Walk Away

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This topic contains 21 replies, has 10 voices, and was last updated by Profile photo of Anonymous Anonymous 8 years, 10 months ago.

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  • #53584
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    Anonymous
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    With all the negative reports about pending falling prices, corruption and demolitions in Spain
    Will people just walk away and loose their deposits when the legal status of ther property is sorted and they have to complete with poor exchange rates,more diifficulty in getting credit and the over all down turn in the enconomy includig the U.K

    Frank 8)

  • #77500
    Profile photo of Anonymous
    Anonymous
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    Hi Frank

    Yes, I think a lot of people that see no way out or upside to there problem will just walk away, I remember lots of people doing that in the uk circa 1992, just handing the keys back to the mortgage lender. The lender had to try and recover any debts within six years otherwise it was written off, think this has changed now though.

    As Inez has always told us the repossion culture with Spanish mortgage lenders seems to have been quite different with debters being given much longer to come up with missed payments or a solution to arreas, given the worldwide cerdit crunch this has now changed

    Its actually quite an interesting subject, how many do you reckon placed deposits for off plan during 2003/4 that will now just walk away, and what impact will this have on the already fragile Spanish market.

    Quite clearly it will have a huge impact, but mostly on the 2b 2b apartments that are standing empty in there thousands, but has ive said before WHY ARE THEY STILL BUILDING, these builders are not fools they must have a plan b.

    Frank, been out to Mabella this weekend, nothings changed, I still cant find a bargain, talk about a 20-30% reduction an you are quickly shown the door,

    Sorry my spell check has gone to bed,she not happy!
    Steve V

  • #77501
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    Anonymous
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    Just Frank wrote:
    With all the negative reports about pending falling prices, corruption and demolitions in Spain
    Will people just walk away and loose their deposits when the legal status of ther property is sorted and they have to complete with poor exchange rates,more diifficulty in getting credit and the over all down turn in the enconomy includig the U.K

    People will walk away if:

    – they want to stay in the property but can buy from the same developers a property for a price which is lower than their price by an amount larger than the deposit.
    – they want to stay in the property but can buy from other developers a property for a price which is lower than their price by an amount larger than the deposit.
    – they bought the property as an investment and the current cost of the property is lower than their price by an amount larger than the deposit.

    The only questions are:
    – who will take the loss? Can they come after their properties in UK, Germany, Holland, etc?
    – what is the procedure for a short sale in Spain?

    IN USA many are leaving the keys on the table and running.

  • #77503
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    Anonymous
    Participant

    Another thought. If Banks are selling repossessed properties, will there, according to Spanish law, be an outstanding debt on the property which the new owners will be responsible for, especially if the banks are not able to get the required price to clear the mortgage debt?

    It could also be possible that other debts could be outstanding on the properties that people just walk away from. e.g. HP on furnishings, credit card bills etc.

  • #77504
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    Anonymous
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    Claire 🙂
    Yep that too
    Steve 6 .Hi Think you have it wrong as your supposed to offer 70% off. 😕
    Surely the point will be when /if these illegal builds are legalised and the value of property is seen to be in negative equity once the mortage is applied.
    Surely the banks will want to reduce their risk and expect the buyer to come up with extra cash.
    In many cases where those that contracted to buy at an inflated price may have to find and extra 100,000 euros for example at a very poor exchange rate.(falling prices in the U.K will make it tough to raise equity on their property here)
    We all know that a massive amount of property was bought as short term monitary gain and these are the ones that are going to loose bigtime as they had no intention of completing in the first place.Why else would anyone contract to buy 3/4/5 properties.
    This will be what we will read as property losses or dropping values as they try to minimise losses
    What are the Spanish Banks view of negative equity and do they extend interest only payments due to the credit crisis as this will hit hard for many when this period is up.
    The currency situation may very well be the one to tip this all over the cliff :cry:.
    Hows that for a balanced view 😆
    You can play around with figures and forcasts but reality will be decided on world events and the attitude of the lenders as to how this all is going to end.
    Many buyers will have no option than to walk away but what gets me is surely the Banks realise this 😕

    Frank

  • #77511
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    Anonymous
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    Just Frank wrote:
    Claire 🙂

    Many buyers will have no option than to walk away but what gets me is surely the Banks realise this 😕

    Today there is a disaster on the stock markets.

    Reason: the bank losses due to people walking away from their properties. Of course this is a simplification but that is the root of all the current problems.

  • #77513
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    Anonymous
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    ralita wrote:
    Just Frank wrote:
    Claire 🙂

    Many buyers will have no option than to walk away but what gets me is surely the Banks realise this 😕

    Today there is a disaster on the stock markets.

