Home Repossessions in Spain: A Legal Perspective

[Lawbird Lawyer]

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 LarraÃ*n Nesbitt

[Stung-by-communityfees]

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

[Patricia]

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]

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

[Mike Carter]

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]

What is dacion en pago.is it repossession?

[Lawbird Lawyer]

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 LarraÃ*n Nesbitt

[john foran]

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]

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]

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