan. To this balance the legal fees of the bank’s lawyer and the associated costs of the seizure process must be added. So a property worth 300K will be adjudicated for 150K to the lender after the repossession is over. To which the expenses and fees of the repossession must be deducted. So both you and your ex-partner will be held liable for the shortfall and may be pursued for the negative equity. When you write you are both "in the deeds" I take it you refer to the Mortgage deed. Because if only one is on the Mortgage deed and you are both on the Title deed only the former will be pursued legally. I would strongly advise you and your ex-partner to follow what is konw as a dación en pago (handing back the keys to your lender in a formal legal manner). More on the dación en pago process: The Dación en Pago Explained - 28th March 2009 We can assist you in a dación en pago, we charge a flat fee of € 1,200 plus VAT per property nationwide. Please read the following post carefully: Advice to Struggling Mortgage Borrowers in Spain - 3rd February 2010 Yours sincerely, Raymundo Larraín Nesbitt

• matthew Says:

  Thu, Apr 1st 2010, 18:34

  i have taken a loan out for 6,000 euros and have paid back about 1,000, we had the loan on our property in spain. and my mother put her house against it as well, i made the first 6 months payments, then lost my job, my mother died and we we moved back to uk, and have no contact from the bank as we do not speak spainish, we have been back 6 months, and a friend has told us they have taken our house,its worth about 100,000 is this possible. is there any thing i can do.

• Stefan Says:

  Fri, Apr 2nd 2010, 04:40

  Hi I just wanted to ask you a couple of things please. I have my house up for sale but I am trying to get an interest only mortgage until he property is sold as the euro rate is crippling me financially. If you are not a resident where do you stand with tax and general fees if remorgaging? The other question is there apparantly a Spanish couple who want to rent my house. The only thing that concerns me is that I have been in touch with an esate agent called equus about renting, they said they can arrange a contarct and collect money but where do you stand inSpain when tenants stop paying rent? I beleive there is an insurance policy you can take out for 58 euros a year which protects rental income, and court costs for eviction. Do you know of this insurance and if so is it reliable. I am not sure if the tenants also have a small child and this is another thing when children are invloved it is harder to vacate them. As my house is up for sale it may be unwise to rent anyway. I don't know what to do as the worst case senario for me is that I have tenants in, not paying rent, I still have to pay mortgage and cant sell the house. Many Thanks Stefan

• Lawbird Lawyer Says:

  Mon, Apr 5th 2010, 08:44

  Dear Matthew, If your mother acted as a personal guarantor of your loan (avalista) and you stopped paying, your lender will take her assets if she failed to repay your debt, yes. 500 borrowers everyday lose their properties to their lenders in Spain on being repossessed. Yours sincerely, Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Mon, Apr 5th 2010, 08:49

  Dear Stefan, The insurance policies I know which are regularly used against defaulting tenants are normally an anual fee equivalent to one month's rental. More on this in my article: Landlord: Keys to Successful Rental Income - 31st January 2008 These insurances cover normally the legal fees and expenses of having a tenant removed. Perhaps when you mention the €58 you are referring to adding an arbitration clause in lieu of litigating. This is an acceptable option as well but it alsp has its associated drwabacks, so it's not entirely risk-free btw. Yours sincerely, Raymundo Larraín Nesbitt

• stefan Says:

  Mon, Apr 5th 2010, 19:30

  Hi If you extend your mortgage to bring payments down do you still have to pay stamp duty tax if you are not a resident or will it be waved as the mortgage is already with theat lender? Many Thanks

• Lawbird Lawyer Says:

  Tue, Apr 6th 2010, 08:29

  Dear Sir, You already asked this question on post 111 on this thread and was replied to in detail in post 112: http://www.marbella-lawyers.com/forums/showthread.php?t=73&page=12#112 You will pay it. Yours faithfully,

• Joanne Says:

  Wed, Apr 14th 2010, 13:33

  I want to give my property back to the bank.My morgage is so high I can never pay it off or sell due to problems. I owe them 200 euros which is a part payment of monthly morgage. They have already threatened repossesion. I also have a personal loan from them. I owe community fees. I am self employed and my work has dried up. I read your comment on dacion de pago were you say all debts must be paid before you can make this arangement.I can not do this. Do I just have to wait for them to repossess incurring extra charges for everybody or is there another alternative.Would al these debts be added morgage, personnal loan ,and community fees together with any other debts on property. I do not own any property and have a car on credit. Can they if once my property is repossessed make a charge against any future earnings if I am self employed. For instance track down a bank acount and take any monies deposited there. Plus blacklist my name.

• Lawbird Lawyer Says:

  Wed, Apr 14th 2010, 16:58

  Dear Madam, Where is it that I write that all debts must be cleared so your lender accepts a dación en pago? Can you quote me writing that please. If I've written that it's incorrect advice and I stand corrected. What I write is the following: Advice to Struggling Mortgage Borrowers in Spain - 3rd February 2010 3. "Dación en pago". This is basically handing over the keys to the lender and signing a deed at the Notary whereby the lender commits itself not to chase you for the debt and consider it discharged for good. Two things are required, the property must not be in negative equity and ideally there should be, as rule-of-thumb, 20% equity so as to offset the lenders’ expenses on taking over the property. It doesn’t matter if you are in arrears, what does matter is that the repossession procedure must not have been initiated by the lender. This is harder than people think because due to the easy credit of the last years the Loan-To-Value of properties was really high, too high in fact, hence all the bank related problems we keep reading with massive writing-offs. People borrowed far too much and now their properties may have fallen below what they borrowed against them. Should this happen the lender will be very reluctant to agree to this "dación en pago de deuda" because the collateral now will have few equity. The Dación en Pago Explained - 28th March 2009 How does a Dación en Pago Work? For a lender to accept it two things are required.- 1.The property must not be in negative equity. 2.The lender must not have started a repossession procedure against the property. The outline of how it works is as follows: 1.The borrower must be on time with the repayments as well as with the Community fees and local taxes. The latter can actually be negotiated with the lender. 2.The borrower approaches the lender and proposes this procedure. 3.The lender will require the property to be reappraised. You will be expected by your lender to pay this in advance. On average it's approximately 350€. 4.If on average the new valuation of the property covers the outstanding mortgage loan plus 13% of the associated legal expenses the lender will accept to take the possession of the apartment, cancelling your debits and will waive taking legal action both in Spain and abroad in your home country. As a rule-of-thumb the cushion of equity should amount to at least 20% of the property value. 5.The day of signing the Deed at the Notary, the borrower will surrender the keys, and leave the property clear of furniture and tenants. 6.The property will now be lodged under the lender’s name. I've signed daciones en pago at Notary's and my clients owed money i.e. outstanding community fees, unpaid utility bills etc. The dación was signed without a problem. So long as there is enough equity in the property the lender will sign. You can also be in arrears and it wouldn't matter. The only three things that matter are: 1. The property must not be in negative equity. Thre should be at least as a rule-of-thumb 20% equity. Following stringent regulation from the BoS the equity within the property should now be raised to 30% in my opinion for 2010. Whicn translates into lenders being more reluctant than ever to accept a dación en pago de deuda. 2. Your lender must not have initiated a repossession procedure against you. 3. And finally there should be no tenants inside the property as lenders don't like it because of the legal hassle (in reference namely to Art 13 of Spain's Tenancy Act). Regarding your other queries the short answer is yes to all of them. i) Your lender can effectively seize the money in a bank account, yes, if post repossession of the Spanish property you still owe them funds. As explained in my article on Bank Repossessions in Spain which starts off this very thread, lenders can adjudicate themselves the property for 50% of the appraissal value if no one bids for it. Meaning its very easy to slip into negative equity. ii) As for your lender blacklisting you in Experian or similar credit-rating agencies that's one of the first and easiest things for them to do. I explained this in the reply to the following query: What are my options if I have fallen in arrears on my Spanish mortgage? -18th November 2007 iii) All these debts will be added and compounded into what you already owe, yes. Yours faithfully, Raymundo Larraín Nesbitt

• Joanne Says:

  Thu, Apr 15th 2010, 16:18

  Thank you for your detailed and informative reply. I read dacion en pago 1 The customer must be on time with payments community and local taxes.Therefore I thought this ruled me out. I now see this can be negotiated with bank to be included. I have emailed my bank and asked for them to concider my property under dacion en pago. If this is excepted and the 350 is paid to them what other charges am I likely to incur your solicitors fees for example. After this procedure is completed.Would my future credit be effected say to buy a car or have a credit card I have no debt on credit card only apartment debts. I am nearing retirement age so would not buy another property. If I start earning again while procedure is going through but not wish to retain property would this be o.k. If Im turned down by bank for dacion en pago will the repossession procedure be the next step. My morgage is just too much for me along with high community fees.

• Lawbird Lawyer Says:

  Thu, Apr 15th 2010, 16:38

  Hi, You're welcome. Yes whilst it's always recommendable to be up-to-date in all the associated expenses as long as there is enough equity they will let pass any arrears or debts you may have outstanding. Almost in every dación I've signed the client had debts. On following a dación en pago signing a deed at a Notary public relinquishing ownership in exchange of fully discharging you of your mortgage liability you will start off with a clean slate. At no time will you be black listed or your credit history suffer as a result of it. You won't have any problems. That's why I advise this option only when there is no other option; in other words, only as a last resort. Should your lender turn down your request for a dación en pago de deuda I suggest you follow any other of the options I suggest in my article below: Advice to Struggling Mortgage Borrowers in Spain - 3rd February 2010 Remember that you must draw a redline on a repossession procedure in Spain; it should be avoided at all costs because of the dire consequences of Art 1911 of the SCC regarding the personal and unlimited liability and the fact that lenders pursue you legally -even abroad- for any shortfall post repossession. If none of the above options can be followed, you will be repossessed, yes. Regarding our legal fees, we charge a flat fee of €1,200 plus VAT irrespective of the value of the property. Depending on where the property is located in Spain we may aditionally charge a small sum for travelling expenses. All legal fees and associated expenses are clearly laid out in a breakdown in our Letter of Engagement prior to retaining us. You will always know what you are paying for. We do this in all the legal services we provide so there are never misunderstandings with our clients. Yours faithfully, Raymundo Larraín Nesbitt

• Joanne Says:

  Thu, Apr 15th 2010, 18:26

  What a relieve I wil be in touch once I have reply from bank.Thank you so much. One final question I mentioned above is what if I start earning while proceedure is going through can they take that money if I want them to take back property via dacion en pago

• Lawbird Lawyer Says:

  Fri, Apr 16th 2010, 08:27

  No they cannot seize or freeze part of your wage. The whole point of the dación en pago is to avoid that. Should they repossess you and be a shortfall they will seize part of your wages, yes. Yours faithfully,

• Joanne Says:

  Thu, Apr 22nd 2010, 11:40

  My bank have sent me form dacion en pago at my request. Also they asked for last 3 water,elec,community bills,I.B.I.and a deposit to be paid into bank. They did not say how much. My concern is what if there is not enough equity in my property as you have explained above. I purchased nearly six years ago at a very high price from the developer. I have told them the debts on property and asked if they would include this in dacion,will everything be frozen now as I have applied to them or am I still incuring debts.How long does all this take. They say they want to arange a valuer to come can they take my furniture and possesions into account.

• Lawbird Lawyer Says:

  Thu, Apr 22nd 2010, 14:11

  Dear Madam, As explained in the excerpt of my article on dación en pago procedure you would be on stage three. Once they've done an appraissal for the exclusive purposes of a dación en pago they will give you a reply within a month or less. If the reply is positive, you only have to agree on what day to sign it. Yours faithfully, Raymundo Larraín Nesbitt

• DannyBoy Says:

  Fri, Apr 23rd 2010, 11:54

  Hello, This forum has been very helpful. I have a similar problem we fell behind with mortgages payments 2 years ago and had emails from the local branch asking us to pay I informed them we couldnt and that we were leaving the property. Since then I have had no contact from the bank at all in 2 years and the local branch has closed. I have contacted the main bank asking what is happening but no response. I returned to the house yesterday and the locks ahve not been chagnged and the only post we have is from a debt recovery company, they are asking for 1700 euros for an outstanding overdraft with the bank who issued the mortgage, but nothing in reagrds to the mortgage. As my wife is not on the nota simple or mortgage could I make a rental aggreement to her so she could live in the property legally incase they do eventually try and repossess it.

• Lawbird Lawyer Says:

  Fri, Apr 23rd 2010, 16:21

  Dear Sir, Thank you for your kind words. You ought to command a Nota Simple to know if your lender has already initiated a repossession procedure or not. Maybe for some reason they haven't notified you. Repossession procedures are taking on average 2-3 years as law courts are clogged with them. What would be the point of drafting this Tenancy agreement in favor of your wife? Remaining in the property for the next 5 years despite a repossession procedure? Yours faithfully,

• Unregistered Says:

  Mon, Apr 26th 2010, 07:41

  Thank You for your response, the point of my wife staying there is as we are currently seperated and she needs somewhere to live, I myself am moving back tot he UK but she has decided to stay here so that was the reason, to know if she would be able to stay in the property with a tennants agreement until she managed to sort something else out.

• Lawbird Lawyer Says:

  Mon, Apr 26th 2010, 09:50

  If your lender is repossessing you I wouldn't advice you signing a rent over to your wife. Yours faithfully,

• sunnylondon Says:

  Mon, Apr 26th 2010, 12:28

  I am currently three months in arrears with caja madrid and whilst talking to them over the last few weeks to try and get me on an interest only mortgage i have recived a respossion order that was started sometime ago, 8 th April. I have called the local branch again today that i was trying to sort out the mortage and i would like to resolve this before it goes to reposseion as i am moving to spain for good. She advsied me that once the reposseion order has started there is nothing she can do. I have range again and she was very aggressive telling me she had no time to talk to me and would relay the message that i can pay all arrears today to end this matter and we can discuss putting me on interest only later. I am very concerend that i will lose the property as it is not in negative equity. What action should i now take.

• Lawbird Lawyer Says:

  Mon, Apr 26th 2010, 13:14

  Dear Sir or Madam, You can at anytime before the judge rules on the matter stall the repossession procedure paying all the moneis owed lump sum. This is discussed in more detail here.- http://belegal.com/forums/showthread.php?t=73&page=5#50 Yours faithfully, Raymundo Larraín Nesbitt

• DannyBoy Says:

  Tue, Apr 27th 2010, 07:35

  Hi thanks for the advice the problem is I don't know what the bank are doing the local branch where we took out the mortgage has closed and when I email or call the main bank no one can tell me what is happening and struggle to find any information about me or my mortgage account. I have recently requested a new Nota Simple and it does show the mortgage on there aswell as a Embargo from Social Security but it doesn't seem to mention anything about the mortgage arrears or repossession. Is there a way to find out? Thanks

• Lawbird Lawyer Says:

  Tue, Apr 27th 2010, 07:48

  It would have to be trough the bank I'm afraid. Repossessions are taking now more than three years on average due to the sheer volume. I wouldn't be surprised they take 4 years or more in the future as a result of the law courts being clogged. Yours faithfully,

• unknown Says:

  Thu, Apr 29th 2010, 20:09

  HI danny boy i am in the same position as yourself. hopefully a little advice here for me. we have a mortgage with Deutsch bank costa blanca our branch manager was very helpful setting up the mortgage. I went to the bank month after month to pay the mortgage none of the staff could find the details of which i gave them. I gave them all our details all the staff could find was three bank accounts (we did not open these the manager did by mistake and told us she would close then this did not happen) Eventually the bank manager who set the mortgage up located the account and took the payment. We had very little information on the mortgage account from the bank. Due to difficulties and lack of paperwork (we only had copy of the escitura) we were a little worried as to why no one could find the mortgage etc. we were asked by staff if we were sure that we had a mortgage with them (our branch then closed) i visited another branch re repayment help through our insurance payment protection plan as my husband was made redundant. we were notified by the same bank manager that the insurance was due to be repaid as it was paid quarterly (i thought we paid in full) she wanted another 290(ish) euros for three mths but then told me this was for death only and for my husband only who was 31 and in great health again alarm bells ringing why was this so much, so as our situation was a little messy with my husband being made redundant and not having spare money we could not pay this nor could we pay the mortgage, i requested a break for a couple of months until we found further employment, the manager did not want to know she said no (very direct.) then i asked if we could reduce the payments again no. I walked away very distressed and not knowing what to do. I contacted the bank numerous times unable to pay the mortgage and no one could help as they could not locate the details I was even asked if i had a mortgage with them again. we departed to the k in search for work last year, before we departed we visited the branch and spoke again explaining we were going to return to the uk and asked about the bank taking the keys the manager again very directly said no we do not take houses back. I asked what would happen next she simply said nothing and shrugged her shoulders. I explained i would be in touch. When settled in the uk we contacted the branch to find the manager was no longer there and again no one not even the new director of the bank could find our mortgage details. The new director took our details and was quite concerned that we had no documents or had not heard anything regarding the non payments. She took our email address and phone number and explained she would be in touch the following day. the call never came so i contacted her again, she was going to contact me the following week. We have heard nothing until a couple of days ago when i had a call from a lady in the bank who asked if we wanted to sell the property. i said yes but then realised that the value of the property will not meet the mortgage etc nor do i have proof of the mortgage or legality of the sale. I am now in possession of a document in spanish for me and my husband to sign and send to the bank. If we let the bank sell the house what happens to the outstanding loan, I am looking to have a solicitor look at the document and give us advice of where to go next.

