Home Repossessions in Spain: A Legal Perspective

[Lawbird Lawyer]

Dear IzzyM,

That falls to the bank to pursue it or not. Some and some don´t.

Yours faithfully,

[Lawbird Lawyer]

Dear deblew,

It would seem your parents can only return the keys to their lender as they have no other option.

The procedure to follow is explained clearly on this thread which has links to the article explaining it in even more detail:

handing over the keys to the bank - 24th February 2009
Unregistered

Please contact us if we can further assist your parents on this matter.

Yours faithfully,

[Lawbird Lawyer]

Dear Doris,

You´re welcome.

As I've written in many replies, Spanish lenders at times sell on these debts to local debt collecting agencies for anominal value (i.e. 70% of teh debt) who will then pursue you. You can reach an agreement with said companies to pay in installments.

Following your query, if they are offering him/her that option it´s because probbaly repossession hasn´t concluded or hasn´t even started yet. They may have already started the repossession procedure however.

Even when a repossession procedure has been initiated you can still clear all the arrears. You normally have 18-24 months until the auction. If you clear it before the hammer goes down you can successfully avoid the repossession.

But you will now have to come up with all the following:

1.- Lawyer's fees: normally between 8,000 -12,000€
2.- Court agent's fees: approx 3,000€
3.- Arrears
4.- Compounded delay (penalty) interest on the said arrears

You have to pay all the above lump sum (no installments) to successfully stall the repossession procedure.

Prior to initiating the repossession procedure a debt collecting agency may contact you, such as your friend´s case, to offer him/her to repay the debt in installements.

My advice, as always, is to do everything possible to avoid this repossession scenario. You must draw the red line at this point to avoid yourself a financially compromised future.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Stefan]

What a great help this website has been. I was stung 5 years ago with didgy English estate agent. Paying well over the odds. But my question is like most others, I have a property in Spain and with the Pound being so weak the mortgage payments willbecome difficult after March. I saw this coming back in august 2009 and went to see the bank manager. He is a nice guy, we communicated on his computer using bablefish. He said I could lenghthen the mortgage but the cost would be 2,000 euros. That seems alot. My house is up for sale and I just want an interset only until the house sells. Are there no such things as interest only mortgages if you are struggling or is it up to the managers discretion? Incidently after our meeting he took me across the road and got me half drunk. So not all bad. PS- To everyone out there stick in an follow the advice on here, in a weird kinda way its nice to know that we are not alone with our worries and concerns.

[Lawbird Lawyer]

Dear Sir,

Thank you for your kind words.

It's at the lender's discretion to give you interest-only, yes.

It is not compulsory for them to offer it.

Have you read my blog post on swapping over to interest-only?

Spanish Mortgages: No Tax on Term Extension or Swapping to Interest only
Friday, June 26th, 2009

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Richard Linda]

I have an apartment in Murcia with a loan from Cajamurcia. I have lost my job and asked Cajamurica to take back the apt under the 'Dacion en Pago' procedure as discussed here.

They have not started repossession procedures, I am not in arrears and the apt is in small positive equity so met all the criteria you discuss but they they have refused saying that I needed to have paid back 15% of the capital before they consider it.

What can I do now?

[Lawbird Lawyer]

Dear Sir,

A debtor is in his legal right to request that his lender accepts assets (an apartment in your case) to fully or partially discharge your mortgage liability.

If your lender is refusing your petition, you have no option other than to hire a lawyer and challenge them at court enforcing your rights which are enshrined by our Civil Code.

With even more reason if the apartment is in positive equity.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[Reberto]

Hi, I have a spanish house and this was bought by myself and my partner in 2006 - We since split up, and although the mortgage was in both our names, I was left paying the bill. I could not afford to pay all the mortgage but did so as long as possible then reducing to half which was affordable, but without her contribution it was not possible to keep this up for long and thus got further into debt. Eventually I sent a recorded letter and email to the spanish bank saying I could no longer keep up the payments and asked them to take the properity in exchange of the outstanding debt, this was early 2008, I have heard nothing since, no chasing of debt, no emails no calls until today I recieved the following message.

We have just been advised via a telegram that the Bank is starting court proceedings to repossess your property in Spain.

We are not sure you were told about it as we were the proxy at the time of the purchase.

This is sent for information only.

I would be willing to settle the debt, but wonder how much this would be as they Value on the villa at time of purchase was 159000 euro's and the mortgage left owing was 109000, does that mean if they sell in auction they cannot go below 50% of its worth or its mortgage or does it get revalued, and will they accept me paying half the deby left owing as this was in joint names?

[Lawbird Lawyer]

Dera Sir,

I refer you to post 93 on this thread which explains what you have to pay now to avoid a repossession.

It doesn't matter if you owe all, half or 1% of the property; you are liable for the full amount of the loan jointly or severally with your ex-partner on defaulting.

You will be expected to pay in full lump sum the breakdown detailed in post number 93 if you are to stall successfully the repo.

Failure will result in you being repossessed. In which case, as explained in my article which starts off this thread, in no-one bids in the public auction the value of the property will drop 50% as per our Civil Procedural Laws and your lender will adjudicate itself the property. If there's any shortfall between what you owe and the value fetched by the property in the auction (very easily) you will be held personally liable with all your assets both now and in the future.

As I also explain in this very thread on repossessions, no-one is bidding in these public auctions (unless the house is in a prime location i.e. beachfront) because the mortgage liability on these overvalued assets frequently exceeds the value itself of the underlying asset defeating the whole purpose of acquiring it. In other words, a flat that is worth 120,000€ has a mortgage on it for 175,000€ so no-one will want it because you cannot resell it and make a profit. Even professional bidders are out of the picture.

That's why banks have set up all these real estate agencies that I reported back in early 2008:

Pssst! Looking For Cheap Spanish Property? - October 5th, 2009 by raymundo

Lenders need to get rid of their property portfolios and now they are targeting foreign institutional investors than can shift hundreds of properties for sizeable discounts.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

[maggie]

We have been lucky to sell our holiday apartment in spain, which we purchased 8 years ago. We are being paid in euros which we will deposit in our english bank where we live. Are we better off financially by the Euro being strong against the pound, whereas 8 years ago, the euro was weak. Thank you for your help