Defaulting on a loan

Questions about selling property
Nigel Howarth
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Re: Defaulting on a loan

Post by Nigel Howarth » 25 Sep 2012 19:28

Hi tas,

You don't pay the agent's commission up front - and I suspect that your developer would also charge you a commission if he managed to find a buyer for your property.

Typically agents' commission are 5% (+VAT) of the sale price achieved - and if you use a registered estate agent, you can use his commission to offset your Capital Gain Tax liability.

You should also try advertising the property yourself on one of the many free advertising sites. Angloinfo has a free classified ad section - and you can also pay to have it 'featured'.

Regards,


Nigel Howarth
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Tasmaniandevil
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Re: Defaulting on a loan

Post by Tasmaniandevil » 04 Dec 2014 16:15

Hi Nigel,

Haven't been in touch for a long time - am currently waiting for the Bank to take legal action, whenever that may be. Another little problem has just arisen - the Management Company are chasing me for non-payment of the communal expenses (approx. £1300 -18 months arrears). I have explained to them (as I did to the Bank), that I am not in a position to pay this money; I had to stop working due to ill-health & now survive on Social Security benefits. The Management Co have suggested that I rent out the apartment - that would cover the communal expenses, if nothing else. Having thought about it, it seems to me that I would have nothing to lose by doing so, however, I am slightly concerned that the Bank might not be too happy if I were to do this, especially if the repossession is just around the corner - the last thing they would want is a sitting tenant! They (Management Co) have asked me for the key in order to inspect the property prior to renting it out. What do you think? Would you go down this road? Would you send him over the key (only have one ) .



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Re: Defaulting on a loan

Post by Nigel Howarth » 06 Dec 2014 15:50

Hi Tasmaniandevil

You need to engage the services of a lawyer regarding legal action by the bank. If the bank serves you with a writ or a termination notice it is essential that you defend the action in Cyprus. Failing to do so could put your UK home at risk!

There is no problem renting out your property here in Cyprus, but you should use an agent. The bank should not object to this.

As for handing the keys to the 'Management Company' - I suggest you think very hard before doing so. What is to prevent them selling the contents of your property to repay your debt?

Have you spoken with the bank about your situation?

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Tasmaniandevil
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Re: Defaulting on a loan

Post by Tasmaniandevil » 06 Dec 2014 17:17

Thank you. Not wishing to submit a lengthy post previously, I didn't go into all the details. I haven't engaged any lawyer to deal with this (more expense which I can't afford), because I don't have any assets here in the UK, or anywhere else for that matter! Seems a strange thing to say, but, with regard to this, I'm glad/fortunate that I don't own my home here in the UK (I'm in rented accommodation), therefore, whatever measures the Bank are taking with regard to my case, I'm not quite sure what they can do to recover 'anything' from me. I'm not being smug when I say that - that's just the reality of the situation. I would imagine that the vast majority of people seeking your advice on this forum do own their own homes in the UK (probably very nice homes at that), and, therefore, not surprisingly those people will be having serious concerns about losing them. The question I ask myself is 'Would it really be worth the Bank's time pursuing someone like me'? I note that in every letter the Bank have sent me demanding full settlement and/or payment of the arrears, they make you aware that the adverse information will be passed to a pan - EU Credit Agency, which could make it difficult to obtain credit in future. As I'm not going to be applying for any more loans or credit here (I've got my credit cards), this doesn't overly concern me as it would for somebody just starting out, in their twenties for example.
As regards the Management Company potentially selling the contents of my apartment, that's an easy one - it's completely empty!
Last spoke with the Bank in June 2014 - action in progress, Thank you.n



Tasmaniandevil
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Re: Defaulting on a loan

Post by Tasmaniandevil » 11 Dec 2014 16:58

Hi Nigel,

I have just contacted the Developer from whom I purchased my apartment in order to find out what the current state of play is with it, as I haven't heard from them for a very long time. The property has been on the market through them (only) since around 2007 - I find it astonishing that they haven't had any interest! Somebody once told me that they are more concerned with selling the unsold units & therefore may not even be 'pushing' my one. That said, somebody else told me that it's the sales people who drive the market, so, they won't necessarily be more interested in selling the Developers unsold units rather than re-sales. Anyway, they have now informed me that my apartment is under 'forced sale ' conditions. Where does that leave me with regard to the rental suggestion? Please also see my post of 06/12 - would welcome your comments. Thanks.



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Re: Defaulting on a loan

Post by Nigel Howarth » 11 Dec 2014 21:28

Hi Tasmaniandevil

If the property you purchased is the subject of a 'forced sale', then I believe the only way this can be achieved is as a result of a court order or judgement issued in favour of the creditor (the bank).

