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EU Property Solutions- Experts in all Spanish property issues

EU Property Solutions offer professional assistance and advice in all areas of European property in particular, Spain. We can help provide strategies and solutions to solve problematic property issues, negotiate with lenders on debts, help reclaim lost deposits on unfinished developments and help with repossessions and mortgage arrears across Europe. We have offices in London, Belfast and Spain.

Handing back the keys – am I still liable?
30 May 2019 @ 12:34

Many owners of negative equity or unaffordable property in Spain simply handed back the keys to their overseas lender and walked away after the market collapsed.

A significant majority believe this ended their overseas property ownership and debt – this is incorrect.

As wronged as many feel they have been by the “loose lending” practices of Banks pre-2008, handing back the keys to a branch is not the way to resolve the issue. Many borrowers who followed this incorrect method now face significant shortfall bills that they are liable for.

From our experience, handing back the keys and walking away results in the following issues:

  1. The Bank initiating legal procedures in their home country to repossess and sell the property. Bank sales or forced sales only achieve a maximum of 70% of the open market value increasing losses.
     
  2. Should the Bank seek Judgement in their home state, collection and legal measures can be enforced in your home country. This puts all your assets at risk, including your home.
     
  3. Given the Bank have spent funds on legal processes your chance of a settlement is reduced. They are essentially ‘hacked off’.
     
  4. European Banks look to place second charges on UK property – from here they can force a sale of your home.

Walking away resolves nothing – don’t believe the forums!

Instead you could deal with your situation, liaise with your lender, understand your circumstances and the legal system of the country you purchased in, and appoint an intermediary.

Here’s some advice from our experiences:

  1. Appointing an intermediary removes emotion and anger – many borrowers feel wronged but a legal case of mis-selling isn’t going to end the burden of your debt? An intermediary removes emotional attachment and can liaise with your lender to get the best settlement feasible.
     
  2. Think about things from the Bank’s perspective: they have what they may classify as a non-performing loan to resolve. Amicable negotiations will benefit all involved.
     
  3. Be honest with your Bank. Transparency and a willingness to be honest goes a long way – even if you feel you have been mistreated in the past.

Don’t ever walk away from debt – it will catch up with you.

In some cases you may be able to “hand back the keys”, but it is not as simple as it sounds. The process is known as a Dación en Pago and is a procedure with strict requirements:

  • The property must not be in Negative Equity,
  • The lender must not have started repossession proceedings against the property,
  • You must be up to date and on time with repayments as well as with the Community fees and local taxes. 


Like 1




2 Comments


Jack Smith said:
01 June 2019 @ 09:36

We spent 18months negotiating with the bank sending tax returns etc and all the time keeping up payments and going further into debt. The bank would not agree so in the end we just sent the keys back telling them we were not prepared to go further into debt. We did not hear anything for 4 years and we then went through the same process ie wage slips etc and they agreed to take the keys with no payment. We did not use a solicitor this would have been even more debt!!


harddunby said:
02 June 2019 @ 20:53

This is rather tounge in cheek when off plans never started but took your money just disappeared.


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