    Reason: the bank losses due to people walking away from their properties. Of course this is a simplification but that is the root of all the current problems.

    Spanish stock market down just under 7%, banks on average down 7,5%.

  • #77521
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    Anonymous
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    Guys + Gals
    It isnt just Spain and if the D.O.W nose dives this afternoon then things may get very difficult indeed. 😥
    Did any of your financial advisors advise you to get out of equities 😯
    Now the only place for your money will be under the bed

    Frank 8)

  • #77522
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    Anonymous
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    If you walk away from your mortgage, there is an increasing risk that Spanish banks will pursue you in the UK for the money you owe them if they have to sell the property at a loss. If they were to do so, it would affect your credit record in the UK. It’s not something I have looked into in any detail, but what with European integration people need to consider this. I’ll be looking at it a lot closer now, but if anyone has any reliable info on this subject, I think we would all be interested.

    Mark

  • #77528
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    Anonymous
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    I believe you are correct Mark. The Spanish banks can pursue your UK assets if you were to renege on a Spanish mortgage. The IR can look into foreign bank accounts too!

  • #77529
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    Anonymous
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    If you walk away from your mortgage, there is an increasing risk that Spanish banks will pursue you in the UK for the money you owe them if they have to sell the property at a loss

    Absolutely, the Banks will pursue you in the UK. Banking systems are now so closely integrated that, unless you changed your identity, you will have to pay the outstanding amount on demand.

    Looks like a ‘no win situation’ again. You loose if you buy and loose if you cannot sell.

    Perhaps we should start accepting the fact that the Spanish only love us for our money; but do they want us living there? Probably not! 🙁

  • #77540
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    Anonymous
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    Hi
    So the mess gets worse 👿
    So you dont complete you loose your deposit and any shortfall in the value if the property prices crash they come after you.
    I would assume that this will be means intererest and management charges that they will put on.
    If you complete and you cant pay they come after you anyway. 😡
    No wonder the banks are comfortable with the situation and what happens if the developer goes bust. 😕
    Will the banks expect you to complete as per the contract or will you just loose the deposit.
    Now may be that PLAN B is no longer an option that many have considered, 😕
    Can I change my vote as its a bloody train crash 😡

    Frank 8)

  • #77542
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    Anonymous
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    Frank wrote:

    So you dont complete you loose your deposit and any shortfall in the value if the property prices crash they come after you.

    In essence you pay a deposit as “an intention to buy”contract. Until you complete, the developer owns the property.

  • #77545
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    Anonymous
    Participant

    It gets even worse 👿
    Now what happens if someone looses a court case on a property thats not as the contract which many are also reliant on as a way out.
    They will have to complete ? and what about reselling ?
    What about the L.F.O situation that many are pinning their hopes on as a way out 😕
    If you look at all the bad situations that can may happen then the train crash will indeed be forthcoming for many.
    Still many will have to wait and see and deal with the problems as and when they happen.

    Frank 8)

  • #77547
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    Anonymous
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    Claire 🙂

    Surely a deposit is part of a contract and the seller has the right to enforce completion on supply of goods or sue for the balance or damages.
    Now not sure is this is 100% correct with Spanish property so perhaps the legal guys can comment.

    Frank 8)

  • #77548
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    Inez
    Participant

    Currently there is no cross border collection of debt. Current law here (as I understand it) is that the banks cannot sell the property for less than the mortgage value on it, I guess unless someone comes along and subrogates the loan to themselves.

    However this was the case late 80s early 90s UK, the banks would take the hit UNTIL legislation was changed to allow them to pursue debtors and boy did they! I know if people hit many years later.

    With the ECs recent summit to open borders up even more, I cannot see how the banks will refuse to pursue home owners assets as they will not be able to sustain a massive loss.

    I suspect it will eventually be down to the BOS but I reckon by the end of the year there will be threats agaisnt people.

    I do know it is taking longer and longer before banks are repossessing and I also know mortgages have an indemnity paid to the bos to cover debt but I am hazy on the detail as I havent had to follow it.

    Certainly interesting and Im seeing more repo stuff around now – in a few months there will be lots to choose from!

  • #77553
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    Anonymous
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    Yes Frank the seller can sue for breach of contract under normal circumstances. If we are talking about the many developments with planning issues, can the developers afford to sue? How many years will it take them to get to court? Most of these developers are being sued for breach of contract in the first place. People can walk away…but loose their deposit. Their choice. They do not own that property, therefore they cannot be pursued for losses made by the Banks. Anyway, for properties that have no LFO, even the Banks can’t sell them as repos.

