Why are repossession procedures stopped in Spain?

So for clarity, the situation is that because there is no mandatory obligation for Banks or individual purchasers to pay the debt at point of purchase / transfer, to ensure that debts are repaid to the community at that point in time, that a loophole exists for

a) individual purchasers to acquire property with outstanding community debts and fail to pay those debts to the community upon transfer (let alone any community payments they refuse to recognise in the ongoing period) until such time as the community have no option but to take civil legal action against them (exacerbating an already overstretched justice system)..

b) likewise Banks/Vulture funders may fail to pay outstanding community debts at point of transfer /acquisition which subsequently accumulate in the ongoing period until such time as legal action is taken against them,

If there was a mandatory legal obligation to pay at point of transfer, then at least the outstanding debt(s) owed to communities at that point in time could be automatically recouped (rather than relying on their good will to pay), which in the case of Banks acquiring repossessed properties or Vulture funders taking over ownership from the Banks,(which could be a significant amount of monies....many thousands of euros), would at least take some of the major burden off law abiding owners who are effectively compromised in all manner of ways in the lengthy interim periods, i.e. they are ultimately paying the price for the abusive behaviour linked to this major loophole in the system at point of transfer.

Therefore, why not argue and fight for closure of the loophole at point of transfer, that allows this abuse to take place in the first place? Why not defend the case for reform of the system, to the greater benefit of law abiding owners for greater protection of communities from the outset of transfer?

We all sadly know how relying upon good will is insufficient these days, especially where financial entities are concerned.

This message was last edited by ads on 29/08/2017.

Ads, I very much agree with you that we cannot rely on good will if financial entities are involved. They are too detached from people´s real lives.

And this is why Maria that loopholes of this nature that have the potential  to be abused need to be consistently reported back to the powers that be, via effective legal  mechanisms presumably intended to closely monitor and respond accordingly. 

How else is reform with transparent and effective accountability in place to protect citizens, to safeguard the rule of law, the system of justice etc, ever achieved if these reporting and monitoring mechanisms are not consistently used by the legal profession?

IMHO, the potential of such mechanisms in place to protect and improve the system should never be underestimated.

Kindest regards.

This message was last edited by ads on 30/08/2017.

Fully agree with you. Always available

MARIA said

Article 9.1.e of the Horizontal Property Act: Purchaser of a home or building in horizontal property regime, even with title registered in the Land Registry, is liable before Community of owners, as the bought property is attached to that liability, for community quotas of the year of acquisition and those of the three previous years.

When a purchase deed is authorised by a Notary he warns the buyer if the seller is not bringing the required certificate of no debt with the Community of owners. 

Yes the law states the purchaser or new owner, I.e bank on repossession is liable for current year and previous 3 but this does not always happen without much effort many threats of action etc.

Many banks, such as La Caixa have a policy of avoiding paying Community debt until they sell the property on to a new buyer and they take ages to register the repossession in the Land Registry, IF indeed they do so.

Many will also tell prospective buyers the there is NO debt when there clearly is and seemingly a number of Notaries do NOT advise the new buyer of the debt, .leaving the Community to challenge the new buyer who has to go back to the bank to arrange the payment.

I have no idea how they manage it but our Community has plenty of recent experience if this and as I said earlier we have just recently managed to get banks to pay existing debt but we still have a number of ongoing repossessions and are awaiting paperwork for formal repossession and acceptance of debt to take place.

Maria,

Please can you identify who are responsible for monitoring these instances that Hugh has identified in his last post, i.e who would you report back to when a Notary fails to advise the buyer of debt owed to the community on a property, who would you report back to when a Bank fails to pay their ongoing community fees, who would you report back to when the Bank fails to register the repossessed property?

It would really help to get some transparency and CONSISTENCY re reporting back these instances so that communities can instruct/ request their legal team(s) to feedback to the relevant powers that be, enmasse, for the relevant authorities to acknowledge the compromising problems, whilst acting as essential  credible evidence to gain reform.

Thank you.

This message was last edited by ads on 31/08/2017.

Ads, thanks again for your questions. Please have answers below in bold green: 

1.Who would you report back to when a Notary fails to advise the buyer of debt owed to the community on a property? In that case, Notary is liable and the buyer can claim against him for any involved damage. You can also report it to the Consejo General del Notariado (http://www.notariado.org/liferay/en/web/notariado/home)

2. Who would you report back to when a Bank fails to pay their ongoing community fees? Community of owners need to claim them in a civil action in Courts. You can also report it to Bank of Spain

3. Who would you report back to when the Bank fails to register the repossessed property? It is an option to register your property as it is you who is losing that publicity before third parties.

I do agree Ads, even though Laws and regulations are in place, it would appear that many are ignored until they really  have to comply or when it suits them.

Banks WILL pay, albeit slowly and the repossession process even when mortgage debt is obviously long term can be dragged out for months and even longer, but it appears no one is prepared to regulate the rules.

Thanks for your answers Maria.It's much appreciated.

I'm sorry but I didn't understand the reply to my 3rd question relating to a Bank not registering their repossessed property, so could you clarify this a little further please i.e. why this is an "option" for the Bank, as opposed to a mandatory requirement, given this "option" to not register a repossessed property allows the Banks the opportunity to renegue on their responsibility to pay community charge in the interim period between acquiring the property and selling it, does it not (a lengthy process), as their ownership is not registered and formally logged, so how can communities know which Bank owns the repossessed property (or Vulture Funder for that matter), when they acquired it, and that the transfer has taken place? .

This message was last edited by ads on 01/09/2017.