• Lawbird Lawyer Says:

  Fri, Apr 30th 2010, 08:01

  Dear Sir or Madam, If you sell the property and there's still an outstanding mortgage loan you will be held personally liable for it even against your UK assets. Please read the following thread on someone who already went through this: Can we be chased by the bank after arranging a Dacion en Pago? Yours faithfully, Raymundo Larraín Nesbitt

• Karen Says:

  Thu, May 6th 2010, 19:47

  Hi there, Hope you can help us...We are struggling to pay our mortgage,although we are up to date. The house has equity in it and we want to follow the dacion en pago route. The bank have said the have stopped doing dacion de pago 6 months ago and refused. they will not come to value the house and are not interested at all. Instead they told us that we would be black listed if we stopped paying our mortgage. Can the notary make them follow the procedure,and the provision set by the spanish cival code?. Surely if we give back our house and all the taxes are paid,they can cancel the debt and we can all move on!. What do we do if they refuse?....we fit all the criteria but they aren't budging.......PLEASE HELP

• Lawbird Lawyer Says:

  Fri, May 7th 2010, 08:09

  Dear Karen, Following my article on the Dación en Pago de Deuda, I wrote that it's not a borrower's God-given right to demand from its lender to accept a dación en pago. The lender will decide on whether they accept it or not; you cannot force them other than trying to do it through a law court which will take long (years) and will be expensive and you'll probably lose it unless you have a good case. I really do not recommend following this litigation path. What borrowers seldom realize is that a bank on accepting a dación en pago incurs in a great deal of expenses which come out of their pocket; it’s as if they were buying away the property from you: 1. 7% Transfer tax 2. Notary fees 3. Land Registry fees 4. Gestoría fees 5. Maintenance and upkeep of the property 6. Payment of local taxes 7. Payment of Community fees 8. Mortgage arrears. 9. Outstanding utility bills. 10. Percentage to be deposited before the Bank of Spain after one year. (*) So basically banks run through the numbers to see if it’s worthwhile for them –or not– to accept a dación en pago. (*) If after one year the property is still on their books they will have to allocate before the Bank of Spain an amount of money as a provision of funds to offset a "potential" depreciation of real estate assets. In 2008 this amount was 10%, in 2009 it was raised to 20% and in January 2010 it has been raised yet again to 30%. What this means is that the BoS believes property prices will be falling. Surprise, surprise. As explained in my article "Advice to Struggling Mortgage Borrowers in Spain", the Bank of Spain has passed on new regulation early on this year whereby banks are now obliged to deposit 30% of the appraisal value for auction purposes of the property. And this, to add insult to injury, comes at a time when credit-rating agencies are taking pot shots at Spain's sovereign credit-rating on a weekly basis (CDS's soaring day-to-day) and Spanish bank's stocks are derailing in the wake of Greece's financial meltdown as investors fear we're toast. So, banks are hoarding as much cash as possible to raise their core capital and the last thing they want right now is to shove more funds into money-losing enterprises such as daciones en pago de deuda. You do not need a crystal ball to know where property prices will be heading next in Spain. What I concluded in my article was that if lenders were already reluctant to accept a dación en pago back in 2008 and 2009, following this new change in the law, they were going to be even more so in 2010. I also wrote that I foresaw that the collateral victims of this new stringent regulation were likely going to be all the struggling borrowers, such as yourself Karen, who were keen on following a dación en pago (to waive a repo procedure) as banks were going to increasingly turn them down. So the logical conclusion of all the above is that instead of needing at least 20% equity (as my outdated article on the dación en pago highlighted in 2008) now in 2010 following the changes in law, I would say that a borrower needs at least 30-40% positive equity for a bank to accept a dación en pago in 2010 unless the property is regarded as prime (i.e. beachfront duplex) in which case the bank will be able to offload it to some savvy investor within the year. In this last case it would suffice to have 15-20% positive equity. What this translates to into practical terms is that a property then must have been purchased at least prior to say 2004 to still have 30-40% positive equity in 2010 IMHO. Yours faithfully, Raymundo Larraín Nesbitt

• MiaH26 Says:

  Tue, May 18th 2010, 12:17

  After months of waiting, our spanish bank (Deutsch Bank) have now informed us that 'The bank is not acepting to reposses houses, we are starting with juridical actions' What does this mean ????

• Help me please!!! Says:

  Tue, May 18th 2010, 15:50

  My husband is one of three brothers, all guarantors of his parents mortgage in Spain. The parents have already handed a property back to the bank and now have defaulted on the mortgage again,as they do frequently. CAM bank have sent us default notices many times over the years which father in law brushed off as mistakes, however we now know that they are in dire straits with no heating and water. The mortgage is in arrears by 200 odd Euros and we have had 2 default notices, and now a letter from Experian which I don;t know what it means but I expect is a warning about legal action. I never wanted hubby to be a guarantor but he agreed with his Dad, if we now paid off the debt to CAM (or Experian) would it be possible to be removed as guarantors. His father basically told us there was no way CAM would ever come for money to us, they'd just take the keys but I feel we have been hugely misled. We have a good credit rating that we struggle to maintain on 1 income, with a 2 year old baby living in a house too small already with no money. Please please help as I feel like I want to end it all. Thanks.

• Lawbird Lawyer Says:

  Tue, May 18th 2010, 16:00

  Dear Madam, Spanish banks at times call a dación en pago a "voluntary repossession". What your bank, DB, is probably referring to is that they turn down your proposal for a dación en pago de deuda and will now issue legal proceedings against you to repossess the property as explained in my article which starts off this very thread. Yours faithfully, Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Tue, May 18th 2010, 16:07

  Dear Sir or Madam, I always advice never to act as guarantor on behalf of anyone on a Mortgage deed; even if it's at the request of your own children or parents. The reason is that on them defaulting, the Spanish lender will come after your assets, whether in Spain or in the UK. The consequences are just much too dire to take any chances with your hard-earned assets. This is also explained in my article which starts off this very thread: The Six Stages of a Home Repossession . . . 5. The Court sets a date for the Public Auction - Normally between 6 to 12 months after the start of the Executive Procedure. The judge decides on the date of the auction. If no one bids for the property the bank will keep it. The bank tries to offset the outstanding loan debt with this auction. However, it may happen that after the property has been assigned to a winning bidder the amount raised is not enough to cover the debt plus all the associated repossession expenses (i.e. because the borrower had run into negative equity). The bank is entitled to pursue the rest of his assets even if abroad. Should there be a guarantor in the Mortgage deed the bank will chase their assets. The property will now be lodged under the name of the new owner. Yours faithfully, Raymundo Larraín Nesbitt

• Karen Says:

  Tue, May 18th 2010, 19:52

  Hi Raymondo, Thanks for taking time out with my earlier enquiry. we have asked the bank for an appraisal of our house to establish for sure what equity we have. They are currently going on a valuation which is four years old. Since then we have spent 40,000 on the house,and it is now urban (registered with the catastro),on 6,000 m of rustic land. Will they have to reappraise it?,as they are not interested......it's as if they want it to be in negative equity..... we bought it for 260,000,they say it's worth 185,000,we owe the mortgage of 200,000.......as you can see,no wonder they don't want to value our house. The estate agents have valued between 385,000 and 325,000. What can we do?,we feel the must reappraise,or can we use an independant recognised valuer?,kind regards

• Help me please!!!! Says:

  Tue, May 18th 2010, 21:19

  Raymundo, I am so grateful of your fast response - you are so kind. Just some further questions, do you feel the Experian notice is a notice of repossession? I have tried to translate with babelfish but still makes no sense to me. We have been told the bank are chasing even though my husband is only in a group as guarantor not on this individual mortgage, how does this work?If this is at all the case. Also, is it never possible to be removed as a guarantor once signed as we have been told once the debt is paid we will all be removed from the mortgage? I am seriously concerned about the advice that is being given as everything that we have been told (Spanish bank not being ABLE to chase the debt in the UK, possibility of being removed as a guarantor?)seems wrong. If my husband has been misinformed by the Notario is there any way we can claim against that? I am starting to worry the only way to safeguard our UK home is to put it in my name, but I understand it is possible for the banks to put a claim on future assets? My husband has a pension fund that we are depending on, could they take this? The property is not in negative equity, could an equity release be taken to release funds? Thank you so much for your kind assistance, I am so grateful.

• Lawbird Lawyer Says:

  Wed, May 19th 2010, 07:58

  Hi Karen, You are welcome. The problem is that lenders are not binded by appraisals carried out by "independent" valuers. They will want to appoint their own and trust only his appraissal. What you should know is that an appraisal on teh sdame property wil lhave different outcomes depending on what it is being commanded for. i.e. an appraisal for a dación en pago will always be significantly lower than say one requested with the purpose of securing a mortgage loan. It's just a fact. The fact that it is registered on the catastro doe not make a property urban as you seemingly imply. Rustic property is also on the catastro. As you yourself write, the plot of land is rustic which always has a signigicantly lower value than its urban counterpart. In any case, I refer to post 150 on this thread in which I explain that the amount of positive equity required in 2010 by lenders has been raised to 30/40% for them to adopt a dación en pago de deuda in lieu of repossessing. Yours faithfully, Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Wed, May 19th 2010, 08:18

  Dear Madam, You make me blush. You are welcome. Let's see, a lender would have no interest whatsoever in removing a guarantor. Would you if you were the lender? I didn't think so. Lenders are -gleefully- happy to have as many guarantors as possible signing the Mortgage deed because it means their safety net (pool of assets they can go after once the borrower defaults) is increased. Nowadays Spanish lenders are requesting young couples to have their parents and even their granparents signing as guarantors. This is simpy crazy, because if a borrower defaults (and workers in Spain are being laid off every day of the week) a chaing reaction is triggered which creates a spiral of debt whereby the whole family has their prime asset (main residence or home) at stake subject to the repayment of the mortgage loan. There are newspaper articles portraying how whole families are being left in the cold after the younglings defaulted on leading a life fueled by "cheap" credit they could simply not afford to repay. In fact, taking this on a larger scale holds true of Spain itself. Regarding Spanish lenders being unable to seize your UK property I believe it is the case if its your main property/residence and you already have a mortgage against it (i.e. hardly any equity left). However, I'm not qualified to give advice on UK law; you would have to ask a UK solicitor on that point. The fact is that Spanish banks can and are already chasing debts in the UK following EU Regulation 44/2001. An experian notice does not amount to repossession to the best of my knowledge. A repo procedure takes on average 3 years in Spain. Once they have a ruling they will execute it in the UK against your assets if possible. Some people are in a state of denial on this matter quite simply because they do not understand the procedure and how long it takes in Spain. So bottom line, you've been adviced incorrectly. Spanish lenders can chase you in the UK. Otherwise it would be all too easy taking out Spanish mortgages and fleeing the country when things turn pear-shaped, not so. Yours faithfully, Raymundo Larraín Nesbitt

• karen Says:

  Wed, May 19th 2010, 14:09

  Thanks again Raymundo for your kind reply. Lets hope we know what direction we will be going in sooner than later.

• Help me please!!!! Says:

  Wed, May 19th 2010, 14:27

  Sorry to make you blush Raymundo, you shouldn't underestimate what a lifeline this site is. You help so many people, please take the praise!!! Ok, I am beginning to understand something is amiss here with the information relayed to us. Could we take counter legal action ourselves if we were advised incorrectly? If so who do we speak to? Also, if the debt weren't settled, would it be possible for the bank to take my husband's pension in 20 years time? Luckily our house is mortgaged currently, so my dear 2 year old son will still have a roof over his head. If we had no assets, would the bank wait until we had some or would they attempt to get us made bankrupt in the UK? Thanks once again for your valuable help, you are so very kind.

• Lawbird Lawyer Says:

  Thu, May 20th 2010, 08:17

  You are welcome Karen.

• Lawbird Lawyer Says:

  Thu, May 20th 2010, 08:29

  Dear Madam, Unfortunately in Spain the legal relationship is determined clearly by the signed and binding Mortgage deed which lays out clearly the terms and conditions of the loan. These cases are very straightforward in Spain. There is little that can be done by way of defence from Spain on defaulting a Spanish mortgage other than paying what's owed lump sum before the hammer falls (Judge's ruling). However, tha case is very different when it comes to defending your assets located in the UK. Regarding safeguarding your UK assets from a potential claim from the Spanish lender I strongly advise you to seek advice from a UK solicitor. I'm aware there are ways to counteract against these claims from Spain, specially when it comes to seizing your main UK residence, as you have specific regulation in place but I'm simply not qualified to pass advice on UK laws, sorry. Yours faithfully, Raymundo Larraín Nesbitt

• Help me please!!! Says:

  Tue, May 25th 2010, 21:35

  Thank you Raymundo, you've been very helpful. I have now the full figures and luckily it looks like the bank are hoping to avoid such action at present, but you have given me very useful information for the future and I am truly grateful. Thanks once again.

• Lawbird Lawyer Says:

  Wed, May 26th 2010, 08:07

  You are most welcome. Regards,

• barrie Says:

  Wed, May 26th 2010, 11:26

  Hi, I would like some advice my property was valued by my bank at 325,000 euros in september 2009 for a change in the mortgage as i was borrowing extra money. i have since had financial problems and have been unable to make payments the bank offered dacion en pago however yesterday i was told that the valuation is now 158,000 euros this leaves a shortfall of 22,000 euros as mt mortgage is for 180,000 euros. i do not understand how the bank can do this when they wanted to lend me money their valuation was high now all of a sudden because thay are takeing the house back the value has seen more than a 50% drop in price can the bank legally do this? there has been no change in the house since the previous valuation. I have paperwork with the valuation of 325 ,000 euros which was signed at the notary do i have alegal case to contest this new valuation. I would appreciate your advice on this. Kind Regards Barrie

• Lawbird Lawyer Says:

  Mon, May 31st 2010, 07:51

  Hi Barrie, Sorry to hear your case. This is a direct consequence of the Bank of Spain raising the provisions that Lenders must set aside on taking over NPL. I explained this very important proposal in Thursday's post: Bank of Spain Raises Real Estate Provisions Set Aside by Lenders - 27th May 2010 Moreover, the BoS has now ordered lenders to reduce the appraisal of second homes located on the Spanish costas (in other words, those that expats normally buy) by 40 p.c. What the above means is that the BoS wants properties stuck in lender's portfolios to be marked-to-market as Spanish lenders had not previously factored in the huge property depreciation that has taken place since 2007. So basically it means that the BoS considers there has been a drop of 40% on these second homes. It also considers there has been a drop of 20% on main residences and 50% drop in plots of land. What all the above translates into is that now there must be a significant amount of positive equity in a property fort a Spanish lender to accept a Dación en Pago, otherwise they'd rather just repossess you. That's probably why your lender has probably changed their mind and puzzled you on turning down your Dación en Pago proposal when initially they had been receptive to the idea. Yours faithfully, Raymundo Larraín Nesbitt

• barrie Says:

  Mon, May 31st 2010, 10:13

  Thanks Raymundo,The property is not a second home it is my main residence so does the 20% not apply to me if so my property value should still be 256,000 Euros going on the previous valuation 8 months ago for 320,000 euros, is this correct?

• Lawbird Lawyer Says:

  Mon, May 31st 2010, 10:36

  You are welcome. Correct Barrie, it it's your main residence, the BoS has outlined in its proposal the reduction in the appraisal value to be of only 20% to bring it in line with today's fall in property prices. Borrowers on main/first residences are deemed more trustworthy as one can reasonably expect them to pay their mortgage repayments even if that implies living on bread and butter so as to waive the dire consequences of a repo procedure. Second home mortgage borrowers will understandably ditch them first so they are regarded as more of a credit-risk, hence the -40% in their appraisal value. Thier priority will be to save their homecountry's assets, not recreational overseas property. Difficult times. Yours faithfully, Raymundo Larraín Nesbitt

• barrie Says:

  Mon, May 31st 2010, 11:07

  Thanks Raymundo, so in your opinion where do i stand legally on this are the bank at fault applying a 51% decrease in valuation since the last appraisal in September is there any way i can contest the appraisal? The property is my main residence, i do not have the extra 23,000 euros shortfall they require for dacion en pago and i do not have any other assests, i have a car but that is registered in my wifes name and she is not on the mortgage. Would it not be in the banks best interest to take the dacion en pago than to persue me for money and assests that i simply do not have? Thanks in advance Barrie

• Lawbird Lawyer Says:

  Mon, May 31st 2010, 11:14

  How long have you been living in that property?

• barrie Says:

  Mon, May 31st 2010, 11:20

  I bought the property in FEB 2005,i am very worried about be repossessed and was hoiping the dacion en pago would be a good solution for us. I do not have asssests but can they take my wifes assests as mentioned before she is not on the mortgage i am the sole property owner

• Lawbird Lawyer Says:

  Mon, May 31st 2010, 11:43

  Are you British? By default the economical regime of British is separation of assets unless agreed otherwise. The lender will only pursue you in your case, as the borrower who appears lodged in the Mortgage deed is only yourself. The dwelling acts as collateral. Even if its solely under your spouse's name the lender will go after it as they had a first charge against it (the Mortgage). Your lender may wish to repossess you because in time you may come, for example, into an inheritance from a family member. You should check in the appraisal report that the property is labelled as your main residence. Perhaps the surveyor mistakenly labelled it as second residence. In any case from my experience, lenders will accept a dación en pago providing you make up for the shortfall in cash on signing before the Notary Public the deed relinqushing the property. These appraisals are difficult, but not impossible, to challenge as lenders will normally accept only those surveyors they themselves appoint despite you paying for the survey. If you are unable to raise the funds they will repossess you. Yours faithfully,

• Barrie Says:

  Mon, May 31st 2010, 12:08

  Thanks raymundo, yes i am british, my wife has no assests apart from a car. Are you saying then that if in the future my wife has assets they can take these even though she is not mentioned anywhere on the deeds or the mortgage?

• Lawbird Lawyer Says:

  Mon, May 31st 2010, 12:47

  You're welcome Barrie. No, you've misunderstood my post above. She's safe, it would be yourself who would be held personally liable with all your assets, both now and in the future if you default and are repossessed.

• anonymous Says:

  Tue, Jun 1st 2010, 18:33

  My friends bought a property in Spain a few years ago while their Son was living there, and have a Spanish mortgage on the basis that the son, as a resident of Spain, is guarantor. They own their property in UK outright and used all of their savings to help buy their Spanish property with a Spanish mortgage for the remaining 50%. They did not want to use their UK home to raise the moneyt. This year the son has returned to UK (permanently) but has kept on a rental apartment for the summer and has not told the Spanish authorities that he is now no longer resident, as he still has a postal address there. If the Spanish authorities find out that he no longer lives in Spain, or when he stops renting and therefore has no postal address in Spain, how does this affect my friends. (They have never missed a payment.) I am very worried that the bank may call in their mortgage and wonder how much time they would have to sort this out.

• Lawbird Lawyer Says:

  Wed, Jun 2nd 2010, 07:04

  Dear Sir or Madam, It will not affect them so long as they service their mortgage repayments. Yours faithfully, Raymundo Larraín Nesbitt

• anonymous Says:

  Wed, Jun 2nd 2010, 08:44

  Thank you! That's a great relief.

• Lawbird Lawyer Says:

  Wed, Jun 2nd 2010, 10:03

  You're welcome.

• neto-negativo Says:

  Tue, Jun 8th 2010, 13:37

  Hi Raymundo, I bought a house in Spain from UCI "Cambio de Casa" 4 years ago, I foolishly took out a mortgage far in excess of my means, although, at the time I was earning quite a good salary. Since then, I have been out of work on and off over the last 3 years, I struggled with the repayments, and in the last 18 months, I have not paid anything on my mortgage. My wife and I are resigned to leaving the house (it is still our family home), but we have received no information or correspondance from UCI in the last 18 months? I am working again now, but I dont know what I should do, should I contact them and ask them for a new payment plan, or should I just forget about it and wait until we are told to leave by the court.

