Handing back your property

We own a property in the Costa Blanca area & due to unforeseen problems in the UK, one of us may be losing our job.  Does anyone know where we would stand legally if we could no longer afford to pay the mortgage on our Spanish property?  I've read cases in the press where owners have just handed back the keys to the bank but surely it can't be that simple especially when I suspect most properties now are in negative equity.

Any thoughts/comments are much appreciated

Thanks

Sandra

There was a high profile case a few weeks ago where some people tried to hand the keys back and the bank here in Spain didn't want to know, they still defaulted and the bank went after their property in UK and won the case.

Unfortunately, you have your responsibilites to pay your debts any where in the EU now. I would suggest that you try and deal with the bank and try and come to some compromise, after all we all meet bad times at some time.

This is the wrong thread for this

Sandra,

I was recently involved with helping a UK owner with handing her property back to the bank. They wanted to deal with the Bank on a formal basis and I engaged a Solicitor to act for them.

The Bank initially wanted to charge the owners the difference between the Mortgage balance and the Valuers figure which was about €20k more that the valuation plus they wanted to make a further charge of €10k for Adminstration etc! The owners refused to pay the €30k and decided to wait and see what happened?

After a long winded period of negotiation the Bank eventually decided to accept the property as full and final payment against the loan balance but they insisted that all other arrears such as; Community Fees, Basura Bills, IBI Taxes where paid off before they would accept the property legally! ( Fair Enough we thought)

The Owners paid all the outstanding Bills but as they were Non-Residents and they were effectively selling their property to the bank they insisted that they would also have to pay over a "Witholding" Tax figure of 3% to the Tax Office. This deductiont can mostly be reclaimed within 6 months if they can prove that they made a loss overall on the Purchase/Sale price? ( Which they can! )

The Bank has since accepted ownership of the property and the Owners can now move on knowing that no further action can ever be taken against them in the Uk.

Some posters may well say that you can't legally be chased through the UK Courts but I'm aware that some Spanish Banks are following this route if they can find  their clients UK addresses and also identify any known Assets?

I can only comment about this one particular case and others people's experiences may well be different? For what it's worth, I think it would be better for you if possible to negotiate a Legal handover and then you can sleep easy and put the matter behind you...............

Good Luck

 Yes, MikeT experience has been the general one in our office when dealing with this type of cases.

 mr. Kevin......where can we find the details of that high profile case please??

Hi Sandra,

I have sent you a private message .

Sandra, I had a long conversation with my bank as I'm in the same position.  Spanish banks (and UK banks!) will not simply accept keys back.  it's not that simple.

The situation is that you borrowed money from them and they want their money back no matter what.  They will not allow you to simply walk away from your debt. If you sell the property for less than the mortgage, you will still owe the bank the balance, but at least your payments will be significantly lower than before.

They will put up a fight to retrieve their money so you have to decide whether it's worth paying a solicitor to take them on on your behalf or to come to some arrangement yourself with the bank.  In the first instance I would recommend you talk to them and explain the situation and see what they suggest. Each case is individual, unless there is a precedent which we can all use as an example.

I wish it was as simple as walking away from your problems!

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Hi Kevin

I'd also like details of this high profile case please? PM me!

Regards

 Each case is different. 

Some Banks are willing to accept dations whatever the financial status of debtor, some requires it.

Some settle in a reasonable period of time, for other ones, it takes long months.

Some Banks are ready to Buy the property back for one of their real estate portfolios, some utterly reject this option.

We always advise to prevently start a dation process one you are unable to pay, in advance to having the Bank repossessing the house. It usually stops their repossession proceedings. If even though reposseession is started, this dation offer ( grounded and foundemanted in Law) will make things different before the Bank and ... before the Judge.

Maria,

Can anything be done if a bank refuses a legal request for a dation ?

 In our opinion, a dation is an effective offer of payment the remaining debt, therefore, I find the owner is in legitimation to stop paying the mortgage instalments once the offer is duly made.

If the offer is brought together with a statement of financial/ family situation and a current valuation of the property in more than 60% of the value that the house had for the mortgage valuation, the dation offer will gain muh more substance before the Bank and the judge.

Hopefully any judge will take into consideration the offer of a dation .

The banks must take into consideration a family's circumstances but this doesn't seem to be happening. I can understand them turning down someone who is just fed up with paying their mortgage and wants to get rid of their property but they don't seem to differentiate between these cases and those in genuine difficulty.