Dacion en Pago or Dation in Payment (handing back the keys to the lender)
If you are in trouble keeping up with your mortgage payments or you might fall in arrears soon, this is the blog you should read.
Definition of Dacion en Pago
Dacion en pago (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. As a result of this, the bank will write the mortgage liability off. Furthermore, the lender will give up chasing the debt or your assets in your home country. The lender will not be able to affect your Credit Report (very important!).
Dacion en Pago has become a good solution to those who are in trouble keeping up with their mortgage payments or might foresee falling in arrears soon. As per Spanish Law, Article 1.911 Codigo civil (Civil Code) says “The debtor responds with all its assets, present and future.” This means that the debt goes personally against you, not against the property itself. This is the reason why defaulting borrowers are being chasing in their home countries despite of the lender having repossessed their Spanish property if they have not followed Dacion en Pago process by the signing of Dacion en Pago Deeds.
If you are in trouble keeping up with your mortgage payments or you might fall in arrears soon, this is the blog you should read.
Dacion en Pago Procedure
Dacion en Pago involves you signing a deed at a Spanish Notary by which the bank (lender) repossesses the property in lieu of the mortgage debt. Besides of that, the bank will write off the mortgage debt and the deeds will be registered at the Land Registry for publicity. After the signing, the lender will not be entitled for chasing you in Spain or your home country.
We need to take into account that 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.
Requirements
There are some specifications that we should take into account why speaking about Dacion en Pago:
- Property should not be in negative equity. 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.
An independent valuator company will value the property (current appraisal of the property) and the bank will decide whether or not the shortfall between the mortgage debt and the current appraisal should be discharged.
- Property should not be charged with a repossession procedure at Court. However, this is also not mandatory so we need to attend particular circumstances of the case.
What this service includes:
- Study and evaluation of your particular case.
- Drafting of Power of Attorney to represent you before the lender, Town Hall, community manager, Spanish Notary, Tax Authorities, etc.
- Negotiation with your lender on the terms.
- Drafting of deed.
- Signing Dacion en Pago deeds before a Spanish Notary.
- Registration of the deeds at the Land Registry.
What this service does NOT include:
- Cost of the Power of Attorney in your home country.
- Community debts and/or IBI (council Tax) debts, if any.
- Community certificates, if necessary.
- Plusvalia tax (Town Hall tax). You can read more about Plusvalia Tax through: https://www.reuterssolicitors.com/plusvalia-municipal-how-it-can-affect-you/
Dacion en Pago, as a negotiation with the lender, should be studied case-by-case in order to find the best approach for your particular case.
We will be pleased to discuss your matter with you and provide FREE consultation.
Do not hesitate to contact us for more information:
Related articles about Dacion en Pago:
«Alicante Today» newspaper recommends us:
https://alicantetoday.es/legal-financial-alicante_18-r.html