Ads:

Some banks might argue that as the property is still not registered to its name, they do not have an obligation to pay community fees but the fact is the that once property is respossessed by them after auction, they are the legal owners.

As you well said, if ownership is not registered, the process to claim on unpaid community fees gets more complicated. New Mortgage Act is not including an obligation for the judge to communicate repossessions to the corresponding community of owners.

Thank you as ever for your honest clarification Maria.

This loophole that has gathered momentum (to the tune of 330,8 millions of debts owed by Banks to communities of owners, according to the General Council of Property Administrators). which does no favours to the reputation of Spain's real estate industry, its economy, and innoncent community owners alike, needs to be fully exposed to the highest level in Spain and needs to be effectively resolved if purchasers are to regain faith in the system going forward.

IMHO, to expect innocent unsuspecting new purchasers within communities to be exposed to this ongoing risk by having to pay the price for the Banks CONTINUING and growing non compliance in this way, is totally unacceptable.

I have to ask the question again.... please can good lawyers and the Bar Associations play their part in this feedback mechanism by bringing this major loophole to the timely attention of the lawmakers, highlighting that this has the potential to become yet another Bank abuse that will only result in yet further stress on the justice system, Spain's real estate industry and reputation, let alone the impact on innocent purchasers.

And the sad thing is it doesn't have to be this way if only an equal momentum could be organised to swiftly resolve and counter the growing momentum by Banks  who are attempting to avoid their financial obligations at every opportunity.

Sadly Ads, too many slightly dodgy lawyers are in the pockets and are paid by the banks, not really independent.

Far too many loopholes are permitted to exist here.

Not registering a repossession is classic.

Until such time as mandatory payment of debt is established at point of sale/transfer, with mandatory registration of property, and sufficient interest charged on back payments to act as adequate detterent, I wonder how many purchasers of properties on communities understand the risks involved given this scenario and how they are laying themselves open to crippling future community payments ( or deterioration of infrastructure) to accommodate the interim non payments? 

Doesn't exactly encourage or incentivise people to buy does it?

Given the concerning level of current debt owed by Banks to communities, don't the powers that be recognise the impact and undermining of confidence on community purchase in Spain? 

This message was last edited by ads on 02/09/2017.

Problem is Ads, many buyers are not sufficiently savvy or aware of any possible risks as they rely on their lawyer and Notary as you would expect.

So far, my experience is that banks do eventually cough up BUT debt in Spain does stay with the property and prospective buyers should ensure a debt certificate from the Administratir is supplied.

Many buyers dont check.

I wasn't just referring to debt at point of sale, Hugh, but the risks going forward for BOTH NEW AND EXISTING owners ( without  inbuilt safeguards  such  as  mandatory registration  at  point  of transfer) whenever Banks repossess properties within a community. There needs to be some form of mandatory registration or informative process in place so that communities can know exactly when and who has taken over reposession, and therefore accountable for community fees going forward.

This message was last edited by ads on 03/09/2017.

Ads:

It is a matter of law making. Property Administrators are possible the optimum body to present this problem to politicians.

Are these the correct details for Communities to contact the Property Administrators, Maria? If not, please could you advise.

http://www.cgcafe.org/

http://www.cgcafe.org/contacto/

So to summarise for all COMMUNITY ADMINISTRATORS...

1.Who would you report back to when a Notary fails to advise the buyer of debt owed to the community on a property? In that case, Notary is liable and the buyer can claim against him for any involved damage. You can also report it to the Consejo General del Notariado (http://www.notariado.org/liferay/en/web/notariado/home)

2. Who would you report back to when a Bank fails to pay their ongoing community fees? Community of owners need to claim them in a civil action in Courts. You can also report it to Bank of Spain

http://www.bde.es/bde/en/

https://www.bde.es/bde/en/areas/supervision/

http://www.eba.europa.eu/consumer-corner/how-to-complain

https://www.bde.es/bde/en/secciones/servicios/Particulares_y_e/Servicio_de_Ate/Servicios_de_At_6d9079a9970c631.html

http://app.bde.es/ecm_www/faces/ecm_wwwias/jsp/op/InicioSesion/PantallaInicioSesion.jsp

3. Who would you report back to when the Bank fails to register the repossessed property?

Property Administrators are possible the optimum body to present this problem to politicians.

....if ownership is not registered, the process to claim on unpaid community fees gets more complicated. New Mortgage Act is not including an obligation for the judge to communicate repossessions to the corresponding community of owners.

The question then still remains, Maria, will law firms take responsibility to feedback their own findings re complexities hampering accountability of Banks to Property Administrators, and also highlight the fact that the Mortgage Act appears to require amendment to include an obligation for the judge to communicate repossessions to the corresponding community of owners?

Only by good law firms and Community Administrators working together to provide evidence to the bodies responsible, to effect workable solutions to address this loophole that the Banks continue to exploit, will progress be made.

Ads:

Those website and contact site are correct.

Lawyers dealing with these matters ( lawyers representing community of owners) would contribute with their feedback to the solution of this ongoing problem of course.

Good politicians  are also essential 

We have not experienced Vulture Funds as yet, only slow to pay banks.

i assume Vulture Funds buy large parcels of repossessed property at knockdown rates and try to manage or sell over a period of time thus relieving the banks of pressure on the balance sheets.

Just one thought, is the parcel of property sold to the Vulture fund with Community debt still attached or settled by the bank first?

Does the Vulture fund have to be chased for ongoing Community fees?

Hugh_Man:

I have seen vulture funds paying these debts once they take possession of the real estate. I guess that is what they do as a general rule. There is no law regulating this.