Home Repossessions in Spain: A Legal Perspective

[John Rodger]

I have signed a guaranor form foir a friend on some properties in Spaina nd now the person can not afford them.
The guaranor was signed in a UK lawyers form who does not do international law. If I have signed this guaranor form in English does this mean it is valid in spain or is it that just spanish versions are valid ? THis is for 350,000 so obviously I do not have the money to pay.
I heard I had to go to spain to be liable as if I did not attend any court hearings it was then not valid ....
please can you confirm these points for me please.
Lastly do you also act in other parts of spain i.e. Majorca or Tenerife or not.
Thank you very much

[Lawbird Lawyer]

Dear Sir,

We act nationwide, yes.

Can you please contact us and scan and e-mails us what you've signed regarding the Spanish mortgage.

Normally a guarantor is included in the Mortgage deed itself signed at the Notary.

As you are probably already aware, when you act as a guarantor of a Spanish mortgage if the principal borrower defaults on the loan, a guarantor is held personally and unlimited liable with all his assets both now and in the future for the full amount of the loan.

Yours sincerely,
Raymundo LarraÃ*n Nesbitt

[Paul Nelson]

I have a property in Spain which I no longer live in. My ex partner is still living in the property and has stopped paying the mortgage as she says she can no longer afford to. We are both on the deeds and I am pretty sure that the property is not in negative equity, (150,000 euro mortgage left) and property worth about 300k. If the bank does go ahead to repossess the property and sells it at auction for a a profit am I entitled to half of the remaining proceeds and if so how do I go about obtaining them? Thanks for your help

[Lawbird Lawyer]

Dear Paul,

If the bank goes ahead and repossess it it will probably adjudicate itself the property as no one is bidding for properties nowadays post credit crunch unless it's regarded as prime real estate for which there is always a market.

Meaning there wil lbe automatically a price drop of 50% of the appraisal value as explained in my article on bank repossessions in Spain which starts off this thread:

Excerpt:

Public Auctions Mean a Further Drop in Property Prices


As the influx of repossessed properties increases in the near future banks will eventually be forced to go through a Public Auction. In these auctions the value fetched by properties can easily fall below 50% of the market value, which would mean that even if the bank sells the asset in the auction the debtor will still owe the bank the balance of the loan. To this balance the legal fees of the bank’s lawyer and the associated costs of the seizure process must be added.

So a property worth 300K will be adjudicated for 150K to the lender after the repossession is over. To which the expenses and fees of the repossession must be deducted.

So both you and your ex-partner will be held liable for the shortfall and may be pursued for the negative equity.

When you write you are both "in the deeds" I take it you refer to the Mortgage deed. Because if only one is on the Mortgage deed and you are both on the Title deed only the former will be pursued legally.

I would strongly advise you and your ex-partner to follow what is konw as a dación en pago (handing back the keys to your lender in a formal legal manner).

More on the dación en pago process:

The Dación en Pago Explained - 28th March 2009

We can assist you in a dación en pago, we charge a flat fee of € 1,200 plus VAT per property nationwide.

Please read the following post carefully:

Advice to Struggling Mortgage Borrowers in Spain - 3rd February 2010


Yours sincerely,
Raymundo LarraÃ*n Nesbitt

[matthew]

i have taken a loan out for 6,000 euros and have paid back about 1,000, we had the loan on our property in spain. and my mother put her house against it as well, i made the first 6 months payments, then lost my job, my mother died and we we moved back to uk, and have no contact from the bank as we do not speak spainish, we have been back 6 months, and a friend has told us they have taken our house,its worth about 100,000 is this possible. is there any thing i can do.

[Stefan]

Hi

I just wanted to ask you a couple of things please. I have my house up for sale but I am trying to get an interest only mortgage until he property is sold as the euro rate is crippling me financially. If you are not a resident where do you stand with tax and general fees if remorgaging? The other question is there apparantly a Spanish couple who want to rent my house. The only thing that concerns me is that I have been in touch with an esate agent called equus about renting, they said they can arrange a contarct and collect money but where do you stand inSpain when tenants stop paying rent? I beleive there is an insurance policy you can take out for 58 euros a year which protects rental income, and court costs for eviction. Do you know of this insurance and if so is it reliable. I am not sure if the tenants also have a small child and this is another thing when children are invloved it is harder to vacate them. As my house is up for sale it may be unwise to rent anyway. I don't know what to do as the worst case senario for me is that I have tenants in, not paying rent, I still have to pay mortgage and cant sell the house.

Many Thanks Stefan

[Lawbird Lawyer]

Dear Matthew,

If your mother acted as a personal guarantor of your loan (avalista) and you stopped paying, your lender will take her assets if she failed to repay your debt, yes.

500 borrowers everyday lose their properties to their lenders in Spain on being repossessed.

Yours sincerely,
Raymundo LarraÃ*n Nesbitt

[Lawbird Lawyer]

Dear Stefan,

The insurance policies I know which are regularly used against defaulting tenants are normally an anual fee equivalent to one month's rental. More on this in my article:

Landlord: Keys to Successful Rental Income - 31st January 2008

These insurances cover normally the legal fees and expenses of having a tenant removed.

Perhaps when you mention the €58 you are referring to adding an arbitration clause in lieu of litigating. This is an acceptable option as well but it alsp has its associated drwabacks, so it's not entirely risk-free btw.

Yours sincerely,
Raymundo LarraÃ*n Nesbitt

[stefan]

Hi

If you extend your mortgage to bring payments down do you still have to pay stamp duty tax if you are not a resident or will it be waved as the mortgage is already with theat lender?

Many Thanks

[Lawbird Lawyer]

Dear Sir,

You already asked this question on post 111 on this thread and was replied to in detail in post 112:

http://www.marbella-lawyers.com/foru...73&page=12#112

You will pay it.

Yours faithfully,