What can I do if I cannot pay the mortgage of my property in Spain?

DACION EN PAGO is the solution

Mortgage Problems: Dacion en Pago or Dation in Payment means handing the keys of your property back to the lender (bank) by the signing of deeds in front of the Spanish Notary. In exchange the bank will discharge the mortgage liability.

As a result of it, the lender will renounce pursuing the debt in your home country or chasing any other assets you may own.

Therefore, Dacion en Pago is a very favourable alternative for the mortgage holder because, by giving the property to the bank, the cancellation of the mortgage debt is immediate.

This legal process requires the assistance of a mortgage specialist solicitor who will study your case and will inform you about the best way to proceed depending on several factors such us your personal circumstances, banking entities, mortgage debt, recorded valuation on your mortgage, etc.

How can I ask for dacion en pago?

We need to take into account that the bank is not obliged to offer Dacion en Pago. It is the debtor who should offer the lender the option to negotiate by a formal letter.

Moreover, it is only up to the bank to decide whether or not they accept Dacion en Pago. Most of the bank entities allow Dacion en Pago as they change their policies in order to avoid procedures at Court. However, some banks are still reluctant, so we consider necessary to study case-by-case in order to give clients best approach of their cases. So, we advise you to hire the services of a lawyer to make sure your debt will be totally discharged/written off.

Once the bank accepts to study the case, the debtor should prove his unaffordability of the mortgage by submitting financial documentation. The basis of the settlement is the unaffordability of the mortgage payment, so documentation with evidences of the client´s financial situation must be provided to the bank.

What are the advantages?

The main advantage of Dacion en Pago is that the mortgage debt will be cancelled in exchange for the return of the property to the bank.

It can be another advantages, depending on the case, which can be that the IBI (council tax) and community debts would be also cleared by the lender.

What are the disadvantages?

Although Dacion en Pago is a great relief to those who cannot meet their mortgage payments, there are some minimum disadvantages:
• It is an exit for those clients that cannot afford another monthly payment. It does not suit all clients. However, this is not mandatory, so a study of the particular circumstances of the case will be necessary in order to determine the possibilities of success.
• The funds paid in to the property both at initial time of purchase and on a monthly basis, will not be returned to you.

REUTERS SOLICITORS represents clients who have difficulty paying their mortgage in relation to their property in Spain.
If you have a mortgage in Spain and are struggling to meet the monthly payments, please contact us.
Reuters Solicitors has experience in helping international clients with mortgage difficulties in Spain.

PHONE (+34) 686 602 953
8 Haiti Street, 1 floor, A
Elda 03600 (Alicante)
Balsicas Avenue, 6 Ground floor A
San Javier, Spain

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