Home Repossessions in Spain: A Legal Perspective

[Lawbird Lawyer]

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]

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 LarraÃ*n Nesbitt

[Lawbird Lawyer]

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]

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]

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]

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]

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]

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]

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 LarraÃ*n Nesbitt

[Mr Brown]

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.