Had to complete new mortgage with life insurance to keep property

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23 Jun 2009 00:00 by Photopaul Star rating. 2 posts Send private message

Hi readers

I am wanting to know of our rights regarding a dodgy deal I feel my pearents signed in order to keep their spanish property.

They fell into arrears on the mortgage and were looking at getting rid or re financing. The mortgage bank, I think Cam bank, said it was better to re sign another mortgage deal, effectivley increasing their debt by nearly 30,000 euro's due to charges and fees.

Also they were told they had to have a life insurnace on one of the applicants. This sounds stupid to me as they are four applicants so who knows which one could die during the term? The insurance premium equals nearly 3000 euros for 3 years of cover..

It scares me that now the mortgage will put them into negative equity and thus stop them being able to 'Hand the keys back'.

Here are some facts on the property to see if there is a legal way to get out of this terrible deal which has my Mother having sleepless nights.

The bank valued the 2 bed ground floor property on Aranal Golf in Benalmadena at 300,000 euros (which I though was much overpriced)  approx 2 years ago, the bank were happy to lend against this valuation.

The mortgage is now 230,000 euros, they did the new mortgage at the end of this May. The bank said it did not need to revalue the property as it was happy with the original 2 year old valuation.

Information regarding the site on which building has ceased leaving a building site. Two years after it was supposed to be completed:

The complex was to have to have Golf, no such thing is there and looks likely there never will be.

The pools are condemned, out of use and always have been and will be for the foreseeable future.

There is a large school taking the place of where on the plans sold to my parents there should have been tennis courts.

There are no shops or bars (community) as promised in the plans.

The buildings are showing signs of large cracks which scare anyone with memories of the film 'Earthquake'.

Roof slates are dropping off the roof onto the patio areas, if someone had been under there then they would have been seriously injured or killed.

It seems that the builders broke the contract when they failed to finish to the correct plans on time. The bank took over the builders obligations when the builders went bankrupt and thus the bank should, in my eyes be liable for this mess. They have lent money based on their high valuation so they should be happy to keep this valuation and let my parents hand the keys back.

Can the insurance policy be cancelled? Everything was in Spanish and my parents didnt want to seem arrogant asking for English copies, so they signed everything without question.

Is there any legal way out of this mess without the spanish Cam bank coming after their only other house in the UK?

I hope everyone is enjoying their Spanish homes and has a great summer... We will smile again soon also... Thanks for any advice / help...

Paul.





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23 Jun 2009 18:19 by rowlandsbb Star rating in 2010 50/50 Macclesfi.... 760 posts Send private message

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I think your parents need some good legal advice.......asap



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23 Jun 2009 18:32 by mariadecastro Star rating in Algeciras (Cadiz). 8578 posts Send private message

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Paul,

is there a First Occupation License in place for the property?

Best,

Maria



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Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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24 Jun 2009 21:07 by Smiley Star rating in San Pedro de Alcanta.... 2478 posts Send private message

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I believe the LFO is issued - to make matters worse the developers bank that has foreclosed and is looking for a buyer to take over the remaining units in the development at significantly reduced prices - the last time I heard of a bank valuation on Arenal Golf for a tw bed unit although some are different - it was low 200,000s - there is a one bed unit in there for sale at 150k - two bedders are selling in the region of 180k



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25 Jun 2009 09:45 by mariadecastro Star rating in Algeciras (Cadiz). 8578 posts Send private message

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Photopaul:

Some answers:

The life insurance can be cancelled, if there is no more than 7 business days since hiring it no justification is needed, if there is more than 7 days, you need to argue the lack of informed decission and some other Consumers rights.

A survey report on lacks and cracks is needed, but the serious importance of them, might entail a right to contract cancellation...  ( and refund of money pay plus legal interests) cannot say it with full certainty till I see the report.

You also have got the action out of the 10 years Insurance policy for building deffects.

There is also the possibility of handing the keys back to the Bank.

I fully agree with you that Banks  are very risponsable of all the mess we are living.

Good luck and please keep us posted.

Maria

 

 



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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25 Jun 2009 11:20 by Rose FP Star rating in Costa Almeria. 20 posts Send private message

Hi Photopaul.

There are 2 elements to this; 1) the legal issues as raised in other postings and 2) the financial issues.