• Lawbird Lawyer Says:

  Tue, Jun 8th 2010, 13:55

  Hi, UCI have probably already issued repossession proceedings against you. Haven't you been notified in your home address? That's odd, mind you UCI aren't particularly known for their good communication with clients. Repos take long. As law courts are currently clogged with cases (not to mention the civil servant's strikes because of reduced public wages) you can reasonably expect them to take possession of the property 2-4 years after proceedings have been filed. At this point in time, 18 months in arrears, I think your lender won't be interested in a "repayment plan". Even when a repossession procedure has been initiated you can still clear all the arrears. You normally have 18-24 months until the auction. If you clear it before the hammer goes down you can successfully avoid the repossession. But you will now have to come up with all the following: 1.- Lawyer's fees: normally between 8,000 -12,000€ 2.- Court agent's fees: approx 3,000€ 3.- Arrears 4.- Compounded delay (penalty) interest on the said arrears You have to pay all the above lump sum (no instalments) to successfully stall the repossession procedure. In any case, you don't lose anything on contacting them as the damage is already done. On commanding a land registry search you'll know if they have already initiated the repo procedure. Lenders have no interest in bricks, if they can avoid repossessing you they will. In fact, at times there may be even pleasant surprises round the corner: Cannot Keep Up Repayments on your Spanish Mortgage? Not All is Lost -9th November 2008 I wish you and your family the best of luck. Regards,

• neto-negativo Says:

  Tue, Jun 8th 2010, 14:26

  Hi Raymundo, Thanks for the prompt reply. The trouble I have is this, I have no way of paying the arrears, or any of the fees. I am resigned to the fact that I have lost everything, so why should I struggle with attempting to fix the situation, why throw good money after bad? I suppose my wife and children, and I will just wake up one day and be told to get out. I know the compound interest is 18%, which is really high, so unless I win "el Gordo" or something similar, I really cannot see a way out. Its a real shame, I have no other country to live in, I have cut my ties with UK and Spain is my Childrens home, at least they have had a good few years in a nice house, and thank God they won't inherit any debt.

• Lawbird Lawyer Says:

  Tue, Jun 8th 2010, 14:38

  Hi, I'm truly sorry. These are difficult times for everyone and many people are struggling to make ends meet. I know it may not sound as much consolation but you are not alone out there, many people are on your same boat as you can surmise from this gloomy thread. One really needs a Prozac shot to read through it. Following what you write, I agree; it doesn't make sense to plough more money into a money-losing enterprise. Might as well cut back losses and enjoy the ride while you can. As I write, they'll take at least a couple of years to effectively repossess you. Until the bailiffs come knocking at your door, you can stay at the property and enjoy it. As I'm sure you already know, there is no prison sentence in Spain for bad debts. Your children will never inherit your debts unless they expressly agree to it on signing an Acceptance and Adjudication Inheritance deed. Yes 18% compound interest is really high and mounts exponentially over time. But what's done is done, there's no looking back now. Kind regards,

• neto-negativo Says:

  Tue, Jun 8th 2010, 14:49

  Raymundo, thanks again for the advice, I have been afraid to contact UCI, but you are right, I should get in touch as a matter of urgency, the problem will not vanish into thin air!!! As a bit of advice to other people in the same situation as this. We know we have been foolish, and after 20 years of proud home owning in UK and Spain, it is inevitabley going to end badley, but we still have our health, we still have a close loving family and its only "stuff" that you cant take with you. I will let you know how I get on, and thanks again - neto negativo

• neto-negativo Says:

  Tue, Jun 8th 2010, 14:49

  Raymundo, thanks again for the advice, I have been afraid to contact UCI, but you are right, I should get in touch as a matter of urgency, the problem will not vanish into thin air!!! As a bit of advice to other people in the same situation as this. We know we have been foolish, and after 20 years of proud home owning in UK and Spain, it is inevitabley going to end badley, but we still have our health, we still have a close loving family and its only "stuff" that you cant take with you. I will let you know how I get on, and thanks again - neto negativo

• Lawbird Lawyer Says:

  Tue, Jun 8th 2010, 14:59

  You're welcome "negative equity". If you need legal advice just let me know. Adopting a positive attitude is always a good step; you musn't let problems overcome you or they'll eat you inside out. Defaulting on a mortgage loan is not the end of the world. There are far more important things in life. Kind regards,

• Amiga Says:

  Tue, Jun 8th 2010, 21:05

  Hello Raymundo, we live in Spain & have a friend, John, who is 86 & has lived here for 7 years. He paid outright for his property but unwittingly signed it over to his son who now is not paying the mortgage which he took out on it. This is due to the economic situation etc. John is very forgetful & so is not sure of the current situation & his son is not forthcoming to John's friends who are trying to help him. When he signed the property over it was stated on the documents that John could not be turned out of his home. He needs to know if he is still secure or whether he is likely to be evicted. Please can you give us some hope for him.

• Lawbird Lawyer Says:

  Wed, Jun 9th 2010, 07:30

  Dear Madam, It doesn't matter what was signed or agreed. If there's a mortgage loan against the property and his son defaults, in time his father will be removed from the property, by force if neccessary. The property acted as a collateral of the mortgage loan irrespective of who owns it (Title deed) or occupies it. Private agreements inter partes are overrided by a Mortgage deed, which is a public document signed before a Notary Public. So basically, if his son slips into arrears the lender will repossess the property and have him removed eventually. As written in previous posts, this can take several years. Yours faithfully, Raymundo Larraín Nesbitt

• Amiga Says:

  Wed, Jun 9th 2010, 08:07

  Thank you for your prompt reply. John's son has had problems paying for a while but about 18 months ago negotiated a further loan to help him pay the first. We think he is currently 3 months in arrears. All document go to the son in UK so we wonder if John will get any notice of eviction himself or will bailiffs just turn up. Would he be given time to remove his possessions? He has no money & we think all that can happen is that the British consulate will repatriate him to UK.

• Lawbird Lawyer Says:

  Wed, Jun 9th 2010, 08:49

  Dear Madam, You are welcome. Yes, he will receive notice at the Spanish address beforehand allowing him time to pack up. As advised, this can take several years. Yours faithfully,

• Lawbird Lawyer Says:

  Thu, Jun 10th 2010, 08:28

  For all those who master Spanish there's an interesting article today in the Financial press explaining (very basically) the legal and financial consequences of a repossession in Spain. Worth reading. http://www.expansion.com/2010/06/09/empresas/inmobiliario/1276117018.html

• Ebay Malc Says:

  Fri, Jun 18th 2010, 16:49

  Thankyou for this useful and informative article - it's been a great help to me and my family. Two questions for you concerning my own situation after I briefly explain the circumstances. I purchased two properties here in Spain with mortgages obtained from BBVA. The first property (in 2004) was a house which currently has €87,000 outstanding. The second property is a bar / café (in 2005) currently with €33,000 outstanding. A loan taken out 3 years ago from BBVA has €2,600 outstanding. I have missed one payment of both morgages due at the end of May. I am no longer able to pay anymore mortgage repayments. Question 1. Does your explanation about repossession for houses/residences apply to commercial properties such as my second mortgage on the bar/café and is the same timescale applicable. Question 2. Are the contents of the house/residence and bar such as clothing, personal computers, furniture, curtains, refrigerators etc siezed as assets when repossession takes place or can I remove/dispose of them prior to the repossession and what is the last time I will be given an opportunity to remove them? (Day before the Police/Locksmith arrive or when the hammer falls?) Thanks again for a great article Malc

• Lawbird Lawyer Says:

  Mon, Jun 21st 2010, 08:17

  Dear Sir, You are welcome. I'm glad it helped you out; I wrote it with that purpose on mind as I was getting an average of 5 queries a day on this matter back in 2007. In reply to your queries, it will follow the same procedure with the same approximate timescales. You can remove all your personal belongings prior to repossession, yes. You will be notified formally (recorded delivery) on the exact date and time on when the court's bailiff, the lender's procurador and police officers will come to have you physically removed from the property. By law this must be done giving notice to the borrower of at least 20 day's prior to the day scheduled to hold the Public auction (Art 667 LEC). They don't just come knocking at your door in the middle of the night to throw you out! In fact, in some cases (minors of age) exceptionally they are kind enough to allow you an extra week or two to sort yourself out before taking effective possession of the property. Repossession takes fairly long mind you. On average spanning between 1 to 2 years. In some cases taking even longer. This will depend on the workload of the law court dealing with your repossession. The more clogged, as they usually are, the longer it will take. Yours faithfully, Raymundo Larraín Nesbitt

• Tania Says:

  Mon, Jun 28th 2010, 22:28

  Hi Raymundo Where is your office based? Also do you deal with clients who are intrested in purchasing a property? I see by the above messages that you offer alot of advice on problems revolved around repossesions etc? We are actually looking to buy a property on the coast of Marbella. Regards Tania

• Lawbird Lawyer Says:

  Tue, Jun 29th 2010, 07:39

  Hi Tania, Our law firm is located in Marbella although we act nationwide. We offer a broad range of legal services, ranging from Corporate law to litigation including conveyancing of course. You have a full list of our services here: Lawbird's Legal Services This thread is devoted only to bank repossession related queries, that's why it's so biased towards the subject. This thread picks off on an article I wrote back in 2007 on Bank Repossessions in Spain. I take the opportunity to offer you our Conveyance Service should you be interested. You may want to read my articles on the matter: • Buying Property In Spain Tips Part II. Off-Plan Property – 18th April 2010 • Buying Property In Spain Tips Part I. Buying Resale: Avoiding the Pitfalls – 31st January 2010 Our Conveyance Service already includes obtaining a two NIE numbers on behalf of our clients at no extra charge (the normal fee is €165 for each one, so its €330 you save for two people). Three NIEs or more will be charged at the ongoing rate. A NIE number is required by the Spanish Tax Office to file taxes. Without a NIE number completion on a property before a Notary Public is not possible. Obtaining a NIE number is taking less than 2 weeks through us. Our Conveyance Service includes the following: 1. Complete all necessary searches on the legal status of the property and the developer/vendor, informing the buyer/s of any issues discovered that may influence the decision or conditions of the purchase. 2. Liaise and agree with vendor/s and/or lawyers in respect of terms and conditions of the purchase, ensuring compliance with current laws. In the event that the vendors are non-resident in Spain, a lawyer ensures that any amount paid prior to completion is lodged safely with a resident party, preferably the vendor's lawyer's account. 3. Make preparations at the Notary Public for completion of the purchase or any further preparations required relating to the purchase such as preparation of Powers of Attorney for individuals abroad (duly legalised and translated) which give authority to a physical person/s to act on behalf of the buyers. 4. Assist in the completion process and ensure title deeds are properly registered in the appropriate local Land Registry, and that the property(ies) is/are free from all charges and encumbrances, free from occupants and tenants, as well as payment of the relevant taxes associated with the purchase. 5. Assist in locating, negotiating and obtaining a mortgage loan to finance the purchase of the property. The obtaining of the mortgage loan may be in the form of an approval in principle prior to the signing of the private purchase contract and is understood without prejudice to any other mortgage facility provided by the developer or the vendor. 6. Obtain the NIE number (Número de Identificación de Extranjeros), or Foreigner’s Identification Tax Number. 7.- At your request we can also include as part of our legal service Title Insurance to cover unforeseen events for a further €294,34 covering the next 20 years. Please note we offer additional optional services such as setting up utilities (water & electricity) on your behalf, drawing up a will for your Spanish assets or fiscal representation to file the annual Wealth & Income tax in Spain. On owning property in Spain you are required to file and pay fours taxes, two national (Wealth & Income tax) and two local taxes which can be arranged through a direct debit to your Spanish bank account (IBI tax & garbage collection tax) on an annual basis. Rubbish tax is every six months. Wealth tax has been abolished as from the 1st January 2008. However, Wealth tax for 2007 is still liable and has to be paid in 2008. We charge 1% of the value of the property subject to a minimum legal fee of €1,300 plus 18% VAT. Please be advised that additional legal services not included in the above quoted conveyance fees are the following (plus VAT): 1.- Arranging the set up of utilities (water & electricity) €210. 2.- Drafting of each Spanish Will €180. 3.- Fiscal representation to calculate, file & pay Wealth & Income tax €85 per person, per year. If you have any queries on the above you can always contact me. Yours sincerely, Raymundo Larraín Nesbitt

• Elaine Says:

  Thu, Jul 1st 2010, 09:50

  Lawbird - I'm so glad I found your site. My husband and I bought an Apartment in an Aparthotel complex in Vera. The management company have breached their contract for payment of annual rental income to us, as owners, because they are loosing money. They want a new contract in which they share the profit (if they make one) with owners rather than an agreed amount. No penalties to owners if they make a loss - other than NO payments for allowing the management company use of the apartment for 52 weeks per year. We are at financial loss because of loss of 4300 euro of annual income, and have either to 1) default on mortgage, leave keys with management comapny and send our set to the bank? 2) renegotiate to interest only mortgage - but are being quoted in region of 2000 euro all told for various 'expenses' & costs - this being nearly 3 months mortgage 3) try to sell, whilst continuing to fund a mortgage we cannot afford now our circumstances have changed here in the UK as well as in Spain. What would you advise?, we and some of the other owners in this position feel that the Bank, lawyers and management company concerned are colluding? We bought as an investment, an apartment in a manged commercial complex, which is let out by a management company clearly in financial difficulty and now not able to pay rent according to the contract to the owners. We want OUT, like so many others Help!!

• Lawbird Lawyer Says:

  Thu, Jul 1st 2010, 11:39

  Tricky questions Elaine. In my latest article on buying off-plan published on this website I recommend the following: Buying Property In Spain Tips Part II. Off-Plan Property - 18th Apr 2010 8.If you are Considering Buy-to-Let, Make Sure the Local Laws Allow This If you are buying with a view to rent the property out, either as short or long-term, make sure the region of Spain in which you are buying allows for this. Some regions, i.e. Balearic Islands, have stringent regulations whereby a special licence is required to rent. Failure to comply will result in the Town Hall fining you. Disgruntled neighbours always make apt whistle-blowers, so be warned. Other regions in Spain, such as Andalucía, do not require letting licences but do have their own regulation in place on letting out property. i.e. Decree 218/2005. And as a final word of caution, unless your property is in a prime location, do not rely on the let to offset the mortgage repayments. Without attempting to patronise you, when you invest in life you can either reap a reward or make a loss. It's all about risk management. You must be ready to accept it. Aparthotel complexs have this problem normally.- the not-so-guaranteed rentals. Witha glut of property available after a decade of over construction the competition to sell or let is fearsome in Spain. Investments where, for example, the break even is after 30 week's a year of occupation may be dangerous to the pocket of any aspiring would-be-investor. My advice is not to rely on rental income to offset mortgage repayments unless the property is regarded objectively as prime. Rentals should be regarded as a bonus always not as means to mitigate the monthly mortgage outgoings. And prime properties are frankly hard to come by i.e. beachfront gated luxury complex in Mallorca. In your case owners should sue this company if you believe they are in breach of contract. An amendment that clearly is biased towards them should not be accepted (why should you anyway?) ex pacta sunt servanda. If you are in 3 month's arrears with your lenders, as per my article that starts off this very thread, your lender may initiate a repossession procedure against you. If you can swap over to interest-only you might as well do it to weather off the storm and meanwhile sell on the property to someone else. The amount you are being quoted is standard. If you are in positive equity territory (substantially I might add, circa 20-30%) you may want to contemplate handing back the keys to your lender. You can read further in my articles: Advice to Struggling Mortgage Borrowers – 3rd February 2010 The Dación en Pago Explained – 28th March 2009 The Dación en Pago Procedure - 21st November 2008 If you default on a Spanish mortgage the consequences are very serious as the liability you have will be personal and unlimited, with all your assets both now and in the future. There's no prison sentence for debts in Spain, don't worry. But the consequences, both legal and financial, will last for years if not decades even in your home country. Please read carefully my above articles and come back here with any queries you may have. My advise is always to draw a red line on a Spanish repossession. If there's anything at all you can do to avoid it, please do so for yours and your families' sake. Too many people have been on denial regarding Spanish banks chasing you abroad. It's happened, its hapenning and will happen. Spanish banks can sell on entire portfolios of NPL to local debt-collecting agencies who will do the chasing up. But they first need a ruling in Spain which must be final and that may take some time before they are able to pursue you abroad against your assets ex EU Directive 44/2001. Spanish Justice is very slow, we all know that, but its wheels churn relentlessly and will grind many who did not heed proper advice. Taking on a Spanish mortgage is no joke and you must be very sure of what you are doing and what are the legal consequences for you and your whole family on defaulting as you may be putting your entire financial future at risk. Yours sincerely, Raymundo Larraín Nesbitt

• Rob in Madrid Says:

  Thu, Jul 1st 2010, 20:37

  'In some cases taking even longer. This will depend on the workload of the law court dealing with your repossession. The more clogged, as they usually are, the longer it will take' It is the exact same situation in America it's taking longer and longer for houses to be repossessed, as the crisis grinds on the stigma of walking away from your house is lessening more and more people are will to do a strategic default. That is they are perfectly capable of paying their mortgage but choose not to, live in the house rent free for 2-3 years- So my question is this are people in spain starting to do the same thing, o holding on to the bitter end losing everything

• Lawbird Lawyer Says:

  Fri, Jul 2nd 2010, 07:18

  Hi Rob, US Banks will now be pursuing "strategic defaulters" so I'm told. In Spain you have to be out of your mind to default on a mortgage voluntarily (if you have assets, mind you). I even read an article of someone who publicly advocated doing this as a "solution". The author was a UK accountant, not a lawyer. Spanish people hold on till the bitter end living on bread and butter if neccessary. It has now dawned on non-residents the serious consequences of defaulting. Mainly that the liability is personal and unlimited (Art 105 of Spain's Mortgage Act) and you may be pursued abroad against your home country's assets so it's no joke. There are cases in which some non-resident borrowers default "strategically" hoping they will not be pursued abroad. This is basically acting like an ostridge ducking their heads in the sand. In fact in Spain one could agree with its lender to limit the extent of responsibility to the asset itself acting as collateral. So if you default they only take away said asset and would not pursue you should there be a shortfall. But unsurprisingly lenders seldom agree to sign such a clause because they want to play safe. Art 140 of Spain's Mortgage Act: No obstante lo dispuesto en el artículo 105, podrá válidamente pactarse en la escritura de constitución de la hipoteca voluntaria que la obligación garantizada se haga solamente efectiva sobre los bienes hipotecados. En este caso, la responsabilidad del deudor y la acción del acreedor, por virtud del préstamo hipotecario, quedarán limitadas al importe de los bienes hipotecados, y no alcanzarán a los demás bienes del patrimonio del deudor. Yours sincerely, Raymudno Larraín Nesbitt