  • #77557
    Profile photo of Inez
    Inez
    Participant

    Yes and thats a real quandry!

    I was sent a property by an owner who wanted to sell it as cant afford the payments. Looking into it theres no lfo so cant be sold – he is going to let the bank have it and what then? How can they concevably come after someone when they cant sell a property they should not have lent on in the fist place – and come after them for how much – if you cant sell it, you cant tell how much to go after the person for!!!!!!!!!!! 😯

    I also heard that debts can be sold across borders, and this may be the way the banks will go – at some stage!

    The bankruptcy courts are going to be full meethinks!

  • #77559
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    Anonymous
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    @mark wrote:

    If you walk away from your mortgage, there is an increasing risk that Spanish banks will pursue you in the UK for the money you owe them if they have to sell the property at a loss. If they were to do so, it would affect your credit record in the UK. It’s not something I have looked into in any detail, but what with European integration people need to consider this. I’ll be looking at it a lot closer now, but if anyone has any reliable info on this subject, I think we would all be interested.

    Mark

    Correct. Spanish Banks can pursue your debts in the UK if you default on your mortage payments.

    On signing a Spanish mortgage you have unlimited responsibility both current and future. In plain English, you don’t only respond with the collateral (the Spanish asset= house) you also respond with your UK assets.

    So if you run into negative equity and you default the Sapanish bank may choose to pursue your UK/Irish assets, even freeze part of your salary over there. Your credit history will take a major blow, not only in Spain also in the UK.

    As Claire has rightly pointed out, until you complete (off-plan) the property belongs to the developer (on which a bank will have set a charge to finance the whole development). So if you pull out in an off-plan you lose your deposit and a large amount of your stage payments. No one will pursue your assets in the UK, this is something different because you have not completed and signed a mortage deed.

  • #77565
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    Anonymous
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    Hi Claire and Drakan 🙂
    Thanks for the info which I am sure has been of interest to many as well as me. ( hits in 24 hours confirms that this is a topic of inerest)
    It still leaves such a mess that many will find very difficult to comprehend and take a 300,00 euro property that is awaiting an L.F.O.
    Dont complete and when the legals are sorted you will be bound by contract to complete with penalties and legals if you loose in court.
    1 Dont complete,or the developer goes bust and you loose your 100.000 + euro deposit.
    2 Those that have completed have a tangible asset,albeit one that could fall in value,but thats the same as any property or investment assuming your in it for the money.( if not then its not a problem).
    Its clear that at this point nothing is lost with this option.?as any loss or profit will only be realised when or if you sell.
    However whats apparent is that the ones that paid well over the top on a development thats going to drop in value(ie 30% + below the value in 2003) may well chose to walk as an option but they have realised the loss here.
    3 Complete and save ? your deposit following legal advice that the legals will follow and and we know that in the main this will happen.
    5 Good point that the builder may not pursue you with legal issues still pending however assuming that this is given I would assume they will be going after everything they can probably backed by the banks as you still have a contract pending and they will be looking for the maximum financial return including covering negative equity.
    6 The banks may have difficulty in chasing someone for the shortfall if you stop paying as they would have to explain lending on an illegal property if that was the case in the first place.

    Its a clear that each must decide what to do according to advice given and time will tell how it works out for indivdual cases.

    Frank 8)

  • #77587
    Profile photo of mike
    mike
    Participant

    @Just Frank wrote:

    Guys + Gals
    It isnt just Spain and if the D.O.W nose dives this afternoon then things may get very difficult indeed. 😥
    Did any of your financial advisors advise you to get out of equities 😯
    Now the only place for your money will be under the bed

    Frank 8)

    And with your money under the bed will come deflation which in Japan has led to roughly 15 years of house price deflation, so far.

    Of course the banks will take advantage and start adding bank charges onto almost everything and some crazies will encourgae investment in gold but I reckon that most people by now have decided that they aren’t very good at investing their money and will leave it somewhere safe where they can get their hands on it relatively quickly, if at a cost.

  • #77600
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    Anonymous
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    Hi Mike 🙂
    Like you my comments regarding money under the bed was just meant as a lighter note and not as such.
    See the ones over the pond have a panic on and reduced interest rates so see what happens.
    The one thing individuals should not do is panic and let things settle before making any move.
    We are on a ride at the moment with no driver 😯
    In some ways a quick sharp recession may be what required as somewhere there will be a base to work from and decisions can be made from there.

    Frank 8)

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