jordan

Sadly, according with the latest figures, home repossession orders have been steadily rising. The number of homeowners facing repossession orders after failing to keep up with mortgage payments in many European countries is up. One of the main consequences of the credit crunch is more expensive repayments for new mortgages and a cut in the availability of deals. I would like to provide an overview of how the Spanish law deals with mortgage arrears and possession cases.
The terms are approximate, it depends of the Court

FIRST STAGE the borrower falls into arrears
At this stage the lender try to contact the borrower to get an explanation about the arrears and start to charge extras such as different interest rates an penalties. Mortgage lenders also attempt to renegotiate alternative arrangements

SECOND STAGE In default. 90 days after the first arrear
Lender's debt collection department try the last attempt to recover the debt

THIRD STAGE 10-30 days after default
A duly attested summon (Requerimiento Notarial) or certified fax must be sent from the lender to the borrower informing about possession proceeding through the court

FOURTH STAGE Repossession order .One week after the summon. Legal action start against the borrower
The lender's lawyer try to obtain a executory judgment for the payment of the overdue mortgage and by public auction the mortgage property will be sold.

FIFTH STAGE The Court set a date for public auction 4-16 months after the legal action start.
If nobody bids, the lender will be the new owner of the house for 50% of the property value.
I have to say that the borrower always owe to the bank much more money than the property value. It must be added interest of arrears, demurrage, court costs etc. Although the house has been sold the borrower is still owing a lot of money so the lender will keep pursuing.
If you have a guarantor the lender will start the proceedings against him in order to obtain the rest of the debt.
The new owner of the property is registered in the Land Registry.

SIXTH STAGE Eviction 6 months after the auction
Police Court, officers and a locksmith will evict the borrower. It is very difficult to evict if there are tenants or children and this circumstance is previously notified in the Land Registry. For example divorced couple own the house and one day none of them pay the mortgage. If when they got divorced they submitted in the Land Registry that use the house would be for the spouse and the children the situation is that is quite impossible to evict the family but the debt remains

rugbymatt

??

El Capitan

There he goes again, another embryonic hijack from the poll winner.

rugbymatt

actually I think you are hijacking, I was just pointing out that the OP makes no sense..............

El Capitan

fljordan is simply a lawyer offering his advice on various living in Spain themes. Repossession is certainly on the up lately in Spain it seems due to people having bought at the peak but wanting to now quit and sell up but there being no buyers, in addition to people who have found their costs go up and income go down so can't afford the mortgage they had. If you are facing the possibility of repossession in Spain the OP makes sense.

rugbymatt

Then maybe an introduction, a brief synopsis of what he was trying to put across to us, and some depth to his post would have made a little more sense.........


If I just came on and listed the Horticultural code of practice when someone asked for plant advice it wouldnt make sense either would it?

zel

Thanks for the info, I'm sure it will come in useful to someone if not now but in the immediate future.

As a side note I was talking to someone last night who was having a chat with their bank manager for a completely unrelated topic and he said that as a unprecidented amount of people are defaulting in Spain the bank managers have been told to not proceed with repo's and telling people to try and hold out for a while as they simply can't sell the property in the first place even if they have the legal right to!

Lionda

This info will be a bit of a smack in the mouth for the people who told us when we came over "you don't get reposessed in Spain if you can't pay your mortgage, they have to take you to court and it takes at least 5 years" Not that we believed them - or that we would default on a mortgage anyway. There is so much wrong advice being thrown around I just shut my ears to it all. Always good to hear the actual truth from an expert

rugbymatt

Ok, while this is probably the letter of the law, how often does it ACTUALLY happen?

SueG

Well we have clients who have contacted us and it is happening unfortunately.

rugbymatt

That's bad news for sure, I just wonder if its like so many other Spanish laws and rules............

Lionda

Hi Sue, haven't seen much of you on here for a while. Hope you are still enjoying the job. Has OH got a job yet? Say hi to him from us

El Capitan

And even worse Zel, some banks were selling off property at ridiculously low price just to clear the debt so the defaulter was left with even less capital then he/she thought. And it seems negative equity could follow you around if the bank sells off your house and it doesnt even clear the debt, they will continue to chase you for the rest.

Thankfully my mortgage will be paid off in November this year.

snikpoh

This is very interesting but not what I've encountered in practice.

We looked at a house that the bank had repossed. It had been empty for 3 years because (quote) In Spain, banks that reposses property can NOT sell it for 3 years. (end quote)

It can then be sold on the open market and not solely via auction.


So, what the actual story is, I don't know.

zel

Aye, it's a terrible situation but the writing has been well and truely on the cards for many a year now and like most people have forgotton you don't get a mortgage because you can afford it while interest rates are low, you get one because you can afford it when they go up as they will go up!

Having said that I do feel sorry for the people as it is their homes


I was only telling Tim a couple of days ago that a couple of my brothers friends who moved to the Costa Blanca region some 10 years ago have and been doing very well for themselves in the estate agents game have had to change tact and start a property maintenance & security company to make ends meet as people can't sell the property so they resort to either leaving it empty (and needing someone to keep an eye on it) or renting it out to holiday makers.

They also said that people are getting away with the odd 50% offer for property!!! Crazy! Oh well enough doom and gloom!