• Rob in Madrid Says:

  Sat, Jul 3rd 2010, 19:33

  Thanks, it should be noted that in some states the loans, mortgages are non-recourse so the lender can't go after you. Also and much more important when ever dealing with a bank (short sale foreclosure etc) you need good legal advice. There have been stories of people doing a short sale and the bank coming after them a few years later. Personally I don't understand why everyone is so eager to buy. Yes prices are much lower than at the boom, but they are going no where (expect down) anytime soon. If you rent all the risk is on the landlord and you're not tying up all your capital. just my 2 ) céntimos

• Lawbird Lawyer Says:

  Mon, Jul 5th 2010, 08:01

  Hi Rob, We've had a couple of posts on the open forum and quite a few more privately on having "short sold" or handed back the keys without a lawyer and then being chased by their banks for the balance. E.g. Property was bargained away and we are being chased for the shortfall. Please help! Wendy Can we be chased by the bank after arranging a Dacion en Pago? Unregistered That's why I always recommend hiring a lawyer to make sure that your personal and unlimited mortgage liability is fully discharged on handing back the keys. Only because a lender agrees with you by email to accept a dación en pago does not mean you are actually signing that a a Notary, such as in the above cases The only thing that matters legally is the deed that is actually signed before a Notary Public. Regarding your advice of renting rather than buying now I've been advocating that for a few years. But I take it further than that, I advice rent-to-buy. With a rent-to-buy contract you are letting a property but you have the choice, not the obligation, of buying the property after a couple of years if it suits you. To top it off, the rent is deductible from the sales price so it's not throwing good money away. Many developers are now offering this in 2010 in off-plan property at very attractive prices. Naturally there are many resales that are also offering this option to serious potential buyers. These rent-to-buy contracts differ greatly one from another. Some landlords may ask you to pay a full year upfront lump sum, others may ask for a rental bank guarantee. Some will allow you only 11 months, others 4 years. There's freedom to tailor the terms and conditions of said contracts to suit both parties. I wrote an article last year on rent-to-buys as I reckon it's an excellent option withg the ongoing market turmoil in which house prices may fall another 20%. The truth is that no one knows and its all wild guessing at best. Some qualified experts are of the opinion that the market has already bottomed out, others that it will fall further (20%) and then there are those that believe property prices should fall a further 50-70% (!). Reant-to-Buy Or How To Profit From Spain's Market Downturn - 5th November 2009 For what is worth I'm in the camp who believes that property prices will continue falling a further 20% on the costas over the next three years or so as we may be heading for a W-shaped recovery if there's a hike of interest rates later on this year. Regarding upscale market, luxury villas and penthouses, I think we may have already hit rock bottom already as they are fairly resilient. Yours sincerely, Raymundo Larraín Nesbitt

• david Says:

  Mon, Jul 5th 2010, 10:30

  I have recently received a letter from uk solicitors about reposesion of property in costa blanca.I have moved back to the uk and have no assets here.I do have properties in Bulgaria and offshore bank accounts though.Is there any way for them to find these? Your help will be greatly appreciated.David

• Lawbird Lawyer Says:

  Mon, Jul 5th 2010, 11:54

  Dear David, If you have no assets then there's little to worry about. Off shore accounts are almost untraceable so it is highly unlikely they'll have access to them. Regarding your property in Bulgaria unless they are tipped off it would be very hard to track down too in my opinion. You are aware of course that your Experian credit-rating will be ruined? Repossession in Spain is normally only an issue if you have assets, or may come into possession of assets in the future (i.e. inheritance, jackpot...). Yours sincerely, Raymundo Larraín Nesbitt

• Unregistered Says:

  Tue, Jul 6th 2010, 09:41

  Thank you very much for your help. David

• neal Says:

  Wed, Jul 7th 2010, 22:27

  I have a 156000 euro mortgage on a 240000 euro purchased property bought off plan! They are now for sale ranging from 100000 to 210000 and although i havent defaulted on payments am finding it hard to continue. What approach or action would you recommend at this point?

• Lawbird Lawyer Says:

  Thu, Jul 8th 2010, 08:50

  Hi Neil, €110,000 up or down makes all the difference in the world on a 240k property! It's the difference between your lender accepting the keys back or else by being repossessed by them with all that a repo procedure entails. It depends on whether you have assets (whether in Spain or elsewhere in the EU) or not. If you don't, there isn't much to worry about, is there? If you do have assets back in the UK then you should try to avoid at all costs being repossessed in Spain. If you can hand back the keys to your lender, good riddance! Your mortgage liability (personal and unlimited) will be fully discharged meaning you start off with a clean slate and not taking a major blow in Experian and similar credit-rating agencies. Banks are run by human beings. They listen to what you have to say. It is never a good idea to ignore a financial problem with them. Try speaking to your bank and make them understand the dire financial situation you are going through. You will be surprised by how often banks try to work along with you to solve the issue. The last thing a bank wants is to repossess you, they are not interested in bricks which weighs down their profit margins following new regulation of the BoS. Handing back the keys is a solution of last resort. There are other options which do not imply losing your Spanish property and will allow you to weather off the financial storm afflicting us all. Take a peak at my article below and follow the links I supply at the end, it might come in handy: Advice to Struggling Mortgage Borrowers -13th April 2010 Levante Lifestyle Magazine Yours sincerely, Raymundo Larraín Nesbitt

• stewal Says:

  Sun, Jul 18th 2010, 21:01

  Hello, It is sad but comforting to know that i am not the only one in a very unfortunate situation. I bought my Apt on the coast on costa blanca for 90.000 eur, I owe 64000, So i have lost all of my savings and any pension i thought i would acrue when i come to sell in 15yrs or so, Not to be, I have missed 2 mortgage payments, I am worried sick at the thought of what will happen, I cannot afford to carry on paying as my comm fees have risen as well. I heard somewhere that a law has just been passed by spanish government for banks to accept that we have lost alot in this process and they have to accept keys or initiate repo proceedings without chasing us in the uk for any outstanding debt, i would really appreciate any comments or help you guys may have for me. May i say this a brilliant website Many thanks S

• mike Says:

  Wed, Jul 21st 2010, 14:23

  I have a property in spain which I can no longer afford the payments on. I haven't failed to pay any mortgage payments yet and am seriously thinking of handing the keys back to the bank in when I go over to spain in August. I do have assets in in England ( 2 properties One fully owned and the other with a small outstanding mortgage owing ) what would be the best way of protecting my assets here in uk. We currently owe 365000 Euros on the propety and those around us in a similar condition are currntly selling for about 350000 - 450000, when they do sell of course. Any help would be appreciated. Thankyou.

• Lawbird Lawyer Says:

  Mon, Jul 26th 2010, 07:38

  Hello, It is sad but comforting to know that i am not the only one in a very unfortunate situation. I bought my Apt on the coast on costa blanca for 90.000 eur, I owe 64000, So i have lost all of my savings and any pension i thought i would acrue when i come to sell in 15yrs or so, Not to be, I have missed 2 mortgage payments, I am worried sick at the thought of what will happen, I cannot afford to carry on paying as my comm fees have risen as well. I heard somewhere that a law has just been passed by spanish government for banks to accept that we have lost alot in this process and they have to accept keys or initiate repo proceedings without chasing us in the uk for any outstanding debt, i would really appreciate any comments or help you guys may have for me. May i say this a brilliant website Many thanks S Dear Sir There is no such legal provision enacted to the best of my knowledge. Spanish lenders can legally pursue the debt in the UK against your assets. I wrote a detailed article on the matter explaining how they can legally do this following European regulation. It will be published in Levante Lifestyle Magazine in the upcoming months of August-September 2010 as well as online. EDIT 19th August 2010 The promised article: Recognition and Execution of EU Member State Rulings: Council Regulation 44/2001 - 19th August 2010 Yours sincerely Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Mon, Jul 26th 2010, 08:01

  Hi Mike The problem with "handing back the keys" Mike is that following new regulation from the Bank of Spain lenders are seldomly accepting this option as they would rather repossess you. This is explained in detail in my blog post: Bank of Spain Raises Real Estate Provisions Set Aside by Lenders - 27th May 2010 Spanish lenders have always been reluctant of accepting a dación en pago de deuda. And now, following the above, even more so in 2010. As I always write, I advice everyone to draw a red line on a Spanish repossession procedure because of the unlimited and personal liability a mortgage loan normally entails. This of course is only a problem for those who hold assets in the UK. If you do not hold assets there isn't much to worry about. If you do hold assets in the UK you must seek the advice of a UK solicitor to protect you and safeguard your financial interests. The only effective way to "get rid" of this serious financial problem, other than selling on the property with the associated mortgage, is to hand over the keys to the bank by way of signing a deed before a Notary relinquishing ownership of your Spanish property and in exchange the lender will fully discharge you from the associated mortgage liability. Meaning you will be able to start off with a clean slate, your credit-rating will not take a hit in Experian and similar credit-rating agencies and obvioulsy your pool of UK assets will be safeguarded against your Spanish creditors. I advice you to read my articles on the matter: • Advice to Struggling Mortgage Borrowers -13th April 2010 • The Dación en Pago Explained – 28th March 2009 • The Dación en Pago Procedure – 21st November 2008 For a dación en pago to work out, two things are required basically: 1.- The property must not be in negative equity (AKA the no-negative equity rule). 2.- Your lender must not have started a repossession procedure against the property. Basically the outline on how this works is as follows: 1.- The borrower must be on time with payments (the repossession legal procedure must not have been initiated), with Community fees and also with local taxes. This however is not normally the case and borrowers are in arrears with pretty much everything. 2.- You contact your lenders' branch manager and propose it to them. 3.- The borrower will require it to be reappraised. You will be expected by your lender to pay this in advance. On average it's approx 350€. 4.- If on average the property has 30/40% positive equity, the lender will accept to take the possession of the apartment, cancelling your debits and will waive taking legal action both in Spain and before British courts (following EU regulation). 5.- The day of signing the deed at the Notary, the borrower will surrender the keys, and leave the property clear of furniture and tenants (a dación will not be accepted with tenants inside the property). It is not compulsory to hire a lawyer for the dación en pago. What is compulsory is that you appoint a translator to act on your behalf on signing the deed at the Notary if your command of Spanish is low. However, we just cannot stress enough how important it is to appoint a lawyer who will act both as a translator and also verify that indeed your debt with the lender is being effectively fully discharged on you signing the Deed. Besides your lawyer will be able to negotiate with the lender as some banks will try to make borrowers pay for some expenses. The Notary is not there to give you legal advice as they act impartially to either party. An example of what may happen if you do not hire a lawyer is depicted on this forum query: Can we be chased by the bank after arranging a Dacion en Pago? Lawbird Legal Services offers this legal service at a flat fee of 1,416€ (18% VAT already included). Depending on where your property is located within Spain, further travelling expenses may be applicable. For an exact quote, please contact us. If you have queries on how this works out come back to me. Yours sincerely Raymundo Larraín Nesbitt

• Spanish Worrier Says:

  Tue, Aug 3rd 2010, 17:29

  The mortgage on my property has not been serviced and the bank have taken posession. It was put up for auction, but there were apparently no buyers. The property was worth €3m with a mortgage of €1.6m. It appears that the bank are claiming that they own the property and can now sell it and retain the proceeds, even if it sells for more than the amount owing under the charge. Does this sound right?! Thanks

• Paul Says:

  Wed, Aug 4th 2010, 07:27

  I have tried since Feb to tell my Spanish bank we are in trouble - my tenants left and we had a lot of repairs/debts to pay. They would not reply to emails or calls and eventually I had a call from IPP Global in May who advised me to go for a Dacion En Pago. I paid them €1500 (on credit card) initial deposit (total will be €3500) and nothing happened. I have chased them to progress the Dacion as I was trying to keep my mortgage up to date by using my credit card in UK and sending most of my wage to service my mortgage in Spain. Last week my Spanish bank told me they would repossess my Spanish and English houses as I had defaulted - I thought the Dacion had been instigated after 3 months but IPP were still not moving. I have maxed out my credit cards and I sold my car to pay last months mortgage as I am terrified of losing my house in England. I still have no idea if the Dacion will proceed, I owe community fees and on advice I paid for a re-decoration to try and get the place rented again. I am at the limit of what I can cope with, it seems that in Spain people prosper only due to others misfortune. I have done everything I could to try to get out of this and save my home in UK - now it seems I am to lose the lot - what would you advise now?

• Lawbird Lawyer Says:

  Wed, Aug 4th 2010, 07:42

  Dear Sir or Madam I would need to have a look at it. In any case if you've read the article that starts off this very thread on Bank Repossessions in Spain I explain that if no one bids in the Public auction (something common nowadays) the lender keeps the property for 50% of the appraisal value. So a property worth 3 million euros in the market is valued for exmaple specifically for the auction at 2 million and the bank gets to keep it for 50% of said value, that is 1 million euros. It will then sell it on to some lucky buyer for whatever price is can fetch, whether 1 million or 3 million being allowed to keep it all, yes. Lenders nowadays post repossession on adjudicating themselves the properties are piling them into purpose vehicles within the enxt 20 days which are really their own real estate agencies. They want to offload them from their balance sheeets as it weighs down their credit ratings. More on this here: Pssst! Looking For Cheap Spanish Property? - 5th October 2009 The appraisal value of a property for auction purposes is always considerably lower than its "real" market value. And as I write, if no one bids the banks keeps it at 50% of this underrated value. So you can easily end up in negative equity with a Spanish lender post repossession. In the above example the break even point is one million euros. If your mortgage loan was above 1 million euros you still owe money to the bank despite them having sold it for 3 million euros as the value by which they adjudicated themselves the property was only 1 million euors which would be below the outstanding mortgage loan. The other day we were in a Public Auction for a prime beach front property (villa) in Puerto Banús (Marbella) which realistically would have today a market value of 4 - 4,5 million euros. The auction started off at 1,2 million and ended at 1.7 million euros; a bargain for such a property if you have the deep pockets to make even more money. That property can be sold on the following day making a huge profit even nowadays. Spanish Property Auctions: An Insider’s View -25th May 2010 Sincerely Raymundo Larraín Nesbitt

• Lawbird Lawyer Says:

  Wed, Aug 4th 2010, 08:22

  Hi Paul You are the third person that contacts us to tell us that IPP Global charged them 1,500€ and nothing happened. The other cases were another dación en pago and a mortgage change in the terms and conditions (novación) that did not happen either. Isn't IPP GLobal a Real Estate Agency to the best of my knowledge? You would need to query them what they've done on your behalf or whom they've hired or outsourced work over to. We cannot speak for them. I suggest you contact them on your matter urgently. What I can tell you is that the dación en pago is a fast procedure if your lender accepts it. It takes on average 1-3 months. As we've written in detail over the last year, your property needs at least 30 - 40% positive equity for a lender to accept it nowadys. You cannot force a Spanish lender to accept a dacion en pago, it's at their own discretion as it entails huge costs for them to accept the keys from you (they have to pay all taxes and associated expenses besides the mantainance of the property). Only because you pay someone for a dación en pago does not imply they will obtain it. Which is why our law firm always recommends that prior to hiring (and paying) us the client obtains the green light from their lender and then we take over arranging the negotiation, drafting and signing of the deed before a Notary relinquishing ownership. Otherwise you are just throwing away good money after bad. You can read a detailed blog post here with abundant links on the matter: Bank of Spain Raises Real Estate Provisions Set Aside by Lenders -27th May 2010 The truth is that lenders are no longer accepting properties for a dación en pago purchased, on average, after 2005 because of the fall in value of real estate assets as the blog post above explains in detail. Yours faithfully

• Denis Says:

  Thu, Aug 5th 2010, 07:11

  Hi. I am a gaurantor for 2 houses being developed in Majorca, this started around 4 years ago. My sister is on the deeds with me as a gaurantor, but i have just learnt that in case of repossession my UK assets are also liable via this thread, which i was told otherwise at the time. The numbers are good, its just we are unable to complete the houses. The mortgage and recent valuation gives €275K equity, but €100k needs to be spent to finish them and that is the stumbling block. There is also collaterol on my sisters property of €150k equity. So there is enough there if come repossesion before they reach me. We have an interest only mortgage that expires in Janaury, which is when I see the big problem arising, as at the moment we have not fallen behind. There are plenty of persons wanting to rent them, but as they are unfinished we are stuck. If we are unable to find the funds to complete and the worst happens, would selling my UK property or handing over to a family member be wise before the worst happens. We are also considering a 'dacion en pago' again if worst happens and with the equity I am hoping maybe accepted. My main concern is my UK property and what I should do to avoid this being touched. Thank you in advance.

• Lawbird Lawyer Says:

  Thu, Aug 5th 2010, 07:45

  Hi Denis Well I'm glad that by reading this forum, specifically this thread, it is dawning on people what they are up against before they sign nonchalantly as guarantors on mortgage loans. I always advise not to sign as guarantor even if it's for a family member or your best friend. If they fail to pay YOU will be up next in the lender's roster with ALL your assets, both now and in the future. And this is hapenning everyday of the week post credit crunch. The problem with selling up your UK assets before your creditors come after you is that in Spain you could be criminally prosecuted for this. It is called in Spanish "alzamiento de bienes" and aims to waive the personal unlimited liability enshrined in Art 1911 of the SCC. I'm fairly sure, without being an expert in U.K. law, that it works pretty much the same in the U.K. In Spain you cannot be jailed for bad debts. But you can certainly be jailed if you purposely decapitalise your pool of assets with the sole intent of deceitfully attempt to waive your financial commitments. i.e. repayment of a mortgage loan. You may want to think twice before doing this. If you are going to take this route seek legal advice from a UK solicitor. As to your other option, a dación en pago, it is the solution I always recommend only as a last resort to a borrower/guarantor. On following it you can walk away and start off with a clean slate. Your credit-rating will not be tarnished and you will have successfully waived all liability. Let us know if we can represent you in a dación. We charge a flat fee of €1,200 plus VAT. The only problem with a dación is that Spanish lenders are now in 2010 even more reluctant than ever to accept it following what I write in other posts on this thread. I wish you good luck and let us know if we can assist you with the dación option should you require it. Sincerely Raymundo Larraín Nesbitt

• Gary Says:

  Wed, Aug 11th 2010, 13:15

  Around 2 years ago i stopped paying my mortgage in Spain even though i could afford it as i could see what was happening with the ecconomy. I have tried many times to discuss where we go from here in order to settle the debt with the bank but they refuse to talk. We then found the banks lawyers who are Allen & Overy in London and my lawyers have written to them also on many occassions without a reply. What is wrong with these people? what are they waiting for some kind of divine inspiration from the madonna!! Has at this point the bank officially repossessed the property or not? can someone tell me please? I also noticed that there is little speak of community charges - if the borrower defaults and the banks repossess who pays the charges as i am being chased for unpaid fees and have told the community to go to the bank as the property is no longer mine. I'm interested to hear how this one works.