I'm sure that the bank will have issued you with a writ or termination notice - and subsequently when the court had made its judgement it will have notified you.

If the property is indeed the subject of a 'forced sale', you can still rent it. The Land Registry has (had) a huge backlog of forced sales to deal with.

Obviously I cannot say what the bank will pursue you in the UK (it's up to them). I suggest you visit your local CAB - they should be able to put you in touch with someone who can help you decide an appropriate course of action at little or no cost to yourself.

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Tasmaniandevil
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Re: Defaulting on a loan

Post by Tasmaniandevil » 05 Jan 2015 17:06

Happy New Year Nigel. I would like your opinion on this please. You may recall my case/situation from previous posts. I took the decision to incur no further expense with regard to this disastrous investment; ie £50000 lost is hard to swallow, and any more expenditure is only going to increase that loss. To date, my thinking has been: best case scenario would be to receive a letter from the Bank informing me that they will repossess & not take any further action against me - then I could just draw a line under it & get on with the rest of my life! I am aware of various legal schemes/groups that have been set up, but, for the reasons already mentioned (cost), chose not to get involved with any of them. I've been mulling this over recently: Are these groups hoping for an outcome that I've described above (an assurance that they won't risk losing their assets in the UK) OR are they looking to achieve more than that ie to have some of their money refunded by 'whoever' , the Developer, I would guess? If the latter is the case, then do you think I am being unwise by not getting involved; after all, if there is a chance of reducing the loss, then who wouldn't want to go for that? Many thanks.

TD



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Re: Defaulting on a loan

Post by Nigel Howarth » 05 Jan 2015 20:47

Happy New Year TD.

The best case scenario would be for the bank to foreclose and take the property to recover the debt - and that would be an end to it. However, If the value of the property does not cover the debt (plus the banks expenses) it could pursue you through the courts in the England for the balance of the debt.

This is straightforward for the bank if it receives an uncontested judgement from a court in Cyprus (which it will get if you fail to defend the action). It will use an 'EU Enforcement Order' that enables a court judgement made in and EU member state to be implemented in another EU member state. Although you have no assets the English court could instruct you to pay an amount to bank each month until the debt is repaid.

As for the various groups, they fall into two categories:

1. Those wishing to keep their properties to renegotiate their loan.

2. Those wishing to get out of the deal completely through a successful action brought against the bank in a court.

I see that you don't want to throw more money at this - why don't you speak with your local Citizens' Advice Bureau? They should have access to someone who can advise you on how to deal with the issue for little or no charge.

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Tasmaniandevil
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Re: Defaulting on a loan

Post by Tasmaniandevil » 14 Oct 2017 13:24

Hello Nigel, I hope you're keeping well these days.

There has been a development in my case since we last spoke. Yesterday, I received a letter from a firm of Solicitors in Cyprus, who are acting for the Bank. Here are some of the key extracts: "As you are aware, the Bank commenced legal proceedings demanding (1) full repayment of the outstanding Loan balance & (2) declaratory relief and right to sell the property."
"Given your default to appear at the proceedings, the Bank has obtained judgment against you for the total amount of the Loan balance until full and final settlement. Furthermore, a declaratory judgment has been issued recognizing that the Bank has become the exclusive beneficiary of the apartment"
"You are hereby informed that the Bank shall now take immediate action to repossess the property. You are summoned to vacate the property, remove any personal belongings and deliver vacant possession to the Bank within 7 days; please return the keys, Title Deeds & a written confirmation that possession is surrendered."
"This is a final notice of repossession & should be taken seriously".
"This letter is sent without prejudice & with full reservation of the Bank's rights to enforce the judgment against you".

Nigel, first of all, I have had no communication whatsoever from the Bank or the Developer for approx. 3 years; this Solicitors letter arrived 'out of the blue'. Had I received notice that a hearing was going ahead, then I would have attended (I remember you stated previously how important it is to do so!). Anyway, given the circumstances, this is what I propose to do;

(A) return the key & a written confirmation that possession is surrendered.
(B) challenge them over the fact that I was not given the opportunity to attend the hearing.

I live in the UK, have only ever been in the apartment once, therefore, it should be vacant & unfurnished. I believe the Title Deeds have been issued, although I do not have them. As regards the outstanding Loan balance (circa CHF 120,000), I am not in a position to pay the Bank anything (I'm on Social Security), therefore, they will just have to do whatever they think is best.

