Spanish court rules that repossession cancels debt

A court in Pamplona, Navara in the North of Spain ruled that reposession of the a debtor's property cleared the debt owed.

Previously a mortage debtor, whose property was reposessed and subsequently sold for less than the debt, continued to owe the remainer.

The bank, BBVA, sued the borrower to reclaim 28,129 euros of debt outstanding on a 71,225 Euro mortage after respossessing the property and then selling it for for 42,895 euros.

The judge ruled it was "morally repellent" that the bank should make additional claims on the borrower. BBVA plan to appeal the decision.

There have even been cases where EEO order have been used to pursue a debtor in another European country.

If the ruling is upheld at appeal, it's likely to encourage more conservative bank valuations, make loan to value ratio lower and make mortgage lending conditions in general tougher.

January TINSA 2011

The Spanish Property Market continues it's downward trend for the third concurrent year.

The properties leading the downward trends are those situated in the larger towns and cities and those situated on the Mediterranean costas.

TINSA estimate that prices have seen a year on year fall of 3.9%, with Mediterranean Properties dropping by an estimated 6.8%

The tinsa index can be downloaded here:
TINSA December 2010

2011 is likely to see the banks reprice much of their repossesed stock of property, meaning that prices are likely to continue to fall.

So in the mean time the genral advice is to rent until you find a bargain.

It's possible to rent a three bedroom two bathroon town house in the Port of Mazarron for as little as 500 euros per month