I would agree that, based on the info you have provided, you really should seek legal advice as it could well be that your parents have a claim to release them from any obligation. Maria is a good starting point!

The financial issues cannot be separated from the legal aspects of a potential claim but I thought you might appreciate a comment on the facts as they seem to be today.

Maria will tell you that there is a facility to hand the keys back to the lender to release you from the mortgage. There is always the possibility of a shortfall when the bank eventually sell and, yes, they can follow you to the UK for that. Possible if not probable, especially when you consider the legal issues raised.

The most poignant fact seems to be that the valuation, perhaps excessive 2 years ago, is certainly much lower today and probably less than the mortgage balance. That being so, the question that your parents need to answer is do they really want to hol onto this property, to maintain the mortgage for how many years until the valuation returns to a point when they can sell and clear the debt in it's entirety. Bearing in mind the state of the market generally and then specifically the physical state of the development, how long will that be? At best several years I would suggest and I am being optimistic it seems!

Perhaps your parents should, in seeking that legal advice, give serious consideration to handing the keys back. Maria has posted on several strings of this nature and will better advise.



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25 Jun 2009 18:58 by mariadecastro Star rating in Algeciras (Cadiz). 8578 posts Send private message

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A good lawyer will be able to argue enoughly so that either in an out of court agreement or a litigation teh whole debt is covered and therefore, no possibilities of other goods being affected.

In my opinion, Banks will noit spend money on foreign executions if the amount is not considerable...

By the way... thanks for your kind words and respect to our work!
 



This message was last edited by mariadecastro on 25/06/2009.

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Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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08 Jul 2009 22:50 by manorpark Star rating. 165 posts Send private message

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I am facing a similar problem regards insurance. Cambank have offered a change to our mortgage ( after 5 months of pestering on our part ) but they are insisting we take out insurance with them despite having adequate insurance in the UK. We also have to pay half a per cent of our mortgage to get the reduction and we have to pay notary fees. We are wondering if they can do this and what our alternatives are. We are doing this in an effort to keep up mortgage payments but they are just adding to our expenses .Would advise avoiding Cambank, their customer service has been terrible. We also think our property was overvalued and wonder if the bank had a deal with the company who sold us the house to arrange mortgages for their customers. The company have since been found guilty of fraudulent practices and dealings !!

Any advice would be appreciated.





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09 Jul 2009 09:11 by mariadecastro Star rating in Algeciras (Cadiz). 8578 posts Send private message

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I just can say: check with other banks which offer to you the possibility of taking the original bank´s mortgage.

Best,

Maria



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Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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12 Jul 2009 12:35 by advisor Star rating in London most of the t.... 311 posts Send private message

the life assurance is simply a way of a lender making more monies, in spain it is not generally a monthly payment like the uk but a one off premium, you can utilise a ulk policy by simply having a deed of assignment drawn up by a UK solicitor (cost around £75) and presenting this to the lender-they wont be happy but you have forefilled your mortgage obligation



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21 Jul 2009 12:22 by Photopaul Star rating. 2 posts Send private message

Hi guys,

Thank you for all your comments.  I just need to ask what is a First occupation License?

Regarding the life insurance, 7 days has passed since taking out the insurance. We have received no paperwork as of yet so need to look into canceling it when the paperwork arrives. Since it it after 7 days I will have to argue that the insurance was not fully explained, no informed decission was made, and that it felt like we had to take the policy or wouldn't get the new mortgage, Also, it is on just one life when there are four included on the mortgage, so that tells you straight away that it is a con as who can possibly guess that I will be the one that dies??? If this is to protect the mortgage then complete rubbish!!  Consumers rights.

It was mentioned: A survey report on lacks and cracks is needed, but the serious importance of them, might entail a right to contract cancellation. Could I have more information on this please?

I am trying to convince my parents to seek legal advice but as this costs money and as they have none it seems hopless.

Once again, thank you for the help on this forum. I hope to keep viditing the beautiful country that is Spain, but to come back with a happy smile and not the frowns from all this trouble... One day maybe...?





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21 Jul 2009 12:35 by mariadecastro Star rating in Algeciras (Cadiz). 8578 posts Send private message

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http://www.eyeonspain.com/spain-magazine/licence-first-occupation.aspx

You may like to read this article regarding First Occupation License.



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Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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