Bargain Property

Cheap Spanish Property

COMERCIAL

ACQUISITION OF BANK REPOSSESSED

PROPERTIES SPAIN

IMPORTANT NOTICE: The information that follows is intended as a guide only, and the author takes no responsibility for the veracity of the contents. In all cases interested parties should take independent legal advice on their own cognisance.

There are three principal sources of property that has either been already foreclosed upon and can be bought direct from the bank and property that is about to be foreclosed upon:

  1. Adjudicaciones Bancarios (‘ABs’)

  2. Cesiones de Crédito (‘CCs’)

  3. Direct from owner with (or without) banks’ approval, (‘Gran Descuento’)

There are usually three lists current at any one time. The first of these refers to properties on which banks have already foreclosed and these are known as Adjudicaciones Bancarios (‘ABs’). The bank or banks in question will already have been adjudicated the property by the court due to being the principal creditor/s. Properties featured on the AB lists are available for immediate purchase direct from the banks, and payment terms have to be agreed individually. In some cases, providing the buyer has a good credit record, the bank will grant credit facilities for the purchase.

More bargains are probably to be found in the second list, pre-repossession properties, the Cesiones de Credito (‘CCs’). These properties are the subject of a loan or mortgage from the bank (they may also have been put up as guarantees by the owners for almost any type of financial transaction) and payments are overdue. In some cases only one payment may have been missed, but in law this is grounds enough to ask the court to start the repossession process. However the bank is prepared to sell the debt to a third party and anyone can buy this from the bank by paying what is outstanding.

The easiest list off which to sell property is without question the Gran Descuento (‘Big Discount’) list. This refers mainly to properties that the bank has advised the debtor of its intention to foreclose within a specified or unspecified period, but offers the owner an opportunity o sell the property directly to a buyer in order to pay off the debt without having to go through the foreclosure procedure.

There are also properties on the list as a result of submissions made by individual owners who are aware of the importance of appearing on the listings.

It must be understood that the CC list in particular is in many cases deficient in detail and the banks responsible for its preparation will not provide additional information simply because, a) it does not figure on their database, or b) it would be guilty of revealing data that is protected by privacy laws. Moreover, perusal of the listings will show that some banks offer more complete information than others, even down to the number of payments missed and the delayed payment interest being charged. It would be more helpful if complete details were always provided, but this is simply not the case and it must be appreciated that these are not property transactions – rather financial ones. The investor is acquiring a property for a price that is substantially discounted from the valuation figure and the difference between these two is the potential profit. Nevertheless this is not a business for the faint-hearted or those of an inflexible northern European mentality. At times it can be frustrating and anyone wanting a quiet life should perhaps stick to the Gran Descuento and Adjudicaciones Bancarias listings and forget about the Cesiones de Crédito products.

Note: As regards viewing properties, those on the CC lists will in many cases be occupied and therefore not available for viewing from the inside, unless the owner is of a co-operative disposition and has no objection. An option is to ask the estate office, presuming there is one, if you can view the property if it is not occupied, or if it is, a similar property on the urbanisation.

No such problem exists with properties that have already been repossessed by the banks (AB Listings) as these can be bought direct from the bank in question. Details of individual properties may not be available as such, but the bank will usually arrange for a viewing.

On the Gran Descuento list full details of any property is available on application, although the time taken to provide this can vary substantially.

JUDICIAL AUCTIONS

If there is no other bidder the owner of the debt will be automatically adjudicated the property, but if another bidder (eg. the present occupier) does appear, the owner of the debt can either just walk away having pocketed his original investment plus interest charges of 12% to 18% that have accrued to him from the time he acquired the debt to the date of the auction, (these will be all included in the reserve price set for the property to be sold at), or he may wish to bid to a level that only he can decide, depending on his views as to the economic viability of selling on the property at a profit at some future date.

SUMMARY

  • There are three ways of acquiring property that a bank has repossessed or is about to repossess:

    • By buying the debt from the bank. (CC listings).

    • By buying the property from the bank after the judicial process has been concluded. (AB listings).

    • By buying the property direct from the owner prior to being taken over by the bank, or where no bank is involved. (Gran Descento listings).

  • Details provided on the banks’ listings vary considerably. Some are highly deficient, others more or less complete. If full addresses, size of property, number of rooms, etc, are not given, these can usually be obtained on request, although the time taken to accede to such requests varies according to the bank in question. NOTE: This does not apply to the CC listings (refer to notes in the foregoing).

  • To reserve a property on the CC listings a deposit of 10% of the quoted price must be deposited with the agents’ lawyers. This is refundable less 10% if the investor decides not to proceed on that particular property but the whole original 10% can be applied to subsequent reservations.

  • And last but not least, you are not dealing with a property agent. In most cases these are purely financial transactions where the buyer is investing in order to make a profit on the bank’s selling price, whether for already foreclosed properties or about-to-be-foreclosed properties.

Of the three lists:

  • Listado de Productos Gran Descuento (‘Gran Descuento’):

All and any property details (number of rooms, square metres, etc), will be provided on request. No deposit required until signing of private contract to purchase.

  • Listado Adjudicacion Bancarias (‘AB’):

No property details but the banks that own the property can make the keys available for inspection visits. No deposit required until signing of private contract to purchase.

  • Listado Cesiones de Credito (‘CC’):

No property details offered until payment of 10% deposit subsequent to which the file for a specific property will be made available for inspection by the creditor bank.

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