Dacion en Pago refused by bank. Bank has valued the property lower than sum owed

2 years ago our solicitor advised us to stop paying our mortgage to a Spanish bank. The bank had given us a mortgage on an illegal build in 2006 (not that we knew this when we bought it). We moved back to the UK and continued paying the mortgage for 4 and a half years in the vain hope that it would be legalised and sold with a clear conscience. As costs of living had risen in the UK, we were struggling with repaying the mortgage and renegotiated with the bank and moved to an interest only mortgage for a year. We found this impossible too especially with no legal resolution in sight and so we contacted a UK/Spanish firm to manage our extraction from the mortgage. The keys were sent to Spain over a year and a half ago to the law firm but the bank valuation was only completed this year in June and the bank has decided that we are in negative equity by 20,000 euros. So will not accept dacion en pago, but will give a personal loan for this amount which we cannot service. We rent in the UK, have no assets and are in debt here. Our solicitors have advised us to accept the offer by the bank but has the solicitor been negligent in its advice to us? Also, did the bank fail in it's duty of care to us by granting us a mortgage in the first place and not advising us that the property was illegal?

Interesting that I have no replies, advice or comments since I posted. Then again, it doesn't come as a surprise at all!

Hello FedupFran

I would stop paying and deal with them in the UK if and when it happens.

As long as you don't have a job where you will get fired if you are bankrupt or your not a director of a company I wouldn't worry.

The VERY worst case is Bankruptcy and that would be good for getting rid of other debts in the UK. The co op bank and Barclays will give bank accounts to un discharged bankrupts.

I'd tell the bank to stick it.

Maybe try and create a false paper trail to another address in Spain (register your self at the town hall etc.).

This might make it less likely that you get chased in the UK if its believed you live in Spain.

Maybe go for a holiday in France (rent some ex pats illegal holiday let, owners direct have loads of them) and send them a registered letter from France giving the holiday let address.

You want the bank to waste some money on lawyers fees/debt collectors on a wild goose chase!

Don't forget the debt wont go away so you will have to be careful if you inherit money or other assets, even decades later.

Think about trying to rent the property out and collecting rent. See if you can lodge the rental contract in the notary so the bank can't take the property very easily.

Don't put the rent money in a Spanish bank and keep it to one side so you have some money to hire a lawyer if you need one.

Try and keep the water and the electricity on.

If the bank want to lend against an illegal pile of concrete more fool them. They were idiots, not you. And as for your promise to repay, just make sure there is no reason for them to sue you. Just make sure that suing you would be a waste of their money.

Don't be a sucker paying for other peoples mistakes! I give you this advice with a clear conscience!!!

Thomas

I'd tell the bank to stick it.