Antonio Flores’ Blog

Today I’m going to talk about a case that, without a hint of doubt, will trigger someone into spewing the type of nonsense “that Spanish judges will favour Spanish nationals at the expense of the poor Brits, major investors in Spain and yet victims of a judicial system clearly biased, racist, etc.”

Well, the case is being heard in Tenerife where they also use the word “guiris” (the nick given to any foreigner originally from above the parallel running across central France and typically blonder than Spaniards), but where they have coined an equally derogatory name for mainland Spaniards: “godos”, which derives from “visigodos”, or Visigoths, post-Roman inhabitants of Spain and who originally came from Germany and Scandinavia and supposedly, invaded them many centuries ago.

So going to the “legals” of the case itself, I will mention that it involves the following:

• A deceased British property owner resident and re-married in Spain.
• Children from both marriages, 2 from the first, both British nationals, and a further Spanish national from the last.
• The existence of a Spanish will leaving everything to the Spanish son.
• The absence of property in the United Kingdom but the existence of a few real estate units in Tenerife, under his name.
• And a Spanish widow unwilling to share the estate…

Our clients, both British citizens and children of the deceased, from a previous marriage, and who had been left out of an inheritance they claimed they were entitled to, hired us to study the case and bring an action for the judicial recognition of their right to the estate of their late father.

In application of Spanish laws, but most importantly, pursuant to the findings of a Spanish Supreme Court ruling, it so happened that they had an entitlement, given that, although testators in England enjoy a basic freedom of testamentary disposition (under certain constraints), Spanish inheritance laws stipulate that a “legitim”, or minimum  portion of the estate, should go to all children equally where the testator was

1. British and
2. had no assets in the U.K., due to a complex application of conflict or law rules that involved bouncing the matter to and fro between Spain and England.

Under Spanish provisions, one third should be going equally to all 3 children, and therefore our clients would be entitled, on paper, to 2/3 on 1/3, which works out at 1/9 each. And whereas the deceased’s Spanish widow opposed to sharing, her lawyer saw it convenient to settle with the above figures in mind, by means of a cash payoff.

Their proposal, not negligible given the size of the estate, was argued against on the basis of what we thought is a sound theory: that the testator had left out his British children on the basis of what he thought right and lawful, under his personal law, but that had he known that Spanish laws also protected his British children in the event of dying as a Spanish resident and holding only Spanish property, he would have wanted his estate to be bequeathed in equal shares.

And this is the direction of our petition, that they inherit 1/3 each, failing which we will still settle for the lesser portion of 1/9 each. And what about the risk of not settling? Since we filed a “cascade claim”, having the first petition for the higher portion dismissed (and the second accepted), would almost necessarily mean that legal costs would not be awarded: still worth the try I would say!

And what about the ethnically discerning judge? If he is Canarian, he will surely have nightmarish nights trying to choose between a half-Scottish half-Spanish defendant, the latter half originally from Germanic and Scandinavian lands, according to Canarians, and 2 half-Scottish half-Irish claimants, the first half also with substantial “Norsemen” blood, who are the Germanic people who inhabited Scandinavia in the Middle Ages which means that, by reference to blood lineage, we have solved the Judge’s tribal dilemma by boiling it down to a pure dispute between Scandis. Init Your Honour?

Antonio Flores Inheritance, Litigation spanish inheritance tax

Again and again, I receive requests for help from property owners struggling to pay the loan with whom I can only sympathize with, and, to the extent of my capabilities, offer my help. The problem is there is not much more one can do apart from trying to negotiate with the bank, in the manner I have previously written about.

And so, if everything else fails, it is then crucial to adopt what I call the “controlled foreclosure mood”, which is when you know you are being kicked out but you remain calm and think strategically. At the end of the day, you know that you have, at least, anything between 12 and 24 months to find new accommodation and, until the eviction order gets effectively carried out, there is plenty of time to weigh different options. I have listed pros and cons of this situation:

For

• You stop paying the mortgage, the community fees, the Council Tax and any other payments not related to your essential supplies, and actually start saving! Whereas the above outgoings can run up to €1,500/month on, say, a 2-bed apartment, the same apartment you can rent for €500/month.
• You have the answer to the endless dilemma of trying to save a property that is in substantial negative equity vs. walking away from it. You don’t have a choice and thus, it brings a sense of closure to an unsettling predicament.
• You have time to look for rental accommodation, without the rush of an impending eviction order.
• You benefit from newly enacted laws that would preclude the lender, if you still end up owing them after repossession, from seizing anything under 1,5 times the minimum wage (€641), or €961, plus an additional €200 per dependent family member earning less than the minimum wage. Also, the property will not be auctioned for less than 60% of the valuation.
• You know that, whatever happens in the future, it is quite likely that you are en route to get rid of the dreaded negative-equity because banks’ lawyers, who tend to be posted far away from where you are and who are pretty laid-back (i.e., CAM lawyers are in Alicante, Sabadell-Atlantico in Barcelona etc.), are not going to send private investigators to find out exactly where you derive your income from, as an ex would! Their business is banking, not debt-collection.
• It is quite possible that the next government, hopefully the PP (Partido Popular), will improve dramatically the economic state of the country and implement effective rules to ensure that the so-called “right to a second opportunity” is carried forward.

Against

• The bank can repossess the property for less than it’s owed on it, which would entitle them to pursue you for the balance.
• You need to disappear for a while from land registries, car registries, etc., if you know what I mean, whether you have assets in Spain or abroad (particularly in the EU, cannot see Caja Extremadura chasing after a beach front apartment in Thailand but conversely, can see Banco de Santander targeting a 3-bed detached house in Woodford Green).
• You need to be careful with having bank account in your name, as occasionally the bank could request from the court the issue of a “sweeping” information order, on all banks, to know if you have any cash in them. This means that you need to operate through a company or a friend/family member.
• You may feel an element of stigma, but, hey, nothing wrong with that, you now live in stigma land…this is Spain!

In my opinion, it is vital to view this situation as a business that has gone wrong and little more, working around the problem as it comes to you but more importantly, not allowing it to engulf your being or weaken your spirit till you give up.

Antonio Flores Mortgages bank repossessions, foreclosure in spain, negative equity, walking away from your mortgage