Handing back property to the bank

Hi,

Does anyone know what would happen within the Spanish legal system with regards to handing back a property to the mortgage lender.  My friend on the same development as me in the Costa Blanca is hitting hard times and is going through a divorce and simply cannot make the mortgage payments.  I think  the weakness of the euro against the pound doesn't help when he does his monthly transfers from the UK.  He asked me if I knew what the outcome would be if he "handed the property back" to the bank.  He has a 20 percent stake (deposit on purchase) which I assume he would lose.  Tricky one this...but interesting.  As a non resident, does anyone know if this would be an option for him?  Whatever the outcome, don't tell his wife.!

Regards,

Kev

I know cases where people have done just that and the bank has happily taken possession of a property.  As long as what the bank can sell it for is at least the value of the mortgage then I don't think there would be a problem.

Probably best to get Smiley here to answer this one though.

Can he not try and get it rented out, possibly on a long term basis?  Seems like a lot of money to lose especially if he's going through a divorce too.

Justin

Thanks for the info.  I have tried to encourage him to rent out his property but we have both experienced a "dodgy" service with a local Property Rental Company.  I only let mine to friends and family but my friend says he wants to "cut his ties" !

If his property sold at the public auction for less than he owed on the mortgage would he be responsible for any difference? So is it a matter of him walking into the bank and giving the keys back ?  What about any CGT and Suma charges etc?

Talking of rental...does anyone have any advice also.

Many thanks,

Kev

Dear Kev:

Answering your questions in green:

Thanks for the info.  I have tried to encourage him to rent out his property but we have both experienced a "dodgy" service with a local Property Rental Company.  I only let mine to friends and family but my friend says he wants to "cut his ties" !

If his property sold at the public auction for less than he owed on the mortgage would he be responsible for any difference? Yes, he will. So is it a matter of him walking into the bank and giving the keys back ?  What about any CGT and Suma charges etc? Every debt will be against the property first and them if a remainer, against the rest of his patrionmy eithere here or in the Uk. Need to say that for UK goods execution the Bank will make calculations to see if it is worth it.

Talking of rental...does anyone have any advice also. Justin will be launching soon a great product for safe rentals.

Many thanks,

Kev