Handing back the keys – am I still liable?

Many owners of negative equity or unaffordable property in Spain who contact us advise that they simply handed back the keys to their overseas lender and walked away after the market collapsed.

A significant majority believe this ended their overseas property ownership and debt – this is incorrect.

As wronged as many feel they have been by the “loose lending” practices of Banks pre-2008, handing back the keys to a branch is not the way to resolve the issue. We are contacted by many borrowers who followed this incorrect method and now face significant shortfall bills that they are liable for.

From our experience, handing back the keys and walking away results in the following issues:

1. The Bank initiating legal procedures in their home country to repossess and sell the property. Bank sales or forced sales only achieve a maximum of 70% of the open market value increasing losses.
2. Should the Bank seek Judgement in their home state, collection and legal measures can be enforced in your home country. This puts all your assets at risk, including your home.
3. Given the Bank have spent funds on legal processes your chance of a settlement is reduced. They are essentially ‘hacked off’.
4. European Banks look to place second charges on UK property – from here they can force a sale of your home.

Walking away resolves nothing – don’t believe the forums!

Instead you could deal with your situation, liaise with your lender, understand your circumstances and the legal system of the country you purchased in, and appoint an intermediary.

This is where EU Property Solutions come in. We have achieved hundreds of settlements across Europe. Here’s some advice from our experiences:

1. Appointing an intermediary removes emotion and anger – many borrowers feel wronged but a legal case of mis-selling isn’t going to end the burden of your debt? An intermediary removes emotional attachment and can liaise with your lender to get the best settlement feasible.
2. Think about things from the Bank’s perspective: they have what they may classify as a non-performing loan to resolve. Amicable negotiations will benefit all involved.
3. Be honest with your Bank. Transparency and a willingness to be honest goes a long way – even if you feel you have been mistreated in the past.

Don’t ever walk away from debt – it will catch up with you.

In some cases you may be able to “hand back the keys”, but it is not as simple as it sounds. The process is known as a Dación en Pago and is a procedure with strict requirements:

• The property must not be in Negative Equity,
• The lender must not have started repossession proceedings against the property,
• You must be up to date and on time with repayments as well as with the Community fees and local taxes. 

If you do not meet the requirements but are having trouble affording your foreign mortgage, there are always other options. Contact us today for a free, no-obligation consultation to assess your situation.

For examples of what we can achieve for you, read our case studies.

If you are experiencing European Property Debt issues or have handed the keys back to your lender and are concerned, call us today on