Geoffn

After our villa being up for sale for a while without interest we today visited our Portuguese lawyer.
The following was stated by him which is rather worrying...

After a period of up to 3 months after an initial default of mortgage the bank will start a legal repossession order. After this date and which could be upto 12 months or even longer in other cases... The case will go to court. During this period the interest rate accrued to the debt could be charged at a much higher rate ( dependant upon our terms) and solicitor and court fees would be added to our debt by the bank.
When the case hits court it is sold via a closed envelope bid system. The min that the bank can offer is 85% of its rateable value (which for us is 167,000) which equates to €148,000 min bid from our bank.
Our outstanding mortgage on the property is €440,000. When we bought in 2007 we paid €640,000 for the villa and put €200,000 in of our own money and borrowed the rest..

He then went on to explain, The difference between these two figures PLUS costs incurred and infated interest from repo start to court day - will be our responsible debt and can/will be pursued in the uk.

This could possibly almost be back to €400,000 debt responsibility minus we no longer own the home.....
Is this correct as this seems a crazy system to me and open to corruption as its a non published sale operated between the court, bank and any interest I can muster up.....it's not sold at best market value, and possible debt pursual of €400k

Or put simply they take the house and our debt is virtually as before...????????

If anyone / company has any experience in these legal or precudural matters or can help in the uk or portugal please contact me prefer via pm.

Regards

EMR

The first thing I would do is contact your bank and discuss your circumstances with them, do not rely on a third party, your lawyer , you will have to pay his costs as well.
Portuguese banks lend to the individual rather than against a property and the debt stays with the individual. You remain responsible for any balance.
Re possession is a last resort and the bank usually places the property with its appointed agents to sell. The system you have described is more common with government repossesions for non payment of tax etc.
The banks will not want to sell for less than its debt unless of course this is higher than current market levels. I know of some developments where the banks are waiting for proces to rise before putting them on the market.
Is your property for sale, if so have you told the bank and is the price at a level that will attract a sale.
Do you rent your property, if so could you not make all the income payable to the bank as a gesture.
The intiative is with you , otherwise the system will follow its normal course and as you say you could end up without a property and still have a large debt.
EU law now allows EU banks to chase up debts in aother EU country so any UK assets could also be at risk plus of course your credit rating will go to pot.
It is not a situation any of us wants to be in and good luck, hope it all works out.

Geoffn

many thanks for the response..

just to be clear i was hoping to clarify this system of repossesion that was described to me by our solicitor.... (hoping for someone with first hand knowledge of this)
"the bank bids in a sealed envelope at a very low price and the difference is your personnel liability.? (open to fraud as its only the bank, judges and a few select others that would bid) and the bank can hold on to its asset and sell as and when they see fit...
UNLIKE the uk where a property would go to auction and the remainer of the debt your liable for.

as its has been described to us....basically YOU could loose your home if it has a mortgage and not only that,.... the debt be more or less where you started at..... is this within EU law..????

the asking house price is now on the negative equity side of things...without interest in buyers (non existant)... i was trying to make a descision wether to let the bank repo and sell at auction and we would clear off the debt...

EMR

My experience is that the banks do NOT sell off at aution but place it with agencies such as Remax etc. They do not want to take a loss that selling in an auction could give.
Unless the bank gets more than you owe ( plus costs ) however they sell your debt will not be cleared.
Banks do not want to reposses which is why it is so important to talk to them to see if there is a way you can renegotiate a payment plan, time to sell etc.
I know of bank repos that have been sold for around 80% of the "asking" price of similar private sales. Guess which one sold !!
How are you marketing your property, try new agents.
If for example you owe 400k the bank takes it back and gets 300k you will still owe 100k plus costs. If you reduce the price and get 350k your debt will be reduced by 50%.
Whatever level it is the debt is unavoidable.

Troia

Your lawyer more or less put it correctly.

Keyword here is speak to your bank if you still have some negotiation "space" financially speaking. The law has changed recently regarding repossession in favour of the defaulter. Hope your lawyer is up-dated.

Other keyword here; banks don't want the house they want the money. Banks roughly know that if the difference between the selling price and the mortgage is too high, you may not be able to pay the difference, bad news for the bank again, so, generally speaking, the bank has some interest to make a good sell.