• Lawbird Lawyer Says:

  Wed, Aug 11th 2010, 13:32

  Hi Gary Madonnas aside, you will be held liable for the outstanding community fees as you are still the registered owner until the property is effectively repossessed by your lender and becomes the new owner. Bold move you've taken on voluntarily defaulting on a Spanish mortgage loan. You are aware, of course, the liability is personal and unlimited on doing so with all your assets, both now and in the future? These procedures in Spain are taking on average between 1-3 years depending on where the property is located (how clogged law courts are). Sincerely Raymundo Larraín Nesbitt

• Gary Says:

  Thu, Aug 12th 2010, 12:14

  Hi Raymundo, Many thanks for your speedy reply you don't know how refreshing it is. Yes it was a bold move by me to stop paying the mortgage but why keep paying a mortgage until you have absolutely nothing left in the bank or collateral to deal with when you know that ultimately this is where your going to end up! If theres no one to rent the property and your circumstances change in your own country why carry on paying! I really feel for the guy who sold his car and maxed out on his credit cards.....that must really hurt! But shurely the banks and Spanish government should shoulder some of these costs for behaving the way they have i.e. Paper bag money, Black money, government officials taking back handed money, illegal planning permission being granted, banks over valueing property by absolutely ridiculous ammounts, Spanish developers promising rental incomes that were never achievable ect the list goes on. I have had my lawyer write to the bank to ask for a value to settle immediately but in 18 months nothing, yet i'm still responsible for paying community charges ect which is wasting my cash i have put asside to settle with the bank. It appears that the banks in Spain are a law unto themselves and just about everyone in Spain is on the payroll. This is the worst deal i have done and there will never be a day that goes by where for 10 mins i don't hate myself for being so gullable. £80k of my kids inheritance down the drain and still counting. Viva Espania..... my arse!!

• Lawbird Lawyer Says:

  Thu, Aug 12th 2010, 13:23

  You are welcome. Hmmm, following your post everybody is to blame it would seem other than yourself Gary. Really? The fact is that turning back the clock only 4 years ago every Tom, Dick and Harry were raking in 20% capital appreciation on their properties, at least on paper, year after year after year. It took a great deal of self-discipline to avoid falling for the hype when newspapers, magazines, tv etc kept banging all day long how much house prices were rising every year and just how rich and smart your next door neighbour was becoming with exotic Cape Verde property and releasing equity from his home. Remember self-certified loans known popularly as liar-loans? People almost thought there was something wrong with you if you did not indebt yourself up to your eyeballs in cheap credit to live "the great life" to which everyone seemed to be entitled. Banks almost threw money at your face when you walked in. Cheap credit is like crack, very addictive and should carry a warning. 4 years on we are back to reality when only those who make a certain income p.a. can afford certain lifestyles with overseas properties. Unfortunately for some, such as yourself, the consequences of your acts will come back to haunt you for the rest of your life. If after you are repossessed there's a shortfall your lender will pursue you abroad and tag on default compoud interest rate pa. You may not hear anything from them in the next decade thinking you are safe when some day out-of-the-blue you will receive a lawyer's letter or a phone call from a debt-collecting agency reminding you of your past life. Property moves in cycles. In Spain these take on average 15 years from peak to through. The last cycle was from 1993 till 2007. Now that everyone is, to put it mildly, complaining on the market it is the best time to buy in my opinion. It is now when people will snatch properties at knockdown prices and will be admired for their financial savvy in years to come. Modern Society has a fixation for money and those who know how to make it. And making money is all about having common sense (and guts). Next time round when you feel tempted to step in when everyone seems to be overboard on property hype -again-, just don't. Buy when everyone is scared and the uncertainty is tangible, you won't regret it. You may want to read our article on buying off-plan and avoiding the common pitfalls: Buying Property In Spain Tips Part II. Off-Plan Property - 18th April 2010 Any way I don't want to sound like I'm patronising you in anyway which is easy in hindsight and terribly rude. We are all adults and are entitled to our fair share of mistakes in life. You only live once after all.

• GeeGee Says:

  Tue, Aug 31st 2010, 21:17

  I have a question that I would very much like to know the answer to. All the information I've seen about having a property repossessed talks about negative equity.... What happens if that doesn't apply? What happens if the price of an auctioned property is higher than the amount still owed to the bank? Are the banks obliged to hand over the excess amount to the ex-owner or do they get to keep it as a 'tip'?

• mal odonnell Says:

  Fri, Sep 10th 2010, 01:57

  I see that spain is ranked with 3rd world countries in how it respects property rights. I am a solicitor and I am dumbfounded at how the spanish banks seem to behave like there is no oversight. Spain will lose respect long term with how they are handling the troubles suffered by foreign investors.

• jason Says:

  Fri, Oct 1st 2010, 16:12

  I am going through the same problems as the people on here-arrears,what should i do etc.I have read all the posts & also looked at other forums regarding reposession & whether spanish banks will come after me in the uk for my assets & give me a bad credit rating.The 1 thing i havn't found is proof of whether the spanish banks have actually done any of this.At the moment i feel there is alot of scaremongering.I would appreciate any comments good & bad from people who have had there spanish homes reposessed & if they have been chased in the uk or given a bad credit rating.

• Charles Says:

  Sat, Oct 2nd 2010, 16:45

  I would appreciate any advice – or indication of where I can get advice – on buying property at a Spanish court auction (?Subasta). I have been told it is not like a normal auction, that it is somewhat closed / the outcome is known beforehand?

• Virginia Cummings Says:

  Thu, Oct 7th 2010, 12:13

  My parents house has been repossessed and the bank are selling it for much less than the market value and way below the 50% that they ower for the outstanding mortgage. we believe that their is a law to recover money over and above the outstanding debt, can anyone help.

• Tony Says:

  Sun, Oct 24th 2010, 22:17

  Can you please advise, my business partner has a Spanish mortgage and he has also remortgaged his property in Spain to pay off his UK mortgage so he no longer has a mortgage here and has not paid his mortgage in Spain for several months. My concern is that since we are both directors of a UK Company if his debt is pursued here will this affect the Company assets?

• Alan carson Says:

  Thu, Oct 28th 2010, 00:18

  Hi - Im looking for all and any advice. This is a short version of a very loooong story. We built a house in Spain which has basically started to fall down and we have been forced to move out and return to the UK. We are still paying the mortgage on the property of 1800 euros a month despite the fact we cannot live or even visit the property as it has been declared unsafe. We are now in the process of suing the architect, builder and technician but have found out today it will be at least TWO YEARS before we even get an initial court hearing. On the advice of our lawyer we have not told the bank about the house - he says the bank would have looked to reclaim the difference in the mortgage given and the current value of the house. But we are now in a position where we can no longer afford to keep paying the mortgage on the property and also rent a property in the UK - especially when we have no idea if or when this will eventually reach court and even if we will be successful in our claim. Can anyone advise? Much appreciated Alan

• jack sturridge Says:

  Tue, Nov 2nd 2010, 19:02

  can some one advice me i have a property in malaga which i have rented for 2 years i have a mortgage but cannot keep up the payments as the rent doesnt cover the mortgage the bank is threatening reposesion can the bank reposees the house an evict the tenants before the rental contract expires thanks

• John Lees Says:

  Sat, Nov 13th 2010, 16:23

  I have a Spanish mortgage of €105,000 & the current value of the property is €90,000 & I am unable to find a buyer. I have lost my income from the UK & will be unable to pay the mortgage & utility bills. I have no assets in the UK but intend to register for council housing. Can I still expect a visit from the bailiffs in the UK in the future regarding the outstanding debt after repossession, I would appreciate some advice. Regards. John

• debs Says:

  Wed, Nov 17th 2010, 09:20

  please tell, me, if we go to our bank and want to hand back the keys to our appartment must the bank take them? my husband and i need to leave spain and move back to the uk, we have no money coming in and can not affored nor wish to maintain our property in spain. our mortgage remaining is 185k the appartments where we live are now seeling for 175k. we payed 50k deposit 4 and a half years ago and have paid in full our mortgage payments every month. we understand that the differnce between the cost of the mortgage to the value of the appartment is 10k, so if we offer to pay this 10k back as a loan from the bank and that they take our keys and give us a closure document must they do this for us, or are they with in their rights to say no?

• lawbird Says:

  Thu, Nov 18th 2010, 11:11

  Dear Debs, The bank can and probably will decline the transaction you propose. Your property is in negative equity and therefore it will not be cost-efficient to them (if compared with their other alternative, a repossession). There are costs involved and they will expect you (or the equity in your property) to cover for these. If you are interested in doing some further reading on when it could be possible to hand back the keys to your bank, I recommend you the following article: http://belegal.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank Kind regards,

• ian hopkins Says:

  Thu, Nov 18th 2010, 21:08

  we are in the prosses of being reprosesed we have just recived a letter from notary as we are 4 mths in arrears. can the spanish bank embargo my wages in uk ? is going bankrup an option?

• paella87 Says:

  Sat, Nov 20th 2010, 21:19

  I would greatly appreciate your advice. When I lost my job I informed the bank in Spain we may run into problems and asked for an interest only mortgage. Thay have refused this and after 6 months have not offered a solution apart from suggesting we take on another mortgage which would be of benefit to them but not us. I am becoming increasingly desperate and am afraid that within 2 months we will have to default on our mortgage as our money runs out. When I mentioned dacion en pago I was told that Cambank would not consider this either. What should I do now ?

• help Says:

  Tue, Nov 23rd 2010, 11:49

  Hi, My girlfiend has a property with her ex boyfriend in Spain, They split up over 3 years ago now and she had tried on multiple occasions to sell the house but he hasnt allowed this to happen. She has offered to pay for her name to be taken off the house but he is not forthcoming with this, it seems as he lives in Spain (she doesnt anymore) it seems that he wants to keep the house... she has asked if it os possible for the bank to take the house back but that is not an option, and also asked him if they can let the bank take th hose and pay the difference bu he wont allow it stating that it will ruin his credit rating in Spain (he still lives in Spain) neither still live in the house in question. Recently she has found out that he has defaulted on the repayments for the house so another 40K is now owed. Unfortunately my girlfriend doesnt earn much and I dont have a job at the moment, we literally only make enough to scrape by each month and even if I had a job we wouldnt be much better off as we are living with family and need to move out in the very near future. We are really stuck with this. If things go to court and the bank takes the house will my girlfriend will be persued by the bank (as I see from your article) would it get to the point that she would be arrested if she ever flew into Spain again? What will they do to her?

• lawbird Says:

  Wed, Nov 24th 2010, 09:57

  Dear Sir, I understand that your girlfriend is not only a co-owner but also a joint mortgagor. In that case please note that she is equally liable for this mortgage as her ex-partner. In other words, the Bank is entitled to chase her as much as they are entitled to chase him in the event of default. Please note that defaulting on your mortgage is not a criminal offence and therefore neither you nor her you should be fearing imprisonment. However, and as the article explains, each mortgagor is personally liable for the debt with all their assets, present and future. If they fail to meet their repayments the bank will initiate repossession proceedings. The property will be auctioned off for whatever value it can fetch and (in almost all cases) this will be less than the value of the mortgage. If the property is sold for less, the mortgagors will be liable to pay any outstanding balance with their personal assets. Therefore, they can find themselves in a situation where they lose the property but still owe thousands and thousands of euros to their bank. If your girlfriend or her ex have any other property in Spain or the UK, it is possible for the Bank to place an embargo over those assets in an attempt to recover the outstanding balance. The Bank can legally go after vehicles, bank accounts, properties and even embargos over their salaries. In summary, there will be no criminal consequences, but the effects of default could be quite devastating for a person's life and therefore she (and her ex) should try to avoid this situation with any means available to them. In our articles we are always suggesting any alternatives we can think of, so please feel free to check the forum. We hope this situation is resolved as soon as possible. Kind regards,

• paella87 Says:

  Wed, Nov 24th 2010, 19:03

  I would greatly appreciate your advice. When I lost my job I informed the bank in Spain we may run into problems and asked for an interest only mortgage. Thay have refused this and after 6 months have not offered a solution apart from suggesting we take on another mortgage which would be of benefit to them but not us. I am becoming increasingly desperate and am afraid that within 2 months we will have to default on our mortgage as our money runs out. When I mentioned dacion en pago I was told that Cambank would not consider this either. What should I do now ?

• cat. Says:

  Thu, Nov 25th 2010, 10:42

  hi we moved into a lovely 4 bed villa 4 months ago and have an 11 month contract. we rented it off a guy we had know for a long time and he collects the rent every month.. nabours have told us that the person who owns the house left 3 yrs ago and not come back.. i went down the bank to ask about this property they came back n said it was with mercia and was repossed but still waiting to go to court.. should i tell the bank we live in the house? i would like to buy the house.. the bank have asked me to go and get more infomation. my partner told me to leave it till someone comes round. but im worried now that we paying only 400 eruos a month for this house this guy collects when we ask this guy he just says we are ok.. im wondering if we are squatting in the banks house and worried. would they kick us out? i have kids? we are not on the padron yet as kids at school and dont wish to changeschools till next sept

• help. Says:

  Thu, Nov 25th 2010, 16:32

  Thanks for the reply, really appreciate it. What would the implications of her declaring herself bankrupt be?, I know this is a very serious option to consider but we literally have no means of paying off this debit. We are not the kind of couple that can even contemplate taking out a mortgage on a property even in the future, we are waiting on council housing at the moment. we live paycheck to paycheck and there isnt much hope of this changing in the future. I really need to resolve this issue by any means neccessary as it will ruin our lives and will even mean that we may not be able to afford to even have children.

• keevla Says:

  Sun, Dec 5th 2010, 12:30

  Raymundo may i ask ..my hubby & i own an apartment outright in Torrevieja but unfortunately he joined 3 friends in buying a golf apartment a couple of years ago. they have their 4 names on mortgage. now no one can pay it, its in arrears . each person owes 70,000 each on original cost of the property (280,000). if bank repossess it'll be lucky they get half leaving each person 35k in debt..can the spainish bank seize our personally owned apartment to cover all the debt or are we liable just for the quarter share.. thank you ever so much for advice.

• mel clarke Says:

  Mon, Dec 6th 2010, 16:20

  Hi. Im in the same situation as many here, massive mortgage and negative equity. Struggling in the UK financially and struggling to pay Spanish mortgage. Been in talks with bank since April and wont let us go back to interest only. It seems I was told the debt would stay in Spain from Barclays UK, but from your comments and press articles it seems they are trying to come after us here. However, right at the start when we completed, the bank issued credit cards in my name and my partners and put 11000 euros on them to cover completion costs...we were duped by the solicitor and sales agent in terms of what the costs would be and never agreed to 11000 going on credit cards, but had given power of attorney to lawyer. I have had Spanish lawyer look at deeds and he says there is 50,000 euros not accounted for and perhaps 'black money'. Trouble is he doesnt seem to want to know and we cant get an answer by phone or email. I know we have been done over, and really need someone who can help us and obviously understand all the paperwork. Is this something you can help us with?

• lawbird Says:

  Tue, Dec 7th 2010, 17:31

  Dear Keevla, The documentation needs to be reviewed but it is likely that you are all joint mortgagors. This would mean that you are all separetly liable for the full amount. The bank can therefore go after one of you for the full amount of the mortgage (or the outstanding balance should the property had been auctioned off already) and then all that you will have is a personal claim against your co-mortgagor(s). Kind regards,

• lawbird Says:

  Tue, Dec 7th 2010, 17:37

  Dear Mel Clarke, Yes, we can certainly review the documentation and assist you on your matter. If you provide me with your contact details, I can then provide you with a quote for our service. You can fill your personal contact details at the following link: http://www.lawbird.com/services/contact Kind regards,

• Jan B Says:

  Sat, Dec 18th 2010, 15:39

  Thank you for a very helpful, useful and interesting site. We are having serious problems paying our mortgage and have learnt a lot from reading the above comments. It would appear that our first step should be to contact our bank.

• lawbird Says:

  Wed, Dec 22nd 2010, 09:56

  Hi Jan, Thats correct. Please find below two articles with tips on what you are about to do: http://belegal.com/blog-by-antonio-flores/10-tips-to-increase-your-chances-of-success-in-handing-back-the-keys-to-your-bank http://belegal.com/blog-by-antonio-flores/how-can-lawyers-help-you-with-your-mortgage-loan If you are interested in instructing a Lawyer to assist in the negotiations, please fill in the following form with your contact details and some background informaiton and we will contact you: http://www.lawbird.com/services/contact Kind regards and merry christmas,

• graham Says:

  Wed, Jan 5th 2011, 14:07

  Hi" I have been asking the bank now for some month,s to take back the keys to my apartment. My partner dyed last year with cancer and left no will, the mortgage was in both names ,i now canot afford to keep the mortgage paid anymore i have for the last year but now all the funds have run out, the bank seam reluctent to answear me as they seam to want me to inhearet my partners half and pay tax on it ! surly this is not wright as we where not married, the bank put me in touch with an est agent they use and he could get the place sold for the outstanding mortgage but it all stopped when they said it needs to be singened over to some one befor they could continue, surley if there is no will and testement left the property go,s back to the bank automatically! i have now fallen into my first month of arrears for the apartment and am asking them to take the keys back NOW" but they do not respond even to this,

• lawbird Says:

  Fri, Jan 14th 2011, 13:30

  Dear Graham, In order for an estate agent to sell the property, the Seller needs to sign the transfer deeds. If one of the registered owners passed away, the only viable way to transfer the property is by accepting the inheritance first and then signing. It is likely that the mortgage you took from your bank is a joint mortgage. This means that you are both jointly and independently liable for the full amount. The bank's legal position became a little more complicated since one of the mortgagors passed away, however, if you fail to negotiate with them and default in payment, they will eventually get the repossession proceedings started. Furthermore, with the fall in property prices, they will take the property back but valuing at current market price. You will therefore be liable to pay for the amount outstanding in the mortgage even after your property has been repossessed. Negotiating with your bank is therefore key here as if they repossess it may be too late to open communications again. For all the above reasons, please note that it is not that "the property goes back to the bank automatically". Its not like that at all. You need to take proactive steps to negotiate a new agreement with your bank and sort the inheritance out before the IHT applicable raises considerably with charges, penalties and surcharges for delay. If you would like to discuss this further, please do not hesitate to write us an email at info @ lawbird.com. Kind regards,

• Jan B Says:

  Thu, Jan 20th 2011, 09:05

  Hi Raymundo, thank you for your kind response. I wrote to my bank requesting they consider a dacio en pago. Within a couple of weeks they have confirmed that they will take my property back and cancel my mortgage. My balance is around 77.000 euros and property value around this value as well. They have advised that they want to move quickly, carry out a valuation, and have already prepared the paperwork for the notary. I've told them that my mother is going to Spain on 10th February and that she will act as my power of attorney. I'm very pleased, but also surprised how fast everything is moving. I wanted your opinion - does this look correct to you ? Best wishes, Jan.

