# Home from Hell



## Alan73 (Oct 28, 2010)

Hi
Im looking for all and any advice.
This is a short version of a very loooong story.
We had a villa built a house in Spain three years which has basically started to fall down and we have been forced to move out and return to the UK.
We are still paying the mortgage on the property of 1800 euros a month despite the fact we cannot live or even visit the property as it has been declared unsafe.
We are a youngish couple with three kids. This was going to be our nest egg so we invested our savings into the property rather than pensions etc.
We bought the plot of land outright and coupled with what he put into the house we currently have around almost 300,000 pounds invested in it.
We are now in the process of suing the architect, builder and technician but have found out today it will be at least TWO YEARS before we even get an initial court hearing.
On the advice of our lawyer we have not told the bank about the problems at the house - he says the bank would have looked to reclaim the difference in the mortgage given and the current value of the house.
But we are now in a position where we can no longer afford to keep paying the mortgage on the property and also rent a property in the UK - especially when we have no idea if or when this will eventually reach court and even if we will be successful in our claim.
We are on the brink of handing back the keys and walking away - and thus losing everything!
Any advice or feedback or suggestions of people who might be able to help greatly received!
Much appreciated 
Alan


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## jojo (Sep 20, 2007)

How awful!! A dream thats turning into a nightmare!! I cant give you any positive advise I'm afraid. I dont know what the implications are of handing the keys in, but if you cant pay the mortgage and stop, then I dont know what will happen, but I doubt in that scenario you could sue anyone??? Is there anyway the banks _could_ get involved with fighting the architect, builders etc???? Afterall, they obviously own a significant part of the house and they dont know yet that you're struggling to pay??? They (being the big guns) might jolt those involved in the build to do something??????

Jo xxx


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## nigele2 (Dec 25, 2009)

Alan that is a horror. But you'll bounce back from this but the sooner the bounce the better .

A couple of things which would aid comment:

Presumably the house even if it was habitable would be in negative equity?
Why return to the UK? 

The problem with suing the architect, builder and technician is that they may not be able to pay and may not have professional Indemnity Insurance - thus your moral victory will get you nothing 

My other thought would be to ensure all other assets in Spain are liquidated prior to throwing the keys.

Sorry not much help. Good Luck


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## Pesky Wesky (May 10, 2009)

Well, I don't know anything about this, but how about another lawyer who can give you a second opinion?? 
Do you speak good Spanish? Or would an English lawyer based here be better?. There are a couple of people who post here who might be able to advise you, but I cant point you to them as it would be advertising. Tell us where the house is exactly.


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## mrypg9 (Apr 26, 2008)

What a dreadful story.....but unfortunately you will most probably be unable to simply drop off the keys and walk away. New EU legislation makes it easier for banks and others who are owed money to pursue debtors in other EU member statres.
The best suggestion is to seek further legal advice, imo. Maybe you could consult a good UK lawyer with branches in Spain?


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## jojo (Sep 20, 2007)

I think you should speak to the bank, cos the bottom line is they dont want your house (whatever condition) at the moment either! They may offer you alternatives - payment holidays, interest only.....! Its possible by next summer things in Spain may look up a bit, so buying yourself a bit of time might help you - and as for those who built the house??? Do you have a mortgage insurance?? Have they made any comment on the propertys condition? 

Jo xxx


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## Stravinsky (Aug 12, 2007)

I am sorry to hear of the problem, but I would caution about simply throwing the keys over the counter.

The bank will be owed a debt. If you give the keys back then their only immediate way of reclaiming the debt would be to sell your Spanish home. However if they get next to nothing for it and don't cover the mortgage ..... then who do you think they will try to come to next for the balance? If it's a big amount then they wont be too worried about spending the money to recover it.

I think you should take professional advice before doing anything along these lines

Good luck


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## gus-lopez (Jan 4, 2010)

I would definitely speak to the bank as they have a vested interest in the property. If you explain the situation & the fact that it is uninhabitable & until now you have being paying the mortgage but, if they don't help then you will have no alternative but to hand in the keys. 
They should certainly help especially as the 10 year guarantee is supplied by the architect via the illustrios college of architects . If the plans are stamped by them ,which they should be, then that is the guarantee for serious structural defects. If the builder hasn't used the materials specified on the architects drawings , i.e. lower strength concrete, inferior re-inforcing , etc; then he is liable as well. 

