Can I hand back my property in Spain to the bank?

Recently in Spain there has been a recommendation put forward by the Spanish Government in an attempt to address the many problems which have enveloped the property market in recent years.

To date British buyers in particular have always been concerned with the consequences to their UK assets should they attempt to “hand back the keys” to the banks in Spain and walk away from their loans.

This latest initiative may ease some of these concerns if the individual meets the criteria being used to assess potential positions.

The directive is called a Dación en Pago.

Dación en Pago, this means: handing back the keys to the lender and in exchange the lender will fully discharge all mortgage debt, not holding the debtor liable in the future. The lender will also renounce pursuing the debt in your home country or elsewhere against any other assets the debtor may hold. This procedure is based on Art 1175 of the Spanish Civil Code, which establishes that a borrower can cancel his creditors’ debt handing in exchange any of his assets.

Recently this CODE OF GOOD PRACTICE has been approved in Spain, all the principal banks are applying it, and those banks must concede a Dación en Pago to those whose situation meets the following points:

1. - All family members must be unemployed and the mortgage fee must be higher than 60% of the net family income.
2. - The property must be the only home owned in Spain.
3. - The value of the purchase of the property is no higher than 200.000€.
4. - The mortgage must be free of a guarantor. Otherwise, the guarantor will be kept as backer of the loan.
5. - The case cannot be amidst mortgage execution proceedings.
6. - The family members cannot have any other property or patrimonial rights.

If the family members do not apply to all this points, then the bank can decide autonomously if it accepts the Dación en Pago, but that is their decision.

For more information on the initiative and/or how it might affect you contact one of our team on 01438 840258