Why are repossession procedures stopped in Spain?

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21 Aug 2017 14:20 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Spain Supreme Court in its decisions dated   23rd of December 2015 and  18th of February 2016   has ruled on the nullity of clause on early maturity  of mortgage loan  which  
(a) does not discriminate the class of default of the debtor, or 
(b)   entitles the creditor to cancel the contract on default of a single repayment installment of the loan 
The Aziz Judgement by the Court of Justice of the European Union, dated 14th of March 2013 also stated this in its paragraph 73.
According to the European Court, the procedural consequence of this would be that the creditor, the Bank, would lack title to start the execution. The foreclosure procedure must be dismissed pure and simply. To this, it was added the obligation of the judge to assess the nullity ex officio, at any stage of the procedure


On the contrary, Supreme Court decision dated 23rd of December 2015 reiterates that the nullity of the provision of early maturity would not necessarily determine the dismissal of execution, but rather:

“assess, in the specific case, whether the creditor's ability to exercise early maturity is justified on the basis of the following criteria:
(1) Essentiality of the unfulfilled obligation
(2) Severity of the breach in relation to the amount and duration of the loan agreement and
(3) Real possibility of the consumer to avoid this consequence; As established by the aforementioned STJUE of 14 March 2013 (Aziz case).

The Plenum of the First Chamber of the Supreme Court has therefore raised a preliminary ruling before the European Court of Justice, in interpretation of art. 6.1 of the Directive.

The doubts of the TS arise on two aspects:


 (A) Whether it may be admissible that the declaration of invalidity of the advanced maturity clause applied just to clauses where just one month would imply the default.
(B) That the application of the law is operative, when it is more favorable to the consumer than the pure and simple expulsion of the clause

As Supreme Court is waiting for the European Court of Justice to answer on this, many repossession procedures are currently stopped in Spain

 



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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21 Aug 2017 16:26 by ads Star rating. 3026 posts Send private message

Dear Maria,

Please could you explain this a little as it's difficult to comprehend the legal jargon here.

Is this a challenge to Bank repossessions where the consumer has defaulted on their mortgage payment for only one month, or is this more complex? 

Is this a moral judgement by the Supreme Court where they have assessed the consumer has not been given sufficient time to negotiate a mutually acceptable alternative agreement going forward with the Bank, as opposed to repossession within a month, which they are now seeking clarification from the ECJ?

If you could clarify the circumstance behind this decision it would really assist comprehending this legal detail.

Many thanks.





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21 Aug 2017 22:07 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Ads:

I am answering below in bold green:

Is this a challenge to Bank repossessions where the consumer has defaulted on their mortgage payment for only one month, or is this more complex?  Correct, it is that.

Is this a moral judgement by the Supreme Court where they have assessed the consumer has not been given sufficient time to negotiate a mutually acceptable alternative agreement going forward with the Bank, as opposed to repossession within a month, which they are now seeking clarification from the ECJ? Both Supreme Coury and ECJ understands the clause of anticipated maturity as null and voidl, consequences of the nullity are what our Supreme Court is requesting the ECJ to answer about.

If you could clarify the circumstance behind this decision it would really assist comprehending this legal detail. I hope it clarified. I am explaining in a different post how this is related to the business of vulture funds.

Many thanks.



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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22 Aug 2017 19:12 by hugh_man Star rating in Kent/Roda . 1345 posts Send private message

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Many banks have not instigated repossession processes even when the debtor has not paid mortgage repayments for a considerable time NOT just one month default.

i am surprised to hear that any banks are efficient enough to commence repossession after one moths default.





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23 Aug 2017 09:17 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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As there are many abusive clauses which are being judicially decided about and Banks sold their mortgage loan portfolios to vulture funds, there is no incentive for the repossession to be started after one month´s default.

 



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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23 Aug 2017 10:28 by hugh_man Star rating in Kent/Roda . 1345 posts Send private message

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I've not heard about Vulture Funds previously, I've always believed that banks many their debts portfolio through sunsiduries such as Solvia and Servihabitat who are a nightmare to deal with.

