View Full Version : What is the best way of buying a property directly from a bank?

John C.
11-04-2008, 04:17 PM
Hi I have a chance of buying a property directly from the bank i have been told i have 3 choices but is also depends on the price of the property. They are Listado Adjudicacion Bancarias (“AB”) No property details but the banks that own the property can make the keys available for inspection visits. No deposit required until signing of private contract of purchase. Listado Cesiones de Credito (“CC”) No property details offered until payment of 10% deposit subsequent to which the file for specific property will be made available for inspection by the creditor bank. Listado de productos gran Descuento (“Gran Descuento”) All The property details ( Number of rooms, square metres, etc), will be provided on request. No deposit required until signing of private contract to purchase. What is the differnce between the 3 types and if i decide to go to auction can the price be reduced.

Lawbird Lawyer
11-04-2008, 06:55 PM
Further to your legal query John, I will explain each of the three.

1.- Adjudicación Bancaria (AB): This is when a borrower has defaulted for example on their mortgage loan and the bank initiates a full repossession procedure on the property which acts as collateral. Post –repossession the new owner of the property will be the bank. These properties are normally key-ready and are fully available for inspection on request. Please read our article on Spanish Bank Repossessions (http://www.marbella-lawyers.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage) regarding public auctions.

2.- Cesión de Crédito (CC): This is a non-performing mortgage loan. The bank may try to sell on this debt to someone else in lieu of a repossession procedure. A bank legally may start a repossession procedure 3 months after the first default. However it can at it’s own discretion delay the repossession procedure. The reason why a bank would do this would be to avoid the associated legal expenses of a repossession procedure, having to allocate a provision for the loss and above all having to wait for 2 years on average until it is legally awarded the property (adjudicación) or else it is auctioned off to someone. That is why banks will try to avoid this drawn out procedure and will sell on the guaranteed debt. The property being offered will most likely still be the dwelling of the defaulting debtor which is why restrictions apply on viewing it (non-key ready). The property will most likely have charges against it (mortgage). It is akin to a distressed sale. However there is a risk in that the debtor will be able to successfully repay the debt in time cancelling the process.

3.- Gran Descuento (GD): This is not a technical term, it’s simply colloquial language. This is when the bank has a property portfolio in it’s books and is being sold at a significant discount. For example a “dación en pago” has been done (waiving the repossession procedure) and the bank wants to get rid of it selling it. Or for example the bank has Off-Plan dwellings available that were subject to guarantee a developer’s mortgage. Having the developer gone bankrupt the bank is now willing to offload asap the huge stock of unsold properties. These properties are an expense to the bank as it must pay it’s maintenance so the sooner it gets rid of them all the better as it will incur in less expenses.