An embargo is the retention, by court order, of an asset belonging to a person to ensure the satisfaction of a debt, the payment of legal costs, or the payment of the liability derived from a crime.
In the case of repossessed homes, normally the action occurs because the homeowner has not covered with his mortgage payments and, as a consequence, the bank proceeds to take measures to recover the money invested when granting said loan.
Faced with this situation, many people ask questions like the ones we expose below:
- Can I sell my repossessed apartment?
- Is it possible to carry out this operation to obtain capital with which to settle the debt with the bank?
- Can you sell a foreclosed home at any time, or do you have to do some special paperwork?
The generic answer is that yes, you can sell a foreclosed home without any problem. However, it is also true that in these cases some specific steps must be followed.
At Sky Marketing we answer some of the common questions related to the sale of repossessed apartments and houses.
How long does it take for a home foreclosure to take effect?
Before deciding if I can sell my repossessed apartment, it must be taken into account that the repossession of a house is not something immediate. Rather, it is a long process that can take several years. The seizure processes are regulated by Article 131 of the General Tax Law and by Article 112 of the General Collection Regulations.
When the bank detects, for example, that a client cannot assume the monthly installments of his mortgage, it proceeds to make a “mortgage novation” , a kind of five-month extension so that he can raise the money. If after that time he does not comply with the payments, a legal claim for seizure is filed that is registered in the Property Registry with the charges that the property has.
This embargo will be registered for 4 years. To eliminate it, the amount pending payment must be paid in order to cancel the mortgage loan and that the bank, which is the entity that requested it, cancel it and leave the property registered as “free” of charges.
Spanish law establishes that the annotation of seizure lasts 4 years and is extendable for another 4 years at the request of the owner. If the debt is not covered during this time, the property will finally be auctioned.
Still, the property is not the first thing that someone with debts is repossessed. Before proceeding to the freezing of money in checking accounts, credits, titles or securities, jewelry and works of art or money income.
Do you have limitations to sell a repossessed apartment? Will I lose money with the operation?
Now that I know that if I can sell my foreclosed apartment, I must assess that doing so will not obtain the same economic benefits as if the house had no debts. The reason is that the sale price of the apartment depends on the money pending amortization in the mortgage, so you will not be able to negotiate an excessively beneficial margin for you.
In other words, you must subtract what you owe to the bank from the final sale price. To these expenses you must also add the derivatives of eliminating the annotation of embargo in the Property Registry so that it is free of charges, although there is the possibility of negotiating this aspect directly with the future buyer.
Even so, and although the operation is not as advantageous as we wish, selling a foreclosed house and being able to cover outstanding debt with the bank is always a relief.
Is it possible to negotiate with the future buyer to expedite the sale of the foreclosed home?
The fact that a foreclosed apartment has pending charges can make it difficult to sell because, although a foreclosure entry on the property does not pose any legal or legal problem, the new owner must acquire his own mortgage for the purchase and, if he must also assume the charges of the property, your investment will increase considerably.
In these cases, it is usual to negotiate with the future owner to sell the repossessed apartment as quickly as possible. One option is to lower the sale price in exchange for the buyer assuming the debts of the apartment and the mortgage as his own. To carry out this negotiation, the bank must request a permit to carry out the mortgage subrogation and that it becomes a debt of the new buyer.
Should the buyer know the debts of the house he is going to buy?
Of course. The usual thing is that we, if we want to sell a foreclosed home, are the ones who report the situation objectively. Let’s not forget that this information is public since the seizure must be registered in the Land Registry.
On the other hand, one of the requirements that any buyer usually requires and that they must present at the bank to apply for their mortgage is a simple note of the same, an official document that allows to validate if a property is repossessed. This note contains other information such as the description of the property (type, location, extension, etc.), the names of the owners or any type of burden on the home.
Does it have advantages to buy a repossessed apartment?
Currently many banks offer repossessed flats and properties for sale. In fact, more and more people are requesting information about buying and selling foreclosed homes.
As a general rule, banks offer facilities in the payment and financing of this type of housing, since they want to sell them. This translates into a lower interest rate, more bonuses, or even a higher mortgage percentage, although almost never more than 80%.
In any case, our advice is to act the same as if you were to acquire any other property, to be advised and to compare before buying. It is true that in these cases the bank can offer you very profitable options, especially in terms of appraisal expenses and financing possibilities, but still, it is always advisable to negotiate. In addition, when buying a repossessed home, we must not only take into account only the price of it, but also the total acquisition costs.
The sale and purchase of repossessed flats has increased considerably in recent years. At Deplace we are experts in all types of real estate transactions, including repossessed flats. We value your property immediately, based on its characteristics in the property registry and the properties for sale in the area. We will also help you negotiate with future buyers so that you get the best price and the best conditions for your sale.
Do you want to sell or buy with Deplace? Get in touch with us!