 

i can't see what Vulture Funds can achieve with purchasing mortgages, many of which are higher than the value of the property now.

 

These subsiduries  appear to wait for ever before instigating repossession orders and even when they do, they avoid paying outstanding Community Fees as long as possible or until they sell the property on.





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23 Aug 2017 12:08 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Hugh_Man:

These funds buy big packages of bad credits at a very low price and they obtain all the benefits both during repayments and after repossession. Original lenders keep being in charge of receiving mortgages repayments ( despite they no longer are holders of credit rights) and forwarding them to the vulture funds.

So, it is highly possible you, as a mortgage debtor are repaying your debt to someone it is not the creditor anymore. 

These credits have a security attached ( your property) but creditors banks and vulture funds are finding important legal difficulties in the enforcement and repossession procedures, at several moments of the process.

It is quite a matter!



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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23 Aug 2017 12:33 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Then, the early maturity clause arrives as the perfect tool for an early maturity of those credits: vulture funds´business starting point.

They take advantage of a legal system  ( Spain´s Mortgage Act) which was created, back in the 40´s to protect lenders

A revision of the Mortgage Act is coming soon in Spain



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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23 Aug 2017 13:09 by hugh_man Star rating in Kent/Roda . 1345 posts Send private message

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It would appear, many laws were set up to protect lenders, banks etc.

Not much protection for the consumer in these cases, though I accept that banks should be able to repossess a property IF they have allowed the debtor a reasonable time to rearrange mortgage debt.

i look at this from the point of view of banks, debtors etc. paying the Community fees that they are supposedly legally bound to do.





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26 Aug 2017 13:22 by ads Star rating. 3026 posts Send private message

Thank you Maria.

Are these Vulture funders responsible for the Banks'  debts with regard to back payments of community fees owed to the Community or are they fighting  against such legal obligations and in that process compromising communities?

Also do these ongoing legal challenges mean that Vulture funders who have taken over mortgage debt are not bound by any regulatory body in Spain which should protect their consumer rights?

At the point of transfer of mortgage debt are owners ( and communities) legally obliged to be informed of this change of "ownership"  from Bank to Vulture fund, and as things stand if they have not been informed is this in itself an abuse of rights?





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26 Aug 2017 15:16 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Vulture funds leave most of the debt administration burden on banks so they are surely ignorant of these issues.

The most recent law governing these debt-cession businesses in Spain is a law from 2015. Bank of Spain is issuing its opinion on matters brought to them on this of course.

In regards to communication of the transfers to debtors: many deeds incorporated a clause by which these cessions could be performed without communication to debtor. Spain Supreme Court has alerady stated ( in 2006)that these transfers require the acceptance of the debtor.



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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28 Aug 2017 12:35 by ads Star rating. 3026 posts Send private message

Has the supreme court had any opportunity to rule on the legal obligations of Banks to recognise and enforce timely payment of debts owed  by them to communities?

Has the Bank of Spain taken any regulatory action to control and adequately deter this ongoing abuse?

Do the Banks in Spain have free reign to continue with abusive practices of this nature which take years to legally and effectively counter through the justice system whilst also causing immense strain on an already overloaded and under resourced justice system?

The Banks in Spain appear to be running rings around the current justice system making a sad  mockery of banking regulatory structures with innocent citizens and unsuspecting law abiding tax payers paying the price for such ongoing abusive and unethical malpractice.

This ironically undermines  any  attempts to encourage the perception that Spain is a "safe" place to invest so long as Banks are not made fully accountable for their malpractices in a more efficient timely and cost effective manner.





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28 Aug 2017 13:10 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Ads:

No specific decision by the Supreme Court when these debts are owed by Banks.

Just read this new today:

http://cadenaser.com/ser/2017/08/24/economia/1503596576_582224.html

 330,8 millions of debts by Banks to communities of owners, according to the General Council of Property Administrators.

40%  of Community of owners have payments defaults, being 1109€ the average amount of debt.