I'd also mention to the bank that you are in the process of , or proposing, suing them & ,as they have a vested interest that you would expect them to help with the legal proceedings.
The other replies are relevant in that if you throw in the keys & it's a large amount they're quite likely to chase you for it so the way around that is to make sure you don't own anything, anywhere.If you were able to buy again do it in the childrens name, etc.


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## xicoalc (Apr 20, 2010)

gus-lopez said:


> I would definitely speak to the bank as they have a vested interest in the property. If you explain the situation & the fact that it is uninhabitable & until now you have being paying the mortgage but, if they don't help then you will have no alternative but to hand in the keys.
> They should certainly help especially as the 10 year guarantee is supplied by the architect via the illustrios college of architects . If the plans are stamped by them ,which they should be, then that is the guarantee for serious structural defects. If the builder hasn't used the materials specified on the architects drawings , i.e. lower strength concrete, inferior re-inforcing , etc; then he is liable as well.
> 
> I'd also mention to the bank that you are in the process of , or proposing, suing them & ,as they have a vested interest that you would expect them to help with the legal proceedings.
> The other replies are relevant in that if you throw in the keys & it's a large amount they're quite likely to chase you for it so the way around that is to make sure you don't own anything, anywhere.If you were able to buy again do it in the childrens name, etc.


In Spain it is possible to hand the keys back to the bank and walk away and not be liable for any outstanding debt. This is called a dacion en pago (datio pro soluto), but the problem is that if your prooerty is in negative equity then it is not possible. Normally with new build/ self build the idea is that once complete it is worth more than you spent on it, but given the current economic climate and of course the fact the house is condemmed I guess there is a pretty strong case that the house is in negative equity. Nevertheless I would still threaten the bank with it.

Gus is absolutely right, make the bank aware that unless they help this will be your only course of action then they are bound to get involved and you would be surprised how much more quickly things happen when the lawyers of Bank XYZ are involved.

The answer to this question may be in your original post, but I cant see it now so I will ask it anyway - probably a daft one, but are you not insured in any way? If you used a reputable builder and architect then they should have professional indemnity and public liability insurance to cover events like this. Also, I would have thought that just like the UK, the Spanish bank woudl insist on some kind of insurance backed warranty for the house to cover events like this.

Is the build completed? Licence of 1st occupancy granted etc? Because for all that to happen an inspector from the Ajuntamiente has to see the house, surely they should spot any serious construction defects?

Do always follow the advice of your lawyer but question him as to WHY you shoudl not talk to the bank, as Gus said, they have an interest in this too, they know if hose falls down, you default, they get left with pile of rubble and will never see a penny!

Good luck, I really hope it works out


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## Stravinsky (Aug 12, 2007)

steve_in_spain said:


> In Spain it is possible to hand the keys back to the bank and walk away and not be liable for any outstanding debt. This is called a dacion en pago (datio pro soluto), but the problem is that if your prooerty is in negative equity then it is not possible.



I'm not sure how that would work Steve. If someone has a house seemingly worth €100,000 with a mortgage for instance of €70,000, but the bank cant sell it for that €70k then do you think they will just write off the debt? (Above is just a simple example.

Someone better tell this guy

In Spain, Homes Are Taken but Debt Stays - NYTimes.com


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## xicoalc (Apr 20, 2010)

Stravinsky said:


> I'm not sure how that would work Steve. If someone has a house seemingly worth €100,000 with a mortgage for instance of €70,000, but the bank cant sell it for that €70k then do you think they will just write off the debt? (Above is just a simple example.
> 
> Someone better tell this guy
> 
> In Spain, Homes Are Taken but Debt Stays - NYTimes.com


Banks don't have to accept this BUT in theory and according to an estate agent friend of mine usually they do if the house is not in negative equity. I guess in the current times they are more reluctant, but the way they often look at it is that if the owner simply stops paying it will take a long time to get to reposession stage. This will also cost a fortune. All the time they have no income, growing debt and a lot of money to pay out. If they reposess they wont see a penny from the client whether they are liable or not - you cant get blood out of a stone!

