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Have enjoyed reading the forums and would welcome advice.
We are looking at buying a bank repossession. Bank has accepted a cash offer (so no chance of pulling out if finance fails as there is no mortgage).
We are worried about the strictness of the reserve contract “contrato de arras”. It is a short agreement, which says that if bank pulls out of the purchase, they return the deposit plus interest (would probably be 1 euro). If we pull out for ANY reason then we lose the whole of the deposit (15,000 euros!). The deposit is to be paid direct to the bank’s account (not the agency, which is a relief) and we commit to close in under 45 days.
We have made the due diligence checks and so far everything seems ok. The bank has legal title with no other charges on record. Bank agrees to give us clear title, without existing debts (there is about 10,000 of IBI debt, community fees all paid) which will be in the deed signed before the notary.
According to the real estate agency representing the bank, there is no negotiating with the bank. Its their way or the highway. We can’t change anything in the reserve contract. They say we will get clear title and that the IBI debt will be removed in future once the respective legal time limits elapse. The fact that this will be in the title deeds is meant to be our guarantee of this in case of any issues in future.
Does anyone have any experience with this and can confirm that this is the norm with bank repossessions?
Also, if this is how strict they are for the reserve contract, I can’t imagine they will allow us to specify any terms in the final deed before the notary. I am concerned that once we have paid such a large reserve amount, we would be at their mercy. What if they want us to pay the valia-plus at completion? (unlikely they will have made a gain as it a repossession but you never know). This is just one example but I am sure there could be other costs in their favour. Does anyone know if banks use standard contracts before the notary and where we could see one before putting the huge deposit?
Thank you!
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There is no “norm with bank repossessions”
Each case is different. It depends on the bank, the estate agent, how desperate the bank is to get rid of that property, etc.
In your case the bank is being quite abusive, a little bit more than usual.
For instance, the reserve contract is usually different as to what you have been offered. Usually if you fail to go to the Notary, you lose the amount given as deposit; if the bank fails to go the notary, it has to give you double the amount (return your money and give you the same amount). This is the most common forfeit agreement.
But, yes, it is quite normal for the banks to try to make it differently.
IBI: it doesn’t sound good to me what I read: the debt will be removed when time limits elapse? My first reaction is NO WAY!
The normal thing to do is to pay the debt before the signature in the notary or to retain the amount of the debt to pay it, or to give the money to the notary and ask him to cancel the debt. Never buy a property with an outstanding IBI debt as it follows the property whoever is the owner.
The fact that it is said in the deed that the bank has to pay the debt will not prevent you from having problems, just that in the end you should be refunded that amount if you have to pay it first. But what about the stress, problems, time spent, etc?
Based on the information you have given, my advice: don’t sign that contract without the assistance of a lawyer. Trust on him to try to negotiate some changes and/or make sure in advance about the conditions of the title deed (Escritura).
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