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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28 Aug 2017 14:27 by hugh_man Star rating in Kent/Roda . 1345 posts Send private message

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For the first time in 19 years our Community has managed to get all banks to pay the Communities historic debts due, before they sell the property on.

Now we have have to hope they continue to pay on demand, but even they are keen to receive 20% discount for prompt payments.

Hard work and Burofaxes, seem to stir them to respond otherwise they just ignore demands.

i don't think the Suptreme Court or the Bank of Spain will act, if the figures MARIA suggests are valid, it would bankrupt even more banks and severely affect a shaky economy, recovering slightly but once again built on increasing debt as is the case in much of Europe.





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28 Aug 2017 17:24 by ads Star rating. 3026 posts Send private message

No Bank has any right to hide behind abusive clauses or continuing malpractice(s), unethical behaviour, denial of legal responsibilities etc, no matter what the economic circumstance, otherwise it makes a mockery of the rule of law not to mention undermining any civilised system of justice.

 





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28 Aug 2017 17:46 by ads Star rating. 3026 posts Send private message

Thank you for the article Maria...

I noticed the following "Salvador Díez, president of the Council, says that they are "very satisfied with the result, because although delinquency is an endemic evil in the communities of owners, it has managed to slow down" and "it is reasonable that this reduction should continue."

Sorry but I cannot agree with this assumption as until such time as there is greater transparency re the Banks ( and/ or Vulture funders) who are perpetuating this lack of accountability and on which communities, with adequate deterrents in place to inhibit this ongoing malpractice,  there is little to act as reassurance for anyone buying into communities in Spain

 


This message was last edited by ads on 28/08/2017.



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28 Aug 2017 18:09 by ads Star rating. 3026 posts Send private message

A question Maria ;)

Are communities protected at the point of purchase ( transfer) by buyers being made legally responsible for any outstanding debts on that property ( unless negotiated otherwise)? And are they not made to pay the outstanding debt at point of purchase ( transfer)?

And if so why should financial corporations who repossess properties or become "owners" not be similarly obligated to meet that debt at the point of transfer?





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29 Aug 2017 11:37 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Article 9.1.e of the Horizontal Property Act: Purchaser of a home or building in horizontal property regime, even with title registered in the Land Registry, is liable before Community of owners, as the bought property is attached to that liability, for community quotas of the year of acquisition and those of the three previous years.

When a purchase deed is authorised by a Notary he warns the buyer if the seller is not bringing the required certificate of no debt with the Community of owners. 



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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29 Aug 2017 12:03 by ads Star rating. 3026 posts Send private message

Thank you Maria.

So if I have understood this correctly, therein lies the problem Maria, as presumably there is no MANDATORY legal requirement to pay the debt owed to the community at point of purchase/transfer of property (only a forewarning to the buyer in the form of non provision of certificate of no debt).

Why dont the Spanish authorities recognise this major problem and the ability to abuse this "loophole" (and thereby recognise the major knock on effects on community finances, not to mention the vulnerability on existing law abiding citizens within those communities who are currently being compromised by Banks and Vulture funders abusing this system ) and make these payments mandatory at point of transfer/purchase?

Given the figures you have rightly highlighted from this article, doesn't this major compromising loophole need closing?

Do law firms not feel obligated to their clients to bring this matter and requirement for reform to the attention of the authorities, especially if in this accountability process it exacerbates an already overstretched legal and justice system? It doesn't make any sense when there is an obvious solution, or perhaps I have misunderstood?





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29 Aug 2017 13:31 by mariadecastro Star rating in Algeciras (Cadiz). 8811 posts Send private message

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Individual buyers generally do not acquire properties if they are not up to date in Community payments.

Banks pay their outstanding community fees before selling their repossessed properties. In the interim period, when Bank is not paying the corresponding community fees, there is a civil action available to the community of owners for the repayment of these, with their corresponding interests.

Law does not make a difference if the debtor is an individual owner owing several hundreds of euros or a bank owing several thousand in the same development. 



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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