Therefore, if a customer explains they cannot pay and will not pay anything yet offer to hand the keys in, the banks often accept this because they get posession cheaply and fast and can get it on the market. 

So it isnt a foregone right BUT if you really cant pay and you are not in negative equity it is often accepted (with some pressure put on the bank sometimes)

In answer to your question, I think the decision would be based on the "realistic achievable value" they anticipate (or a valuer anticipates) and probably knock a few grand off it! Once they have agreed to this, if they cant recoup their mortgage they can't chase the mortgagee!

Check this link out

The Lawbird Tribune The Dacion en Pago Procedure


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## gus-lopez (Jan 4, 2010)

In this case the house would appear to have no value so you 'd think that they would want to do everything to help the OP.


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## xicoalc (Apr 20, 2010)

gus-lopez said:


> In this case the house would appear to have no value so you 'd think that they would want to do everything to help the OP.


Totally agree - they help the OP, they help themselves!:clap2: so why the OP's lawyer told them not to talk to the bank is beyond me!!!

My house (rented) in spain is on a new URB and the builders went bust, we have no licnece of 1st occupancy and therefore builders elec, water etc - which is good because its FREE!! BUT the landlady was having no joy with the builders to get the papers for the town hall etc to get house legal, she got her bank involved and its all going fast now!


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## Alan73 (Oct 28, 2010)

Hi folks
First off thank you for all the feedback, comments and advice. All is greatly appreciated! I posted the original thread late last night so hopefully I can expand a bit now which might help make things clearer.
We bought a plot of land four years ago in the Costa del Sol - near Coin about 25 minutes inland from Marbella. Via the estate agent we purchased the plot through we met with three architects, looked at work they had previously completed etc and decided to choose one.
After a lengthy period of having the usual paperwork completed etc work began on the villa. It is a relatively big house over five levels and around 620m2 build with swimming pool and various terraces etc.
We noticed some problems shortly after moving in but this was put down to settlement etc and the issues appeared to be fixed by the builder.
However over time these problems re-appeared along with others elsewhere.
Late last year one of our terraces collapsed, followed shortly after by our swimming pool and various other patios and terraces. Cracks appeared in outside walls - a real nightmare!
Via our lawyer we brought in an independent technician/architect who advised us to move out immediately as the property was at risk of collapse.
The builder, architect and technician have also refused to accept any responsibility claiming this was caused by an Act of God - ie heavy rains. However no other property has been affected except ours.
With no accepting any blame we were forced to return to the UK, cordon off the villa completely on the instruction of the Town Hall and start legal proceedings.
The builder had insurance but it ran out a year ago. He claims the house was complete but we never signed any documents to say this was the case and the Town Hall has never been out to grant our habitation licence. We are suing him but dont expect to get a penny as he has nothing.
We were offered a 10 year building insurance midway through the build but after speaking to our lawyer who explained the pros and cons we decided not to proceed with it
The architect is registered through the architect college in Malaga and is all insured and certified. We are suing him for 60% costs as he was overly responsible for the entire project and appears to have failed to check the builders work.
We are also suing the technician who drew the foundation plans and calculated everything for 20% - he is fully insured and certified.
We found out yesterday we are looking at March 2012 before we are even given a preliminary court hearing date.
We contacted our bank - Cajasur - today to ask for a mortgage break or a reduction in monthly payments. They agreed to drop the payments from 1800 euros a months to 1200 euros for one year - as long as we paid 6000 euros to change the mortgage.
So in a nutshell - we will drop your payments but charge you more over the 12 month period!
We have a mortgage of around 325,000 euros on the property - and currently have around 275,000 euros of our own money invested in it.
However given the state of the property it is easily in negative equity at present
Repairing the outside areas is estimated at around 250,000 euros - but we are now awaiting a second report on the house itself as our technician/architect believes the entire property has been built sub-standardly and is all at risk.
I have also today spoken to our accountant who has advised me to go bankrupt as this will prevent the bank chasing us should be hand the keys back
Our lawyer is Spanish but is also qualified to work in the UK
My wife also speaks fluent Spanish and she has been dealing with the bank - who have been horrific!
I hope this makes our situation a bit clearer