• Jan B Says:

  Thu, Jan 20th 2011, 09:27

  I forgot to ask Raymundo, are there normally any additional charges that you are aware of to carry out the dacio en pago ? Thank you again for your help.

• lawbird Says:

  Thu, Jan 20th 2011, 16:48

  Hi Jan, The forum is operated by different employees at Lawbird. I would strongly advise you that you instruct a Lawyer to review the paperwork you will be signing. Without reviewing the documentation it is impossible to say whether the deal they are offering you is "normal" or good. By way of example, we had a client who believed he was signing the return of his property to the Bank but did not realize that in the documentation the property was being valued at significantly less than the amount outstanding in the mortgage. He was then chased by the bank on the outstanding balance even when he had already returned the property back to them. For all the above I suggest you instruct a Lawyer who will ensure that you are successfully released and who explains to you the consequences of what you are signing. In terms of costs, there will be charges accruing from the transaction (eg. Notary fees) but exactly how much will depend on the value of the mortgage, the way in which the transaction is being structured and what has been agreed during the negotiations (ie. who will be paying for what). If you would like to obtain a quote from a solicitor, please do not hesitate to contact us at info @ lawbird.com. Kind regards, Marcelo

• Jan B Says:

  Mon, Jan 24th 2011, 20:49

  Hi Marcelo, thank you for your response. I'll email you further. Kind regards, Jan.

• colin Says:

  Wed, Feb 2nd 2011, 15:25

  I rented an apartment from a developer who was responsible for finding tennants as they offered the owner a rental guarantee when he bought, however the developer did not pass on my rents to the owner of the property and then the developer went bust. The owners lawyer would not agree to me renting direct from the owner as the owner is in arrears with his mortgage and the property will be repossessed. i have been to see the bank who are keen for me to buy the property on a rent to buy deal however they will not accept any rental payments. The owners lawyer has contacted me saying i must start to pay the owner but i am aware that the property is going to be repossessed and also i have no legal agreement with the owner, please advise.

• worried lady Says:

  Mon, Feb 7th 2011, 22:01

  We are having problems paying our mortgage, and are now 1 month in arrears due to a reduction in income. We do have a small business here, but business is seasonal, and we rely a lot on people coming on holiday. We have contacted the bank, and they have been understanding, but for how long? To complicate matters, we are renting our house in the UK to a family member, and it woud be awful if we were to lose this as well. I am at my wits end to know what to do, and my husband seems to be putting his head in the sand and pretending everything is ok. I would be grateful if you could give me some advice. It would be very much appreciated and might ease my anxiety. I have thought about going back to the UK alone, but do not want to be a burden on my family.

• Unregistered Says:

  Mon, Mar 21st 2011, 17:05

  hi I bought a property in almeria 5 years ago and paid half and borrowed half on a spanish mortgage unfortunately I lost my job last year and have struggled to pay since. so I asked my bank manager if I could hand back the keys and he told me there is a problem with the paper work because of this thing going on between the local government and regional government (la junter) or something and he says it will be sorted out this year some time and he will take it (my apartment)back then. but until he has offered me interest only mortgage for 1 year, or repossession. I still can't afford interest only so is repossession the only way?

• Patricia Says:

  Thu, Mar 24th 2011, 15:03

  Dear Sir, Unfortunately, this situation is not infrequent. Your options are these: 1. Accept the one year interest mortgage offered by your bank or renegotiate a different arrangement 2. Negotiate repossession, which is entirely up to the bank to decide on the terms and conditions, as you mayhave read former informatin on this thread. In the event that none of these options were possible for you and your current financial situation led to the non-payment of the mortgage fees, the bank could decide to start a court action against you. Best Regards,

• Kathy Says:

  Fri, Apr 8th 2011, 11:44

  Hi I am in arrears but paying the full mortgage and some arrears. Have I got a defence when it comes to court? There is no month I paid nothing. Thanks

• Kay Says:

  Fri, Apr 8th 2011, 17:46

  Advise needed regarding property in Tenerife This may be a tough one to answer it sure is a hard one to ask advice on but i cant think of anyone to turn to for this advise Well here goes I came back to the UK in 2009 to work due to circumstances beyond my control I had mortgage problems I did let the bank know that I was leaving and explained that i was going to work and asked for a few weeks to get sorted back in UK this was Ok I kept in contact via email they went through all the process of asking for copies of everything as they do I was at one point told that my bank account had been closed I was not given any information where I could pay any monies to. I have tried for two years now to get some response from the bank and they never reply I just don't know where to turn I have little money for big lawyers fees so any advise would be appreciated I had my apartment trashed a few weeks after returning to the UK but have been unable to get across I have since found out from a friend that when she was over in January they saw what looked like cleaners on my balcony it transpired that they thought that I had sold up and had just left a lot off stuff behind My daughter who is 17 is over there at the moment and has just been to the apartment having had to get in through a window as a key had been broken in the lock to find that everything has gone my beds my clothes my fridge my washer my dryer every thing apart from 2 sets of drawers and a unit I have like i said tried to communicate with the correct people but they have not bothered to communicate with me WHAT DO YOU THINK I CAN DO ? Sorry for the rambling but i am in a state of shock at the moment

• Marta Says:

  Tue, Apr 12th 2011, 16:54

  Hi Kathy, Unfortunately there is not defense to this. Banks normally begin the repossession procedures after 91 days of delay in repaying the full amount owed. This normally equates to the 4th unpaid mortgage receipt. However having said this, it is important to note that the bank will reserve their right to initiate repossession as soon as you are late by one day, for example.

• graham Says:

  Wed, Apr 13th 2011, 15:34

  Hi" last week i recived a letter from my bank witch was all in spanish ! so could not understand. i have been asking them to take the keys back for quite some time now, as my partner dyed just over a year ago, and since then i have struggled to keep up the mortgage, witch i now have not been able to pay since november last year, all the bank kept saying was that i had to pay inhearatence for my late partners half of the apartment.witch i canot afford ! then the apartment would be all mine! unless i did this i could not sell the apartment to get rid, as i had a buyer wanting it, but the bank would not let me sell it to them, witch would have paid off all the outstanding mortgage and left a little over , the letter was an offical one i had to signe for, from the bank, but i sent straight back and asked them to send it back in english so i could understand it ! but they have just not bothered to reply.they have constently not replyed to my letter and emails and phone calls regarding sorting this out, so it looks now as though its going to repossesion i think, so how do i stand ?

• Marta Says:

  Wed, Apr 13th 2011, 16:48

  Hi Kay, I am sorry to hear about the difficulties you have been through. With regards to the problem regarding the bank, this is indeed very strange. The only thing I can think of is that they would have already repossessed your property and closed your account. If you are not able to come to Spain in person, I would recommend engaging the services of a lawyer in order to find out what has happened to your bank account and property. This doesn't necessarily mean huge fees. Law firms tend to charge in accordance to the complexity of the matter. Please contact us and I will give you a quote. It would also be convenient to request a land registry search in order to find out if you are still the title holder of this property. Your situation must be clarified as soon as possible as it could be that you are in debt with the bank and if this is the case, it could affect any assets you hold in the UK. The so called 'cleaners' could have been people sent by the bank in order to seize all your assets.

• Patricia Says:

  Sat, Apr 23rd 2011, 18:43

  Dear Graham, Welcome to the belegal forum. The bank is failing to send you the letter in English as the official language in Spain is Spanish and they are not obliged to send you the Communications in English. As your partner has passed away, the bank understands that the property has been left to you in the will. You do not mention if you have accepted the inheritance before the Notary already, and this is an important data. In order for the property to be legally yours in a 100%, the inheritance must have been accepted and the Inheritance taxes paid, otherwise you are unable to sell the property, as it is not considered yours. The bank is considering this, as they´d rather transfer the ownership to you so you have the opportunity to sell it and pay off the mortgage ( if possible, leaving still funds available for you ), otherwise they will go on for the repossession of the property. Our advice is that, once the transfer of the estate has been formally processed and inheritance taxes have been paid, the exact amount due to the bank ( as there will be interests on default ) is checked in order to set a selling price that covers the mortgage plus expenses. The legal assistance of a bilingual solicitor is crucial in this case, to provide with their legal advice all along the process, be in charge of the property sale and also translate the formal documentation, that will naturally be in Spanish language. If you would like to obtain a quote from a solicitor, please do not hesitate to contact us at info@lawbird.com. Kind regards,

• Fay Says:

  Mon, Apr 25th 2011, 11:03

  We fell behind with mortgage payments but the bank said they would be ok with what we were paying into the account as long as it didn't reach 3 months arrears. We actually paid cash into our current account for the full amount to bring the mortgage payments up to date and asked for it to be transferred to the mortgage account (held at the same bank). Unfortunately, the money remained in our current account for several days for no apparent reason and it was only clear when we went to pay the following month's mortgage payment and was told we had to pay an additional €3000 for legal fees! We explained we'd already paid the mortgage up to date so why were legal proceedings even started? We were told to pay the extra €3000 or we would lose our home but we didn't have €3000. It went to court last April but we weren't notified and still haven't had an eviction notice. Is there any way we can find out what is going on? Also, because the account was paid up to date and never fell 3 months behind is there anything we can do now because we still don't understand why they kept the money in our current account instead of paying it to the mortgage. Our bank statement proves this was the case.

• Unregistered Says:

  Mon, Apr 25th 2011, 11:55

  We fell behind with mortgage payments but the bank said they would be ok with what we were paying into the account as long as it didn't reach 3 months arrears. We actually paid cash into our current account for the full amount to bring the mortgage payments up to date and asked for it to be transferred to the mortgage account (held at the same bank). Unfortunately, the money remained in our current account for several days for no apparent reason and it was only clear when we went to pay the following month's mortgage payment and was told we had to pay an additional €3000 for legal fees! We explained we'd already paid the mortgage up to date so why were legal proceedings even started? We were told to pay the extra €3000 or we would lose our home but we didn't have €3000. It went to court last April but we weren't notified and still haven't had an eviction notice. Is there any way we can find out what is going on? Also, because the account was paid up to date and never fell 3 months behind is there anything we can do now because we still don't understand why they kept the money in our current account instead of paying it to the mortgage. Our bank statement proves this was the case. I just wanted to add that I've just found a website that said the following is correct procedure:- 1. Lender writes regarding arrears - this never happened. 2. Lender makes last attempt to get arrears paid once the mortgage is 90 days late - this never happened. 3. 10 to 30 days after default a Requerimiento Notarial or certified fax is sent - this never happened. 4. 7 days later legal action of a repossession order is issued - this never happened. At this point all we knew is that the bank were telling us we had to pay an extra €3000 for legal fees but we never received a letter or phone call from their lawyers. 5. Court sets an auction date and if the property isn't sold the lender buys it for 50% of its value. The new owner (bank?) is registered at the Land Registry. We have no idea if this happened because we've never received any paperwork or correspondence regarding the repossession apart from a court date sometime last April (2010). Is there any way to find out what happened at the court hearing and whether there has been an auction? 6. 6 months after auction an eviction notice is served and locks are changed. This hasn't happened. Basically we have no idea what happened at the original court hearing, whether there's been an auction, whether the bank purchased the house or someone else did. The locks haven't been changed and no eviction notice has ever been received but no-one is living in the property. Is there any reason we wouldn't have received any letters apart from the original court hearing? How do we find out what, if anything, has happened? Do we have any legal standing because the above procedure wasn't followed. I assume we would have had to sign for any correspondence sent via Beaurofax.

• Daragh Hyland Says:

  Wed, Apr 27th 2011, 13:43

  Why dont people, find out if anybody would take over their mortgage payments and just hand over the key's to them. They could draw up a legal agreement with the persone, that when the mortage was paid off they would sign it over to the purchaser.

• Patricia Says:

  Mon, May 9th 2011, 15:37

  Dear Sir/Madam, You would have been served the claim, when you should have objected to this, in principle. Our advice is that you seek legal assistance at the earliest, so an appointed solicitor can investigate the current situation and find evidence that can invalidate the process, particularly that you did actually have money in the account. It is essential that you can prove that you notifed the bank that they should have charged the pending mortgage amounts through the bank account that was not linked to the mortgage account, where you had the available funds for the mortgage payment thus avoiding the 3-month delay, which is the customary maximum timeframe which the bank will allow a mortgage account to be in the red. Best Regards,

• worsel66 Says:

  Thu, May 19th 2011, 17:19

  I purchased a property in Spain and as I was a pensioner was unable to get a mortgage my son obtained a mortgage but I am on the escitora he has since defaulted and the house is being reposessed will they try to take my assets in the uk or just his

• spain house Says:

  Thu, May 19th 2011, 18:42

  We have a house in Spain, but we stopped paying the mortgage over 2 years ago and there is no equity in the property at all. Our lawyer in Spain received a letter from the bank 18 months ago saying that they were going to start court proceedings but we have heard nothing since. We have no assets in the UK and live in the Middle East. Can they come after us in this area of the world? Whilst we have no assets now, we might acquire some in later life. Will this stay with us for the rest of our lives? The total debt is over Euros 400,000....

• allan Says:

  Sun, May 22nd 2011, 08:34

  Some advice if posssible. Son and Daughter in law simply cannot afford monthly repayments on their home as he has no work. They have tried in vain to get bank to move them on to interest only and were told if they brought arrears up to date this would happen. We gave them the money to bring up to date then bank reneged. They are now considering defaulting and renting a property as life is intolerable and the choice is whether to pay the electricity bill and feed the children, or pay the mortgage. If they move out and hand keys back what are the repercussions? They have no other assets. Daughter in law has work but the mortgage payments are over 50% of her income. Can the bank claim her income??

• gary.s Says:

  Tue, May 24th 2011, 19:21

  My house is valued at 402000 euros,By the Bank,I have not been able to pay 3 months mortgage,My mortgage is 68000 euros,will they take action or will they negociate due to the Equity in the value,Regards,Gary.s

• Marta Says:

  Wed, May 25th 2011, 15:11

  Hi Gary, The bank will most probably initiate a judicial process in order to seize your property. No matter how small the debt is. Try negotiating with them a payment method with which you feel more comfortable. For example increase the term, lower the interest rate and minimum rate ( clausula suelo), or negotiate an interest-only period. If you are having difficulties in keeping up with your repayments this will give you some time to put the property on the market.

• Unregistered Says:

  Thu, May 26th 2011, 16:42

  Some advice if posssible. Son and Daughter in law simply cannot afford monthly repayments on their home as he has no work. They have tried in vain to get bank to move them on to interest only and were told if they brought arrears up to date this would happen. We gave them the money to bring up to date then bank reneged. They are now considering defaulting and renting a property as life is intolerable and the choice is whether to pay the electricity bill and feed the children, or pay the mortgage. If they move out and hand keys back what are the repercussions? They have no other assets. Daughter in law has work but the mortgage payments are over 50% of her income. Can the bank claim her income?? Hi Allan, We are in the same situation. We fell behind last year and asked to remortgage or go interest only but the bank wouldnt help unless we paid our arrears, at that time around 3000 euros. We didnt have that and when we asked them to help by possibly remortaging and putting the arears together they again said they wouldnt help and told us to borrow the money from friends or family!! Not really a professional helpful response. We didnt do this, and at the time we too were concerned that even if we did manage to clear the debt that they wouldnt then help. In your case it seems that we would have been right. We continued to pay our monthly payments into our bank account but they never deducted it off our mortagage. When we noticed this they told us that our account was frozen. They then eventually took this money at a later date for charges, all of which were never explained to us. Anyway we have now not made any form of mortgage payment since the beginning of the year. Like your son and daughter in law we are just scrapping by. Our business here in Spain has all but virtually ceased now and we are just trying to get a little money together to return to the UK and try and get some work over there. We are doing odd jobs and cleaning jobs just to try and eat. We are behind on our community fees and electric payments. We are in slight negative equity which doesnt help our situation. We asked the bank to take back the property and they said no. We explained our financial situation to them and they said that they were not interested and that they would take us to court and the debt will be against us for life. We said we would rent out the property so at least they would have a tenant also but again not interested. We have no assets in the UK or elsewhere except a 10 year old car which will probbaly have to go soon. No one seems to want to help so it seems we will just have to go along with the repossession. They were more than happy to throw their money around 5 or so years ago, they over valued our property so that they could give us the mortgage but now the problems have occurred they do not seem at all interested in helping. Anyway ill update this post if we get any where with the bank though im not that hopeful. Any one who can give us any advice would be much appreciated.

• Unregistered Says:

  Thu, May 26th 2011, 16:49

  me and my wife are in the same situation, in arrears, bank wont help, not much income coming in, in negative equity, tried to give it back bank said no, no assests elsewhere. let them come after me, i dont have any money to give them

• Patricia Says:

  Tue, May 31st 2011, 11:59

  Hello Worsel66, Welcome to the belegal forum Legally, they can go against your and your son´s assets in UK for the pending debt, but this is entirely up to the bank. They will decide how to proceed depending on their interest.

• Lynsey Says:

  Fri, Jun 10th 2011, 07:58

  I need advice please, 2 years ago we were in a very difficult financial situation, the bank offered us a 2 year interest only on our mortgage, aslong as we had insurance and pensions with them !!! 2 years is up in 3 weeks, we have been in contact with our bank over the last 6 months, to advise that we will not be able to pay the increase from 600 a month to 1055 a month ! We have never been in arrears. We have been offered 2 options . Both of which I am very worried about. 1 . New mortgage to cover the original, and charges 6,500 euros for notary commission, solicitor, valuation ect. My worry about this is our property does not match the Registro, the Catastro has the correct info but not the Registro. 4 years ago we had an extension, we had the wrong Licence, Licencia Menor, not Obra Nueva !! We have paid impuestos on the work...but it has not been signed off by an architect extra. If we chose this option, would this cause us more problems, or open a can of worms. 2 nd Option, to extend the terms on our mortgage from 18 years to 25 years but 6.5 % fixed ! & with set-up charges of 1800 euros - 680 Notary, 300 bank commsision - 500 Registro and 300 Solicitor. Do these charges seem realistic. We can not pay these charges, as we have no money and that is why we are asking for help. We have a meeting with the bank on Monday..The new mortgage would be best, but I am worried, it will cause problems. Please advise would be gratefully received.

