Home Repossessions in Spain: A Legal Perspective

Mrs H · 02-13-2009, 01:30 AM

My bank manager emailed me in October 2008 and confimed that the bank would take the property back with no further action.Since then he has left and no one else can speak english I have phoned left messages and sent emails to confirm that the bank have agreed to take pocession of the property I dont know what to do as I have emails to confirm the bank have agreed to take the property back any advise what todo next????

**Lawbird Lawyer** · 02-19-2009, 07:49 PM

Dear Madam,

I think you better appoint a lawyer to find out what is happenning with the dación en pago procedure (handing over the keys to the lender).

The legal steps to complete a Dación en Pago Procedure are:

1.- The customer must be on time with payments (the repossession legal procedure must not have been initiated), with Community fees and local taxes.
2.- You contact your lenders' branch manager and propose it to them.
3.- The borrower will be required to pay a new valuation (updated appraisal).
4.-If on average 80% of the new valuation of the property cover (debits +13% of the debits like legal expenses) the lender will accept to take the possession of the apartment, cancelling your debits and will waive taking legal action in Spain and in the British courts.
5.-The day of the signing the Deed at the Notary, the borrower will surrender the keys, and leave the property clear of furniture and tenants.

Mrs Ruskin · 02-20-2009, 04:30 PM

I am in arrears by 2 nearly 3 months, but we have paid small amounts as suggested by the bank.

The bank have said that we cannot renegotiate the mortgage and to return it would also be very expensive.

If the property is valued or sold with negative equity do we then pay interest on that difference and is it common to negotiate the sum owed?

Thanks

**Lawbird Lawyer** · 02-23-2009, 11:04 AM

Dear Madam,

The bank is probably not accepting the dación en pago procedure because you are already in negative equity.

A dación en pago is a conveyance procedure it's as if you were selling the property only that you will not receive money for it. So all associated expenses, fees and taxes to a normal conveyance procedure have to be paid. That is why there must be equity in the property to make up for this shortfall as it will be the bank that pays for all this (except the appraisal) which can be offset against the property's equity.

In your case the bank will probably end up repossessing you. Your best option wpuld be to sell the property as a non-performing mortgage loan (distressed asset) for the value of the loan so you can walk out clean.

joanne hill · 03-16-2009, 10:07 AM

our Spanish property was valued by the bank at 300,001 euros the property was on sale for 240,000 euros.
Since buying the property in September 2007 the value has plummeted to 190,000 euros.
Do i have a case for negligence against the bank. I believe i have been subject to very unprofessional behavior from the bank. I believe my property was deliberately overvalued so a 110% mortgage could be sold.

**Lawbird Lawyer** · 03-20-2009, 11:42 AM

Dear Madam,

No, I don't believe you have a case.

Yours faithfully,

Nicky · 03-21-2009, 08:07 PM

We too have been caught in the credit crisis. We have two mortgages on two separate properties but with the same bank. Mine and my husband's work has dwindled and this coupled with the high interest rates we have been paying over the last year have left us drained of all money and savings. There is equity in both properties. We have been in talks with the bank for the last 5 months and they are finally lowering the interest rate a little but still the repayments are too high for us. We would be able to afford interest only and keep both properties which is what we would like to do but the bank will not let us. Indeed even though they are reducing the interest rate a little they are now asking for life insurances for myself and my husband which puts the costs up again.
If we hand the keys back to the bank can they take our other property and thus make us homeless. On recent valuations there is more than sufficient equity in both properties and we have had them both on the market but they are very few buyers at the moment and we are running out of time. Please can you give us some advice of what we should do next. Thank you

**Lawbird Lawyer** · 03-25-2009, 03:11 PM

Dear Madam,

We've written a detailed article on the dación en pago procedure (handing back the keys to the lender) and submitted it to admin but we are still waiting for them to publish it...

When they finally do I'll post the link to it.

In the meantime, you can read a detailed reply on this matter in this thread.

mrs Brewer · 03-29-2009, 10:30 PM

Hi i have a morgage in spain of 81,000 euros my property is up for sale for 99,000 euros which i have just recently reduced. I desperatly would like to buy a property in England but handing my keys back in spain, would that blacklist me in England for a morgage?

**Lawbird Lawyer** · 03-30-2009, 09:41 AM

Dear Madam,

No, it will not affect you in the least.

Please read our featured article on Dación en Pago (handing back the keys):

The Dación en Pago Explained - 28th March 2009

What will affect you is if the Spanish lender repossess you. In that case not only will you be blacklisted in ASNEF, RAI, and Experian but also they may chase you in the UK for the outstanding debt or elsewhere.