Today we are looking at a painful issue for many people. Not those looking to buy a house for sale in Spain but those looking to sell or get rid of a house in Spain.
Spain is different and sometimes Spain is very different.
In the USA, it is easy to give a property back to the bank. In the UK it is easier than here. In Spain it might be quite hard. Speaking to a friend last year he told me that a bank manager in one of the coastal resorts had compared his bank to a video shop with people returning the keys into a box and skipping the country. However it is not that easy to do this with the advent of the EU open borders policy. Now they can get you in the UK if they so mind.
So what are your options if you are behind on your mortgage and need to get rid of your property?
The first is sell at mortgage amount, unless you are massively over financed on the house and its value is less than what you owe. Up until now a short sale was impossible but things are changing. Many banks do not want to add to their current real estate portfolio so they will sell the property at a lower price than the mortgage and pardon the owner of the house the excess debt.Why do this? Well if the property goes into the repossession process then the amount owed will increase by roughly 35% due to the clauses in the deeds. This would mean that you do not just owe the amount currently outstanding but also all the legal and other fees that are added in. This is an awful situation to be in so should be avoided at all costs. Swallowing your pride and taking a hit to get rid of the problem is the least of your worries. Don't take it personally. It is not a character assassination.
Secondly there is the option of a "Dación en Pago". This means handing the keys back to the bank with their blessing. It may mean writing off a lot of invested money but it allows you to get out of a tight situation which will only get tighter if nothing is done to remedy it. The bank has to agree to the process and for them to agree they will order a valuation on the property. If the valuation is a cartain amount and the amount owed is less than 80% of that amount it is likely that the bank will give you the option of returning the keys with their blessing.
You can renegotiate your deal with the bank to get a lower payment maybe although that often requires another visit to the notary. Or you could even ask for a payment holiday although not many banks will do this willingly.
You do have one more option that comes to mind which is to rent out at greater than the mortgage amount and hold out until the situation gets better. If you are behind on payments this may not solve the original problem but some are using it in the hope that the market will get better soon and there are tentative signs that it is.
Whatever you do keep talking to your bank and if you need to get a friendly lawyer to do this for you as they know the tricks of the trade that may keep them off your trail for a longer time. If you know any tricks that have been used wehy not post them in the comments.
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