Giving a Property Back to the Bank

Are you thinking of handing back the keys…

Over the past 10 years there have been many cases in Spain of people walking away from a property. Because usually they can no longer afford to keep it. However, this is not a wise thing to do. As under European Law it is possible for the Banks in Spain to enforce an action for repayment of a debt in another country. Here we explain about giving a property back to the Bank.

The Risks Of Not Giving a Property Back to the Bank Properly

Interest and costs will be added on to the original debt. Thus, the consequences of walking away can be quite serious.

A wiser solution is to come to an agreement with a Spanish Bank to give a property to them (called a “dación en pago”). Thus the matter is resolved neatly and properly. Without further future consequences arising and the client will no longer be liable for the mortgage.

If you or a friend or family member are aware that you will struggle to pay the mortgage in the future. And the property is not in a negative situation. Nor is a repossession proceeding started by the Bank (as otherwise this will not be possible). Then please contact us to explore the option of having the debt cancelled and the property transferred legally to the Bank.

Why do a Dación?

A client should consider this as otherwise they may find themselves in the position that a sale could cost them more than they would gain. Especially after all liabilities are paid. As the property being repossessed not only gives rise to additional interest and costs. But also the risk of being pursued in their home country to seize assets to pay Spanish debts.

Why does a Bank consider this?

A Bank may consider the option of a “dación en pago”. As repossession proceedings are expensive and time consuming. It can be a better option for them to get the property and be able to auction it quickly. So they can earn a return from it than to spend several years trying to get paid.

Giving a property back to the Bank or colloquially “handing back the keys” can be a low cost expensive option. Please contact us if you would like to discuss giving a property back to the Bank.