EU Property Solutions- Experts in all Spanish property issues

A frequently asked question we receive is whether an overseas property debt issue could affect your ability to buy property in the United Kingdom or your home country. Every case is different, the below outline potential scenarios which could affect your future.

• Many borrowers believe that their only option is to surrender their keys to the bank and walk away from their overseas property. They believe that there will be no repercussions at home.
• We know through experience that Spanish Lenders place interim charging orders on uncooperative borrowers for UK or Irish homes. This effectively reduces your equity at home!
• If you intended to sell your property asset to fund another purchase, then your funds obtained would be reduced. To have a clear title to complete the transaction your solicitor would have to release funds to the Spanish lender to remove their charge and have a clear title for the purchaser.

OR

• Should you have borrowed monies from a UK lender and issued a mortgage for a Spanish Property then your mortgage offer is under the jurisdiction of the United Kingdom.
• There are instances where the borrower has defaulted on their mortgage. Rather than going through lengthy Spanish Court Processes to achieve a judgment, the lender’s jurisdiction in the United Kingdom allowed them to apply to Credit Agencies to have a default placed on the individual’s credit file.
• A default is disastrous should you wish to raise funds to purchase through a mortgage. It is unlikely that a lender will offer a mortgage to a borrower who has a default account on their credit report.

We are seeing an increase in Debt Collection Agents and Solicitors being used to pursue debtors.

Many of these Agents are threatening Personal Bankruptcy now and it is becoming apparent aggressive collection methods are being used moving forward.

EU Property Solutions assist people daily who have significant mortgage arrears and missed community fee payments. Many borrowers who purchased properties in Spain were not aware of the associated costs such as Community Fees and IBI taxes. These additional costs and Mortgage Debt in Spain can result in significant stress.

Community fees are owed to Community Presidents in Spain. These Presidents are charged with ensuring the community in which you have purchased is visibly up to scratch – for example the maintenance of common areas, swimming pool cleaning and general upkeep of grounds. It is important for borrowers to keep up to date with these fees as debt collection can be instructed by Presidents in Spain to the UK and Irish Debt Collection Agents.

IBI taxes are taxes paid to the Spanish Government, it is essentially council tax. These need to be cleared with no arrears for property transactions to take place. Given it is a state debt there is no debt forgiveness available.

If you cannot pay your Spanish mortgage and fall into arrears, then your mortgage balance will increase. Missed payments are added to the balance along with penalties and interest. Furthermore, you risk legal action and ultimately you are putting your home assets and income at risk if you do not act.

If you cannot maintain payments on your Spanish property, then swift action is needed. If not, balances will simply rise and the issue becomes out of control. If you act quickly through a professional intermediary, then the matter can be brought under control and an amicable and desirable outcome achieved.

In most Spanish settlements we can achieve the surrender of the property to the Bank and a complete debt write off, we can even negotiate some Community Fees arrears and IBI tax arrears into the settlement. Knowing this, do not ignore your increasing debt balances.

Since the financial crisis in 2008, Spain has seen well over a quarter of a million properties repossessed. A staggering figure! A large proportion of these repossessions are foreign-owned properties. 

EU Property Solutions find it incredible so many British and Irish borrowers feel they can merely “hand back the keys” and walk away from the property thinking they are somehow immune to any consequences once back home.

Many borrowers simply post their keys through a Bank or representing solicitors’ letterbox and make a run for it hoping for the best.

These debtors have the impression that Spanish creditors’ cannot pursue their home country assets and nor that the Banks have the time or resources to pursue overseas. This may be true in respect to small balances but in truth Banks are stepping up their overseas debt collection and debtors with this mind-set could be left to rue this misjudgment.

In order to promote free-trade commerce throughout Europe legal cooperation is essential and thus legal mechanisms are in place to facilitate overseas perusal.  This makes it nigh on impossible for the UK or Irish High Court to raise its own motion on grounds for non-enforcement or review.

Anyone who signs a mortgage deed in Spain, including guarantors, is personally liable for the loan. Any legal action with likely be notified to the Spanish Address on which the mortgage has been placed, and although logical, many overseas borrowers in Ireland and the UK will be unaware of any proceedings against them until the process is gathering apace.

In terms of debt perusal in the UK or Ireland, lenders can look to recover your home assets and many lenders will appoint UK Debt Collection agents and this could lead to an effect on your home country credit report.

The Spanish lender can look to put a charge on your property even if it already has an existing mortgage and can even enforce an Attachment of Earnings Order.  Spanish lenders to seem to be developing a greater appetite for overseas debt perusal given the magnitude of balances and Banking system overhaul.

It is imperative that if you have surrendered your property you communicate with the relevant lender to minimise the exposure and risk of your home assets.

EU Property Solutions are proud that we keep growing the number of clients we assist across Europe and in fact the world. Pre - 2008 we saw many investors purchase their property in the sun and a large number of these borrowers have fallen foul of the much-publicised property market decline.

With so many borrowers falling into Negative Equity and property debt EU Property Solutions was incorporated to assist as many individuals as possible. To date we have successfully completed cases in:

The bulk of our current works are in Spain and hence our office location there. Spain was significantly affected by the property crash post-2008 and naturally being an area of significant investment for borrowers from UK and Ireland we see thousands affected by the decline.

Looking further afield we have had in the last three months settlements in New Zealand and Hungary. The Hungarian case was another example of poor lending by overseas Banks using the Swiss Franc Currency.

We know the processes involved for each specific lender allowing up to date and current advice being available to our clients.