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## gus-lopez (Jan 4, 2010)

Alan73 said:


> Hi folks
> First off thank you for all the feedback, comments and advice. All is greatly appreciated! I posted the original thread late last night so hopefully I can expand a bit now which might help make things clearer.
> We bought a plot of land four years ago in the Costa del Sol - near Coin about 25 minutes inland from Marbella. Via the estate agent we purchased the plot through we met with three architects, looked at work they had previously completed etc and decided to choose one.
> After a lengthy period of having the usual paperwork completed etc work began on the villa. It is a relatively big house over five levels and around 620m2 build with swimming pool and various terraces etc.
> ...




Heavy rains aren't an 'act of God', they are to be expected every 20 years or thereabouts, in Spain. I'd get the lawyer to get on to the college of architects if the plans are stamped & get them to put some pressure on the architect. I'd also get the lawyer to 'forcefully' speak to the bank re; them getting involved & also tell them that you are not paying anything to change the mortgage & if they don't help they won't be getting anything as you'll go bankrupt. 
Personally I'd be piling on the pressure in any way I could, denuncias on the architect, the technician, builder, etc; for professional negligence, shoddy materials, anything you can dig up. If the 2nd report shows that the materials used are contrary to the specifications then all are responsible from the builder to the architect , & I'd issue more denuncias to that effect !

here's some light reading & the section ,Third Step.- The house is built: Documents
Documento sin título

This shows that it's the architects responsibility to obtain the final completion of works licence to allow the application for the Lfo.


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## xicoalc (Apr 20, 2010)

Alan73 said:


> The builder had insurance but it ran out a year ago.


Firstly I totally agree with Gus again!

On the quote above. In the UK, and in my understanding in Spain also the builder should have professional indemnity insurance covering for claims of negligence, shoddy work etc etc. If he is a member of any trade associations then usually the membership also gives such insurance. You said the insurance expired a year ago, but when did he do the work?

If, for example he did the work in 2008 and the policy expired in 2009 you should still be able to claim against the expired policy because that was covering him during the time he did the work. It's like if I crash my car into yours today but my insurance expires tomorrow. I may change insurers but if you come back in 6 months with whiplash you claim of the policy that covered me at the time that the incident took place. With professional indemnity you claim off the policy that was in force when the negligence came about.

Like Gus said, get a bloody good lawyer involved, you should NOT be paying the bank anything like 6000€, thats rediculous, they should be making an effort to help you. Get a lawyer involved, and suggest to him that he tells the bank until they agree to assist in the legal case against the builder you are witholding payments. That should kick them up the bum! BUT get legal advice on that.

Bankruptcy is complexed. If you have no assets in the UK then go bust in Spain and start a fresh in the UK, BUT and its a BIG BUT, you have put a lot of money into this house so i would fight fight fight now. The bank are the ones with the biggest loss to make, the ball is in your court, get them fighting the battle, and laim from whoever you can claim from - evem if it is an expired insurance policy!

Oh one last thing, you may need to find out if the faults occured due to poor quality construction OR poor design. If the plans are wrong and the builder did everything right but by the plans then the blame lies with the architect. If the plans look spit on but the building work was sub standard then obviously the blame lies with the builder!

Good luck!


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## Pesky Wesky (May 10, 2009)

What an effing mess Alan 73.
You must be heartbroken and exhausted.

I don't know as much as Steve and Gus, and the only advice I would give is make sure you're talking to the boss in the bank, the person who can really move things. If you don't get any joy from him, and it sounds like you've been treated terribly by the staff there, go to the head branch and complain. 

Also, as I said originally, get another lawyers opinion because no one here seems to understand the advice your lawyer has given you.

Hope you can start to make progress soon.


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