• Patricia Says:

  Mon, Jun 13th 2011, 11:47

  Hello Allan, Sorry for the late reply. Unfortunately that is the situation for many families nowadays. We understand that your query is related to a Spanish property and mortgaged by a Spanish bank. If we are right, the first thing that your son and daughter-in-law must do is to try and obtain the possibility to process a Dacion en Pago with the bank, that is , handing back the keys of house to the bank as payment of their debt. This is formalized on public deeds and the bank will not claim anything else in relation to the property. Another possible option is that the bank accepts the house as payment of the debt but requests the debtors that they sign a debt recognition certificate for the amount resulting from the difference between the full debt and the current value of the house. In the event that the bank does not accept any of these options, just " handing back the keys" is not possible, so no matter how many times you deliver the keys on the Bank officer´s desk, they will ignore that fact and initiate the bank repossession through legal means. If the sale of the property does not cover the full debt, the bank can , as per current regulations in Spain, claim the pending debt by seizing and putting embargoes on any assets in the debtors name ( In Spain and/or abroad ) , such as other properties or bank accounts. In order to recover their money, the bank can even hold on to your salary and benefits ( pensioners benefits, etc ) up to a 30% . These are the options according to law, as in practice the bank often prefer to lose the money rather than start legal actions and take the debtors to court as the processes are generally long and expensive, needless to say how expensive they can be when they have to prosecute debtors out of Spain. If they start defaulting, the bank will claim their debt, not only claiming the principal debt at the due date, but also late payment interest and compensatory interest, together with the court expenses. I hope this information has been useful. Regards,

• Patricia Says:

  Tue, Jun 21st 2011, 16:31

  Hello Lynsey, Please accept our apologies for this late reply. As you had a meeting with your bank last week, we would like to know what was the outcome of it and what was their comment when you brought up your concern with the Land Registry and Catastro. Initially, if the said property has the registration incorrections that you describe, the bank will not agree to extend the mortgage, unless these are corrected. Regards,

• Martin Says:

  Fri, Jul 8th 2011, 06:09

  One thing I have learnt in spain is that never, never never trust a bank or a bank manger here in spain, they are devious and will get you into more trouble. I was having trouble paying my mortgage so decided to rent the property out and rent a smaller place myself the rent would cover the mortgage. No problem I thought the bank was informed and everything fine you would think. NO the tenants started to default in paying the rent and bills, I had literally 15 to 20 meetings with the bank I even spoke to their head office and was told to speak to the manager at the branch it was their problem. The walls were put up, I tried desperately to negotiate with the bank myself then via a solicitor, trying to give them the keys back (dacion en pago) The bank refused because of the tenants, so I spent 2000 euros in putting it in the hands of the solicitor for eviction of them in the meantime they continued not to pay the bills and rent. The bank had our address, telephone numbers, e-mail address and also our solicitors details and never contacted us and we found in March this year we received a demand from the Court that the bank had got permission to sell the property at auction and we found out it is in October 2011. In the meantime we went to court with the tenants who incidentally did not turn up and was granted the eviction of the tenants which is due to take place on 27th July. Before the court trial the bank agreed to do the dacion en pago (hand the keys bac) with the tenants still inside but we wanted our furniture and personal belongings back so informed the bank that we would do the dacion en pago after the tenants were evicted the bank then took 3 weeks to answer and informed us that they now would not do the dacion en pago and would take full legal action against us unless we came up with all the outstanding monies. We only had a small mortgage when we first had tenants in the property of 100,000 euros because we were living in rented paying our bills and rent and paying the bills at our property and not recieving anything from the tenants for 22 months the mortgage has now risen to 170,000 euros and the bank have put costs of 51,000 euros for repossessing the property. We stupidly have now lost everything and we are told that the bank will come after us for more money, while my tenants who owe us over 14,000 euros in lost rent and over 2000 euros in unpaid bills get away scot free. The tenants are even trying to purchase the property at auction and trying to stay in the property they have also tried behind our backs to negotiate with the bank which we have found out recently thats why the bank agreed to do the dacion en pago but because we got the eviction the bank cancelled it. Do not ever trust a bank and if possible never have a mortgage because you are never told the true story from the bank and as far as I am concerned the banks have brought this situation on themselves as they over loaned and unfortunately spain will go the same way as greece and portugal and the economy here in spain is not strong enough because of greedy builders and banks and they are now reaping the rewards and taking us with them, so mark my words there are many years of hardship ahead. At least another 5 to 10 years. Regards

• Ian H Cox Says:

  Thu, Aug 4th 2011, 09:52

  Any advice, please. I possess a property and have defaulted on the mortgage. I went to negotiate with the bank manager when payments were up-to-date and wrote to him to confirm what was about to happen and to receive instructions about what would happen next. Despite many phone calls to various people at the Bank I have recieved no form of contact. Can I write to them confirming that I wish them to repossess the property and hand in the keys and deeds stating that I do not wish to retain it and do not want to contest or go through a legal process, increasing the debt.

• Unregistered Says:

  Mon, Aug 8th 2011, 11:04

  Dear Sir/Madam, You would have been served the claim, when you should have objected to this, in principle. Our advice is that you seek legal assistance at the earliest, so an appointed solicitor can investigate the current situation and find evidence that can invalidate the process, particularly that you did actually have money in the account. It is essential that you can prove that you notifed the bank that they should have charged the pending mortgage amounts through the bank account that was not linked to the mortgage account, where you had the available funds for the mortgage payment thus avoiding the 3-month delay, which is the customary maximum timeframe which the bank will allow a mortgage account to be in the red. Best Regards, Many thanks for your reply. We were never served a claim. We did seek legal assistance but our lawyer got nowhere with the bank. He even went to speak with the bank manager but she refused to answer his questions about why the money was held in the bank account and not paid off the mortgage. Every other payment was taken from the bank account as soon as it was paid in. The bank manager told our lawyer she had no reason to speak with him and give an explanation! She told him there would be a court date in April and he should speak directly to the bank's lawyers. We didn't have anymore money to pay the lawyer to puruse it further and just assumed we'd receive the court date and have to let the bank take the house. Since then we've heard nothing except for when my husband tried talking directly to the bank manager, shortly after she refused to speak to our lawyer. She told him the bank didn't want our house because it was derelict and she knew they wouldn't receive the remaining debt, even if it sold at auction, because my husband was autonomo. We've had nothing from them, or the courts, since - no letters, no beaurofaxes, no phone call, no mortgage statements... nothing. Is there any chance they didn't actually repossess the house? My husband still receives local townhall bills in his name and we thought they would change to the bank when they took possession. Can we just ask the townhall who now has possession?

• Eamonn Says:

  Wed, Aug 10th 2011, 18:26

  Before i begin let me thank you all for this really useful forum and for all the advice you give. Keep up the great work! I own an appartment in Rojales on the Costa Blanca.When i bought it mine was the in the 3rd of 4 blocks. The builders however decided not to complete the 4th block and errected a scruffy corregated iron fence around the vacant plot, dumped building materials in it and then just left it. Because of this the neighbourhood has gone down, with decent families scrammbling to get out. This has of course meant an accelerating drop in values. I currently have a mortgage of 62,000 euros( the property is now probably worth less than 50,000) Could you please tell me approximately how much i will have to get my mortgage down so that they will accept me handing the keys in and won't be inclind to chase me for the balance. I underdstand that this will be difficult for to answer , but would be really grateful for any approximation

• Michelle Cox Says:

  Wed, Aug 10th 2011, 23:30

  Erm, I am in the worst pickle of my life and I just don't know what to do anymore?! I live in Spain and own 2 properties with my ex boyfriend. For the last 2 years nearly, he has not let me have access to either property and has changed the locks. He rents out both properties and pockets the rent. Problem is he does not pay the mortgages with the rent which is how we initially were able to pay the mortgages. Now the banks are reposessing both properties and he will not hand over the keys to me so I can rent out the properties to cover the mortgages, he is happy for them to get reposessed. He knows it takes nearly 2 years for the banks to reposess and knows that he can earn himself a huge income from the rent..............he wants to mess me up financially for splitting up with him! Ludacris, I know, but that's the way it is! We stand to be in debt of about 90,000 euros for both reposessions and obviously I will have to pay half of that back to the banks. He has assured me that he is able to cover his half of the debt with no problems, but he knows I have nothing and that is why he is doing it! Any suggestions as to what I can do? I never thought I would be in this situation, as have never been in debt in my whole life and have always paid my way. It is very distressing!

• Toxic Debt Says:

  Tue, Sep 20th 2011, 13:53

  Hi I'm 5 months behind with my mortgage payments in Tenerife & i cant afford to make them any more. The Bank has emailed me saying I have 7 days to pay the arrears of €2000 or give them the house. The email is worded as this... "You can make a transfer to your account in Banesto and still paying your mortgage or give us your house " The property value is €136000. I owe €60000 on the mortgage + €2000 arrears & €58 in the red in the bank. There have been a couple sold after 2 years on the market for around the €110000 mark. My question is this: If I hand the keys back - "Give them my house" as they put it - and they sell at a higher price than what i owe, will i get the balance paid to me or will i forfeit any claim to any profit when i hand the keys back? If i let repossession take place and they sell for a higher price than what i owe would i get the balance back? I dont know whether to let it get repossessed or to hand the keys back to the bank. In hope of advice Mr Toxic Debt :-(

• ANON Says:

  Tue, Sep 27th 2011, 23:43

  If a British citizen owes money on a mortgage, can this debt be passed on to their children , even though they are in the UK, are adults, and have nothing to do with the property?

• Marta Says:

  Wed, Sep 28th 2011, 15:34

  Hello Anon, No, this is not possible. It could only occur in the event that the owner of the property had passed away, the inheritor accepted the will and the inherited goods had a debt. The inheritor would also be inheriting the debt.

• Mandy Marbella Says:

  Fri, Oct 7th 2011, 14:32

  Dear Lawbird, Is there any way at all to take these banks to a tribunal? it seems the people who want to try to keep going by means of interest only or extending the mortgage term - the banks are not interested in helping. My situation is that I have positive equity and I have the feeling the bank does not want to help as they would like to keep the house. I am financially pushed at the moment and have applied to Banesto to have an interest only payment, my present payments are 1/3 interest and 2/3s capital... The bank clerk suggested why didnt I give the house back to the bank? why should I do that, perhaps because there is around €150,000 equity in the house? I would be able to manage very well the interest only... (around €400) rather than €1200.00. But after sending my paperwork they came back to say that my financial position is too weak to REDUCE my payments!!!! Do they understand what they have said? they dont find it too weak to pay the €1200.00!! I wonder really - or there is someone who has an eye on the house? What would or could be the next course of action? any comments would be appreciated.. I am here in Marbella

• Anon London Says:

  Sat, Oct 8th 2011, 19:43

  Has anyone on this site had the Spanish banks chase them in the UK, if we are supposed to be part of the European Union why are we not following equal rights and the Spanish banks are so backward.

• Anon London Says:

  Wed, Oct 12th 2011, 10:01

  No as per no one can answer my question!!

• Patricia Says:

  Fri, Oct 14th 2011, 08:40

  Dear Mr. Toxic Debt, Please accept my apologies for this late reply. The best way forward is to come to an agreement with the bank about the mortgage payments. If the bank took the house finally to auction, there is the risk that the amount you get after the sale does not cover the debt you have with the bank and therefore the bank will go against the debtor´s income. If after the auction, the sale price was higher than the debt, the remanent would be for the debtor. You must take into consideration that once in arrears, the debt is increased very quickly as the bank starts to apply a lot of interests on delay. On top of that, there are court costs, so the final amount of the debt can end up being quite high. Also, be aware thart the selling price when a property is sold by auction is far below the market price. In your case, we believe that the bank would be in advantage if they agreed for a Dacion en Pago, as they can sell the property for about 110.000 Euros in the free market, and as your debt is of 60.000 Euros, they would not be in loss. A good negotiation would be to negotiate with the bank a Dacion en pago asking the bank to compensate with an aditional amount. Another option is that the Dacion en Pago is signed bound to the fact that if the property is sold over the a certain amount ( negotiated with the bank ), the remanent is paid to the debtor. The bank may be reluctant to go for any of these options, and therefore these are the remaining options: 1. Hand over the house to the bak and lose 50.000 Euros. 2. Continue to be in arrears and let the bank repossess your house, with the consequent sale of the house in public auction. The risk here is related to the amount the bank gets after the sale; if below the debt, the bank can pursue your assets, in Spain and worlwide, until the debt is cleared. Option 1 sounds as the least detrimental. Regards,

• Chris M Says:

  Sat, Oct 29th 2011, 18:25

  Hi Lawbird I came to Spain 7 years ago and bought a restaurant with an S.L. company three years ago my wife and I took out a credito de polica for 30,000€ with Banco Popular, first guarantor the company second guarantor us personally and since then we have been paying interest only. But this year because of the crisis it looks like we are going to have to quiebra the restaurant. My question is what in your opinion will happen to the debt with credito balear as we owe money to the Seguridad Social and Hacienda and proveedores as well. We have no assets in the UK.

• Amanda Says:

  Wed, Nov 2nd 2011, 18:05

  Why is everyone getting in a state. Its Spains fault that property is worthless now. Let them say this and that but I have heard nothing about anyone being chased in the UK by Spanish banks its stupid archaic threatning and against every ones humans rights. Take a stand and stop listning to the hype and corrupt housing market!! .

• susan Says:

  Thu, Nov 3rd 2011, 13:31

  Could you please advise, my son has a Spanish mortgage which has not been paid for some time he has also remortgaged and the property in Spain has negagtive equity. He received a telephone call from a third party stating that if he signs the property over to them the debt will be cleared, which he has done, although I cannot understand why someone would want to do this considering how much negative equity there is in the property, what type of company could this be?. He has never heard from the bank again. Have you heard of this happening before?

• Anon London Says:

  Tue, Nov 15th 2011, 22:36

  Thank you Amanda I feel the same, I will go to the Courts as its all threatning and let them come after me. I was told there is no way I could sell for years so what could I do but walk away. Its their problem and yes and archiac law.

• Anon London Says:

  Tue, Nov 15th 2011, 22:37

  Thank you Amanda I feel the same, I will go to the Courts as its all threatning and let them come after me. I was told there is no way I could sell for years so what could I do but walk away. Its their problem and yes and archiac law.

• Sue Says:

  Tue, Nov 22nd 2011, 11:49

  From first contact at the bank, how long would I expect a Dacion en Pago to take? What happens if I go into arrears during the process? Will it be stopped? When I first contact the bank, should I ask for something in writing to show that I have asked for the process to take place? Can a Dacion en Pago be halted in the unlikely event that our finances should improve during the process? Thanks for any help.

• Patricia Says:

  Thu, Nov 24th 2011, 12:37

  Hello Mandy Marbella, Once a mortgage has been contracted with a bank, you are accepting the terms and conditions initially agreed so if your financial situation changes after some years, you have the right to approach them and try to negotiate the mortgage conditions, however, you cannot force them to agree with your conditions nor are they actually obliged to get to an agreement. Therefore there is no point in taking them to court for that reason. I recommend you to hire the services of an expert solicitor that can use his knowledge and experience to negotiate the mortgage conditions in your behalf. We offer that service at Lawbird so please feel free to send us an e-mail through our website´s contact form so we can continue the communications. Regards,

• deborah Says:

  Sun, Jan 1st 2012, 12:35

  I have 4 properties in spain with 4 mortgages with 2 different spanish banks. I am really struggling with payments can i return the keys on 2 of them (one bank) and keep 2 (another bank), the 2 I am wanting to return have negative equity, the other 2 have perhaps a small amount if any equity in them.

• southernbelle Says:

  Mon, Jan 2nd 2012, 20:29

  we are in the process of requesting a dacion en pago from the bank who themselves suggested this ( the usual long hardship story for us too !) We are now in the UK and owe £30k in CC and loans here and have the paperwork to back it up ( which have been to ironically pay the Spanish mortgage for the last 3 years !) and we rent a house and have no assets . Could you advise whether a lawyer would add weight to our application for this , i.e to present our case of poverty I guess . My in laws have offered to help with lawyers fees but not any repayments , we are not in arrears but probably can pay another 2/3 months max . Thanks , excellent site by the way

• Patricia Says:

  Tue, Jan 3rd 2012, 12:18

  Hello Deborah, The only way to find out if your suggestions are possible is to start negotating with the banks. Probably, they will offer to change the mortgage conditions rather that accepting a Dacion en Pago ( handing over the properties in exchange of the debt ). In these cases it is highly recommended to hire the services of an expert solicitor that will liaise with the bank to negotiate new mortagage conditions and reschedule payments or even finally get to an agreement that leads to the Dacion en Pago. We offer that service at Lawbird, so please feel free to contact us if you wish us to study your particular case. Regards,

• deborah Says:

  Tue, Jan 3rd 2012, 18:09

  thank you for your answer Patricia could you give me an idea of cost involved if I were to ask your firm to do this for me.

• tenny Says:

  Thu, Jan 5th 2012, 00:14

  Dear Lawbird, I have a house in spain that we purchased in 3 names. We owe c100 Euros and the property is probably of the same value or +/- 10%. Can I hand the keys back to CajaMurcia? Who would the bank purse in the uk given it is owned by 3 individuals? Thanks Tenny

• Patricia Says:

  Thu, Jan 5th 2012, 12:33

  Hello Deborah, Thank you for your interest in our services.. I would very much appreciate if you could drop me an email indicating the names of the banks involved, the amount of equity left and mortgage conditions for each property, so I could offer the most approximate quotation of the costs. Please send me an e-mail on patricia at lawbird dot com. Best Regards,

• big sk Says:

  Wed, Feb 8th 2012, 18:23

  My son bought a property in spain in 2008 together with a friend, due to certain circumstances my son has had to take the mortgage payments on himself (his friend is still on the mortgage) the apartment is standing empty as my son lost his job,. We are travelling to spain on the 19 february as my son got behind with his payments and the bank have said he has to up his monthly payments for the next 5 years in order to clear the arrears, he has been asked to come over and sign the agreement. I believe there could be a notary there and if this is the case have you any idea of the charges for a notary. My son is in massive negative equity (paid 180,00 for apartment and they are now selling for 75000) We would like to hand the keys back but I know he will be liable for the shortfall. He is also behind with service charges and utilities. (my son is now in employment )He wants to try and rent the property out, Im not sure this is going to be the right thing to do as I understand he will have to pay wealth tax? Dont know whether he will actually cover his overheads after taxes,utility charges etc., His mortgage is over 30 years (he is 32) he has no assets in this country, he is renting a property and he also has dependants i.e. partner and new baby. The payments on his spanish mortgage are crippling him. We would like to try and renegotiate the monthly payments on the mortgage or extend the term - can you take a mortgage out for longer than 30 years?. Would we need a lawyer to do this. Help really worried about meeting up with the bank in spain - feel like the lamb going to the slaughter!!

