Bank Repossession in Spain

Original article

After the last article on Costa del Sol bank repossessions I received an enquiry about how bank repossessions work in Spain compared to the UK as he was having trouble with his repayments. So please find below the stages that you expect should you (god forbid) have to deal with in the case of non-payments.

Arrears

The first stage would be arrears, where the borrower is unable to meet payments. The mortgage provider will be in contact asking for an explanation and start charging you a variety of penalties. The lender may also attempt to renegotiate the existing agreement.

IMPORTANT NOTE: If the borrower is are having difficulty meeting repayments, contact you mortgage lender prior to arrears as they may be willing to discuss renegotiating you agreement, off-setting payments, etc… as it is not in the banks interest to repossess your property.

90 days later

90 days after the first arrear, the debt collection department will attempt to recover the defaulted debt.

Up to 30 days after default

The borrower will receive a certified document from the lender informing you of repossession proceedings through the courts.

Further 10 days later

Legal action will be started against the borrower for outstanding repayments and to auction the property to the public to reclaim all monies owed.

Up to 16 months later after legal action

The property is put on auction to be bid upon. If there is no purchaser, the property becomes the possession of the lender for 50% of the properties value.

If lender becomes the new owner, there may be additional monies owed to the lender as in most cases the mortgage will be higher than 50% of the value of the property. Plus the additional penalties for arrears, court costs, etc… there may also be an attempt to reclaim owed monies from any guarantor on the mortgage as well.

The land registry information is then updated to confirm the new owner.

6 months later.

Eviction notice. Court officers along with police and a locksmith will evict the borrower. Although if it is the borrower’s main residence and they have children, it is far next to impossible to have the borrower evicted. The debt would remain though.

Hope this gives you a better idea of how bank repossessions work in Spain. Please note I have kept the date relatively general as they are not clear cut

Regards

Andrew Belles

Costa del Sol property



Real Estate Professionals