Spanish & other overseas Debt Recovery for Investors
By Maria Thermann

Spanish & other overseas Debt Recovery for Investors

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If you happen to own an overseas property and you incur debts on this property, this may well affect your chances of purchasing another property back home. For example, if you do not pay your obligatory service charge or community fee in Spain or any other property related tax, you could end up losing your foreign property as a result and be unable to buy a property in your home country. If, for example, you are letting out your Spanish or overseas property to tenants and they default on the rent, lawyers you appoint will try to recover monies for you in accordance with Spanish or other overseas laws.

Spanish authorities, for example municipalities owed community fees, are now employing law firms to collect such debts. Your Spanish holiday home or investment property could be sold at auction to recover whatever debts are held against the property, if you default on payments to the municipality and tax authorities.

Most law firms will be able to deal on your behalf buying or selling property, but not all deal with debt collection. However, gradually more law firms are beginning to offer multilingual debt collection services. You may have to give them a Power of Attorney to collect monies on your behalf in the country you hold assets - and such assets could also include your yacht, caravan, mobile home, not just an apartment, condo, town-house or villa.

You may find yourself in a lot of trouble, if you inherit a Spanish property and discover that the deceased owner has not paid their community fees or property taxes, even if you have made payments against that property for your own share of it. In such cases, the law firm you hire for probate purposes should also be a firm knowledgeable with the process of recovering debt in Spain to protect your interests.

If you find yourself in a situation, where you are in mortgage debt, perhaps as a buy-to-let landlord, it is imperative to be patient, totally honest about your savings, worldwide income and assets and to be co-operative at all times. Don't imagine you can just hand back the keys and walk away from your debt situation in Spain or other overseas territory. If you have a negative equity situation with regard to your property - meaning the outstanding loan is greater than the valuation of your overseas property at the present time - you will still owe the rest of the mortgage to the lender in Spain or the overseas bank, after said property has been sold at auction. This debt will come back to "haunt" you, if you try to buy another property in your home country.

A Spanish lender may place interim charging orders on your Spanish property, if you do not cooperate fully with their requests to pay what you owe. If you put your overseas/Spanish property on the market in the hope to sell and thus discharge the debt, you must pay the overseas/Spanish lender first, including all charges and interest, before you can buy another property at home in the UK.

How the debt situation is handled will depend on how and where you raised the finance to fund your purchase. If you borrowed the money via a UK lender, for example, your mortgage payments fall under the jurisdiction of Great Britain. The UK lender may decide to register your default with UK credit agencies, instead of pursuing the debt via Spanish Courts. This means that any future lender seeing a credit report on you is likely to turn down a fresh mortgage/loan application in the UK.

The golden rule is: be transparent and don't hide income or world-wide assets as the lender can come by such information through different channels and you will get found out sooner rather than later. If you bought a property in Spain with somebody, and that co-owner defaults on a debt, you may well find yourself in a tricky situation and your dream of owning an overseas/Spanish property portfolio could turn sour. You can appoint an intermediary to deal with your debt solutions to save a lot of hassle.

Some law firms offer such services in Spanish and other languages, including English. It is also possible to do international credit checks on prospective tenants' employers, who might be renting your property on their employees' behalf, and to appoint an international debt recovery agent. If you own commercial property that you want to let out, you should consider taking out an international credit report on the company applying to you for the lease.

Ambrosian Abogado

(Spanish and English spoken law firm)
offices in Barcelona and Mallorca, law firm deals in property law (buying and selling Spanish property) and in debt collection

E & G Solicitors in Spain

English and Spanish spoken law firm
deal with asset and debt recovery in Spain

Credit Serve
deals with European and USA credit checks on companies and credit management

also deals with international credit checks on companies

perhaps the biggest and best known agency doing credit checks worldwide

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