• peter williams Says:

  Fri, Feb 10th 2012, 09:48

  Due to a messy divorce.......I have just been forced to declare myself bankrupt in the uk where I reside....I have a place in Spain just in negative equity..... I have NO money!! Advice please re disposal of Spain - handing back keys etc?? Thanks.

• Patricia Says:

  Fri, Feb 10th 2012, 13:27

  Dear Mr. Williams, I recommend you to approach the bank at the earliest and let them know about your new situation, showing them the relevant documentation from UK. Afterwards, you can start negotiating new mortgage conditions or finally get to an agreement with them to hand back your house in exchange fo the debt. We can offer our assistance at Lawbird, so please feel free to e-mail me on Patricia at Lawbird dot com to get further information. Regards,

• eamonn Says:

  Tue, Feb 14th 2012, 12:37

  Before i begin let me thank you all for this really useful forum and for all the advice you give. Keep up the great work! I own an appartment in Rojales on the Costa Blanca.When i bought it mine was the in the 3rd of 4 blocks. The builders however decided not to complete the 4th block and errected a scruffy corregated iron fence around the vacant plot, dumped building materials in it and then just left it. Because of this the neighbourhood has gone down, with decent families scrammbling to get out. This has of course meant an accelerating drop in values. I currently have a mortgage of 62,000 euros( the property is now probably worth less than 50,000) Could you please tell me approximately how much i will have to get my mortgage down so that they will accept me handing the keys in and won't be inclind to chase me for the balance. I underdstand that this will be difficult for to answer , but would be really grateful for any approximation

• Patricia Says:

  Tue, Feb 21st 2012, 13:20

  Hello Eamonn, Thank you for your compliments, we try to be as much helpful as we can. Unfortunately, I am unable to provide with an approximate amount; it is very difficult to find it out as each bank follows a different criteria. Regards,

• Malcolm Says:

  Wed, Feb 29th 2012, 19:12

  Once again I have turned to your page for information - it seems to be the only reliable source although I am sure there are others. My situation is that I own three properties. A house in Orcheta, a bar in Villajoyosa and a storeroom below the bar. There is also a small loan. All properties are on separate mortgages with the BBVA. When things became difficult (lack of money) two and half years ago, I stopped paying the mortgages. I kept the bar open until April 2011 but vacated the house in June 2011. I thought all the properties were in negative equity and received no assistance from BBVA. I have not had any communication from them and their attitude was obstructive. Recently I approached them again and received verbaly from the Bank Manager a figure which indicates we were not in negative equity but if we sold the property then this would clear all outstanding money. I returned to the BBVA branch the next week to confirm that the figures he had given me were correct but found the Bank Manager absent so I spoke to an assistant who gave me a completly different figure. I'm talking €35,000 higher just on the house - why the Bank Manager should give us a low figure I do not know but I have my suspicions. In the preceeding week I had received an offer on the house that would have more than covered the Bank Managers original figure. We have literally a long line of people waiting to buy the bar and store room - so no worries there. I'm sure we will have enough money after the sale(s) to clear the outstanding amounts but are mystified by the BBVA Bank Managers attitude and he does not appear to be an honourable man. (He admits he has his own agenda by having friends willing to purchase the bar and store - at the right price). What I need is someone to guide me through the legal minefield - would your Firm do this and could you give me some idea of the costs involved. I am going to see the BBVA tomorrow to try and get something in writing. Thanks again for your wonderful informative web page.

• Patricia Says:

  Fri, Mar 2nd 2012, 09:17

  Hello Big Sk, Please accept my apologies for this late reply, as I believe that you have already visited Spain and that your son may have signed the agreement the bank offered. In these cases, the best option is to renegotiate the mortgage conditions or try and agree with the bank the Dacion en Pago, that is, that the property is handed back to the bank as payment of the debt thus being your son freed from any future liability in relation to it. However this is only attained if the equity left is small, so renting the property during this period will bring in some cash but it is advisable to inform the tenant, unless it is for short rental. In your son´s case there is also another person registered in the mortgage deeds, who is also liable for the debt, not only your son, and this fact must also be considered in relation to the new mortgage conditions, as a dissolution of the jointly owned property must take place so that person´s name is removed from the mortgage deeds, though this can only happen if the bank accepts it. Please feel free to email me on Patricia at Lawbird.com if you wish to receive more detailed information on how to proceed and learn how we can assist. Best Regards,

• Barry Says:

  Thu, May 31st 2012, 13:46

  I split up with my girlfriend 3 years ago and we owned a property together in Spain. I have since found out that the house is standing empty. The mortgage has not been paid for the last 3 years, the bank I bought it from the branch has since closed. I have sent various emails and they keep getting bounced back to me. Is there a possibilty I could take the house back on, with a reduced mortgage rate (1500 euros three years ago) or shoud I just cut my losses.

• Colin Says:

  Fri, Jun 1st 2012, 07:45

  Please help. My spanish property is in negative equity, so the bank will not accept dacion en pago. I no longer can afford to pay the reduced amount my bank has offered, We do not want the property any more but we can find no buyer, and the bank is demanding money. We used your firm to buy the property in 2007, and you provided a great service at that time, and I am hoping you can now offer me some advice on what my options might be this time.

• Patricia Says:

  Thu, Jun 28th 2012, 15:19

  Hello Colin, I am afraid that the only option is to contact the bank and start the negotiations of new mortgage conditions that suit you both for a certain amount of time or try again a Dacion en pago, this time with the aid of a solicitor, that is quite convenient as the banks usually consider their legal perspective. Please feel free to send me an e-mail by clicking on my profile so we can look for your file and study the case. Regards,

• dee Says:

  Wed, Jul 18th 2012, 13:48

  Hi can you give me an idea of the costs involved in a repossession. what can the bank charge me.

• Unregistered Says:

  Fri, Aug 31st 2012, 17:55

  My parents purchased a flat in Spain in 2006/2007. They paid a deposit and arranged a mortgage with a Spanish bank but the flat wasn't completely built at the time. They then started to make mortgage payments - I think they may about two payments in 2008 before realising they couldn't pay the mortgage. They simply posted the keys back to the bank, and emailed the bank. They never heard anything back at all, they still receive the odd letter from the bank giving the balance of an account they had there (nil) and they didn't attempt to contact the bank again - they naively thought they would be clear of everything because they posted the keys back. My father then destroyed all of the paperwork relating to the property - a silly move but's what done is done. They have heard nothing about the mortgage and now have no records at all about the property, mortgage etc including the fact that they posted the keys back. Last year, a letter arrived from a debt collector requesting payment of community fees for the flat. My parents replied saying they had returned keys to the bank. Now the debt collector has replied saying that they have checked the land registry, and my parents are still listed as the owners. They are very confused - does the fact that the bank hasn't contacted them for nearly 4 years mean it has been repossessed? Do you have any advice on steps forward etc? They are elderly and my mother is in bad health, and they don't have the funds to pay for legal advice. Neither of them work and they have paid off the mortgage on their UK house. Could the debt collector or the Spanish bank come after their UK property at some point? Thank you!

• magel Says:

  Fri, Sep 7th 2012, 14:57

  Can you adivse please.We are undergoing proceedings to have our property repossessed, we had been managing to pay a certain amount of the mortgage but early this year the bank sent burofax to advise re the debt The bank would not make any arrangements to re negotiate our mortgage unless we paid the arrears & costs amounting to 10.000€, if we had that kind of money we would not be in this situation. We had a lawyer try to work things out with the bank but they flatly refused to help. He advised us to stop paying anything as the bank had started re possesion So far all we have had is some papers from the court: procedimiento: Ejecucion hipotecaria we accept we are going to lose the house as it is only worth about a third of what we owe. We can't seem to find out where we are in the process, do the bank or court have to inform us when it has gone to auction and when we no longer own the property or will someone just turn up to evict us, are we given notice to leave. Would apprciate any advice.

• Phil Says:

  Mon, Sep 10th 2012, 10:16

  We have a property in Lanzarote that is in negative equity. 2 years ago we negotiated a payment with the bank where they put a second mortgage on the property - this has now increased our negative equity to £100,000. We are able to offer the bank about 2.5% interest on the loan with no capital repayments. We have no other assets in Spain or in the UK and so if they do repossess they can only come after future money. What should we do? Repossess or try and negotiate again (although last time this increased our debt by £20,000 over 2 years!).

• Patricia Says:

  Fri, Sep 14th 2012, 09:41

  Hello Magel, As you have already been notified of the process ( procedimiento: Ejecucion Hipotecaria ), the details of the particular courts of justice and process reference number appear on it so you are free to attend the process if you wish by means of legal representation in order to be informed of all the steps that are being taken, though this will have a cost which may not be worth paying. Some court officers allow for a few days notice before the eviction takes place, but there is no way to guarantee this in your particular case. Our advice is that you stop paying, as your lawyer already advised you, and be alert for court notifications. Regards,

• Sally M Says:

  Thu, Sep 20th 2012, 13:11

  My boyfriend and I bought a house in Spain in 2005 and moved over in 2010. We have had no problems paying the mortgage until this year. We were in arrears ealier this year but managed to pay it off. However we have been unable to pay the mortgage for the past 3 months. We have had no communication from the bank at all and we have not had any letters from them. We have now received a Cedula de Citacion and have to appear in court. We don´t know what they are going to do? Are we going to be repossessed or do we have time to pay off the arrears, as we have heard nothing from them? What are our options as we want to keep the house and can now pay the mortgage payments? If we are too late? What happens now? We have kids will they give us time before we are evicted?

• Patricia Says:

  Mon, Oct 8th 2012, 08:41

  Hello Sally, I recommend you to contact the bank and ask them to stop the proceedings as you are now able to make payment of the arrears, however, you will have to pay the full pending amunt upfront including the legal costs they have incured. A repossession process is not that quick, so you are in time to solve the situation. It is highly recommended to get the legal assitance of a solicitor to negotiate new conditions with the bank and, even more, stop the legal process they have started, not only due to the language barrier but also for the confidence it gives them that you are sincere in your proposals. If you wish to discuss your case by email, please contact me by clicking on my profile. Regards,

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• G.McA Says:

  Sun, Oct 28th 2012, 23:46

  hi, I have just found this forum and it gives some very useful info. My problem seems similar to many others on here, in that we want to get out of our property in Spain but very likely have negative equity - at the same time, we also want to be sure that our UK assets are secure. We purchased an apt in Murcia in 2008 with valuation approx €180K, paying approx €40K cash and €140K mortgage with Bancaja (now Bankia) - what are the possibilities to hand the keys back in a controlled manner ? I have just last week kicked off some initial discussions with the local branch rep on this but she seems (understandably) to not be very interested or helpful, only saying it is very unlikely to be agreed and asking for copies of my P60's, monthly bank accounts, etc as evidence that we cannot pay the mortgage. Some of the replies on here suggest that some banks may be open to negotiations as obviously it is better for them not to have legal & repossession, etc costs as well, but I toitally understand that they would ideally not want to have the property back on their books. What if my property was now valued at €100K (not sure if that is reasonable but take it as an example) --> would the bank consider taking the property as full and final settlement. or perhaps I could scrape up say 10 - €20K cash to add to the settlement - are the banks (and Bankia in particular) , amenable to this type of negotiation ? We basically want to get rid of the apt as it is pulling us down and not allowing us to get on with our lives (we cannot sell it or rent it at the moment, our agent has tried hard to do so we think ) - we would really appreciate your advice and guidance on the best way to proceed here. Thanks

• james brown Says:

  Sun, Nov 11th 2012, 19:55

  i have an apartment in the costa del sol and the locks have been changed. i received a letter dated the 22nd october in the uk which arrived on the 7th november 12. I am unable to translate fully but it states i have 15 days. Is this legal for the bank to do this should i have received some paperwork in advance and how can i get my clothes and furniture out of the apartment as they are all i have. Can i break the locks to gain entry.

• Unregistered Says:

  Sun, Nov 11th 2012, 23:30

  My problem seems similar to many others on here, in that we want to get out of our property in Spain but very likely have negative equity - at the same time, we also want to be sure that our UK assets are secure. Keep pestering your bank . After 18 months we finally were granted a dacion. We stopped paying the mortgage, provided all the evidence to show we could not afford it and the property was in negative equity. A burofax requesting the dacion was sent through a lawyer. Persevere !

• Mrs L Says:

  Wed, Nov 28th 2012, 18:17

  Hello, i'm after some advice! 2 years ago i took out a Mortgage for 250k to purchase our first home on the costa del sol. We have recently been struggling to meet the repayments, we went to speak to the bank to see if we could go on interest only, they refused. We asked for any advice/help that they could give us, they didn't offer anything. We are now in arrears. Again, we spoke to the bank, asking for interest only until we got back on our feet, or any help that they could give us. They won't help in any way. I am now in a better position financially and i can now only just make the monthly repayments, but i can't find the money to resolve the outstanding arrears. When i took out the mortgage they put extra on it to cover an insurance, im not exactly sure what this insurance covers, but the repayment is in with the mortgage repayment. My husband also has a personal pension with that bank which holds funds in that, could the insurance and pension be used to pay off the arrears? I've had no letters or phone calls about repossession or any action. I've not even had letters to say i've gone into arrears. If i was to commence with making the monthly repayments, could i still lose my home due to the arrears? Also i have 2 young children, would they evict us and leave us homeless?

• Stung-by-communityfees Says:

  Mon, Dec 10th 2012, 21:40

  I handed my property back to the bank and they have subsequently sold it, I am now being chased for the community fees even though I went bankrupt and included the properties in my uk bankruptcy, community fees have now got a judgement against me and bailiffs have been paid, I understand the bank are responsible for discharging the fees prior to sale? These seem like fly by knights and have made my life a nightmare surely my debts went in the bankruptcy

• theresa Says:

  Tue, Dec 18th 2012, 14:55

  My situation is this, i brought a hosue in spain 2005, we are behind in the morgage and have now found a buyer which is under the morgage value paper work has already gone in for a dacion de pago.. The banks have agreed to the sale in principle and to wipe the remainder of the debt clean. I have told the agent that the buyers have to pay all notari fees etc.I still owe aprox 700 for the ibi which i cannot pay as i dont have the money However I have just been informed by some one that I will have to pay Hacienda. Will i have to pay this as i am making a large loss and no profit what so ever. Are there any other fees that i should be aware of that i have not been told about and is there anything i can do about the ibi as i know this can stop the sale. desperate for the right advise. regards

• Patricia Says:

  Wed, Dec 19th 2012, 13:49

  Hello Stung-By-CommunityFees, I understand the debt you are being claimed corresponds to Community fees you had pending of payment for your property in Spain. It is in all probability that the Spanish authorities are unaware of the fact you have been declared bankrupt in the UK, therefore a court process was started by the Community of Owners to recover the debt. In Spain, whoever bought the auctioned property is liable for the debts it has, so the new property owner would now have to deal with the matter. I recommend you to ask the Bankruptcy Administrator in the UK to contact the Spanish courts dealing with that claim to let them know the debtor has been declared bankrupt. Regards,

• Karen6498 Says:

  Tue, Jan 22nd 2013, 02:23

  I have recently obtained a divorce in the uk. My ex husband and I jointly own a property in Spain. I at first purchased the property off plan with someone else. I put down approx ?40k then later later date my ex husband was put on the deeds. He continues to pay all fees for property(mortgage and community fees). I pay ?100 towards this as I have othe financial commitments ie uk mortgage. My ex is currently refusing to sell the property (very little or no equity in it/ negative equity) he refuses to provide any mortgage details or copies of deed, refuses me access to property though he frequently uses it I have offered to sign property over to him again he refuses. What is the likelihood of me handing back my share or property to the bank ? Any other suggestions I am sole provider for my children( not of the marriage) and as a result of the debt he left me in I doubt I can afford a solicitor but any help would be appreciated

• Patricia Says:

  Thu, Feb 7th 2013, 15:10

  Hello Karen, The bank will not accept partially taking a property. Your ex-husband has not got any right to block your access to the property as you are the co-owner, so reporting the case to the authorities would help in that regard, if youa re able to produce a copy of the deeds that confirm it. Also, if your husband refuses to let you have a copy of the deeds, please be aware that you can get a copy yourself, by asking the Notary or the Bank where the mortgage is secured, to give it to you. Please let me know if the divorce processed in the UK established anything concerning the Spanish property and I will be able to advice further. Regards,

• Unregistered Says:

  Fri, Mar 22nd 2013, 02:11

  Hello Karen, The bank will not accept partially taking a property. Your ex-husband has not got any right to block your access to the property as you are the co-owner, so reporting the case to the authorities would help in that regard, if youa re able to produce a copy of the deeds that confirm it. Also, if your husband refuses to let you have a copy of the deeds, please be aware that you can get a copy yourself, by asking the Notary or the Bank where the mortgage is secured, to give it to you. Please let me know if the divorce processed in the UK established anything concerning the Spanish property and I will be able to advice further. Regards, No, it was not dealt with in the divorce as my ex refused to even discuss getting rid of property. I've told him he can have my half but he refuses to take me off mortgage. He uses property and now takes his girlfriend there. He tells me it is his intention to rent it out and if I want to go I must pay rent

• Patricia Says:

  Fri, Mar 22nd 2013, 11:13

  Hello Karen, As a co-owner of the property you have no obligation whatsoever to pay a rent to enjoy it and in case he forced you it would be against Law and you would be in a position to report him to the authorities. In fact, you can freely access the property following the route I explained in my previous post due to this, though I recommend you to let your ex-partner know when you will visit the house, or agree scheduled visits. While he is not ready to sell the property or buy you out, this is how you can proceed, unless you want to force a sale at Public auction, where you will both be at a loss. Regards,

• Escaped and happy. Says:

  Sun, Mar 24th 2013, 19:58

  Spain are in a financial nightmare and there is nothing they can do. I handed my keyes back to the bank and am now living happily in the UK. No one has chased me or frozen my assets all threats and nonsense and I am glad I made the decision to leave when I did.

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• Anon Says:

  Wed, Jun 26th 2013, 19:33

  Dear escaped and happy I did the same and no one has chased me. i couldnt sell and they couldnt tell me if I was ever going to be able to sell stuff them I say. I started my life again and all is well .

• Espana1 Says:

  Mon, Jul 1st 2013, 09:36

  Hi, I am due to visit my parents property in Spain this month. They are currently in Mortgage arrears on the property due to financial circumstances in the Uk. If the property has been repossessed would we have been notified prior to this happening - I am worried I will arrive and not be able to access the property due to the lender or bank taking back control of the property. Any advice would be appreciated.

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