I would very much welcome your opinion/advice, particularly with regard to (A) & (B) above. Thank you very much.



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Re: Defaulting on a loan

Post by Nigel Howarth » 14 Oct 2017 14:58

Hi TD

I've not heard of this happening before. There are tree possibilities:

1. The bank sent the notice to your lawyer in Cyprus and he/she failed to advise you.
2. The bank sent the notice to the wrong address.
3. The notice was lost in the post (but the bank should have sent it recorded delivery.)

I suggest you write to the bank's law firm advising that you didn't receive notice of the hearing and ask them to confirm when the notice was delivered.

You should also contact your lawyer to see if he/she received it.

At the moment I wouldn't return the key, etc. Just wait to hear from the bank and your lawyer.

(Do you have the reference number of the judgement? I may be able to get a copy off the Internet).

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Tasmaniandevil
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Re: Defaulting on a loan

Post by Tasmaniandevil » 16 Oct 2017 11:53

Thank you for your prompt reply Nigel.

I don't have a lawyer acting for me, so, that narrows it down to 2 possibilities. If I was a betting man my money would be on 'they've sent it to the wrong address', because the address I lived at when I took out the Loan in 2004, is what's stated on the Court papers! When I moved about 4 years ago, I provided my new address to everyone concerned,therefore the Bank's lawyers have my current address, hence, their letter reached me last Friday.
The only reference on the Court papers is: Action no. 1932/14 (not sure if that's what you need to find it on the net). It appears to indicate that the hearing took place in November 2015???

Regards,

TD



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Re: Defaulting on a loan

Post by Pantheman » 16 Oct 2017 15:30

If I may just interject here, you say you are on social security, you have no money to pay and therefore cannot maintain the property. Why then do you need to follow up that you didn't know? Would it have made a difference since you cannot pay?

What do you hope to achieve by complaining about the wrong address, surely it would be better to hand it back and be 'shot'of it, instead of it hanging over you??

Just confused as to what you are looking for. Curiosity really.

Sorry about your predicament, but you have a chance to cut loose. If you give them a letter of possession you should also ask for a letter that by handing it back, it is in full and final settlement of that account and the bank will have no further interest in you.


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Re: Defaulting on a loan

Post by Nigel Howarth » 17 Oct 2017 17:42

Hi TD

I've looked through the published court judgements at http://cylaw.org/ but can't find yours.

The problem as I see it is the court has awarded the bank an 'uncontested judgement'. The problem with this is if the debt exceeds the value of the property, the bank can pursue you for the difference in the UK (or any other EU country) using an EU Enforcement Order.

If the bank then takes action against you in the UK to recover the difference you cannot defend.

If the bank accepts your letter of possession as full and final settlement of the account you will be in the clear.

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Re: Defaulting on a loan

Post by Pantheman » 18 Oct 2017 09:10

Tasmaniandevil wrote:
25 Sep 2012 14:57
Hi Nigel, the last reply on this topic (AndyP), mentioned that I should consider getting myself a good agent. This did occur to me when my predicament arose a few years ago - the reason I didn't was that it was going to cost money, would be a bit of a punt, with no guarantee of a sale. As far as I can recall from my visits to Cyprus, if you put a property on the market, you pay the agent's fees upfront (unlike in the UK, where they are taken from the sale proceeds). Is that still how it is today in Cyprus? Many thanks.
Just to answer a couple of things.

1. You do NOT pay agency fees up front (don't know where you heard this but completely wrong), agents work on a no sale no fee basis.

2. Asking you developer to sell it was the worst thing you could have done. Tell me would he rather sell yours or his. Developers are just that developers no agents. I would go as far as say that a developer cannot, legally sell someone else's property, only registered agents can! The law allows anyone to sell their own unlicensed and that's how they sell theirs.

3. Do NOT under any circumstances give a PoA to the developer, he doesn't need it to sell, what he told you is tosh! IF they find you a buyer it can all be done without the developer.

4. You can negotiate with the bank by yourself if you had some serious offer, banks want to get rid of these NPL's and will normally assist where they can. I have done this for clients with similar financial issues as yours.

5. The developer may well be a guarantor, it means the bank will chase both of you until it can reach a settlement. It doesn't absolve you of your responsibilities.

6. As stated find 2 or 3 good agents tell them the situation about the bank, and let them decide if they want to take it on or not, and they will speak to the bank on your behalf. (at least that's what we try to do).

7. Nigel gives you impartial advice about how things work, how you use it is entirely up to you.

Good luck with it all, your situation is repeated many times over, you just have to stick with it and fine the best solution. Just chucking in the keys and walking away won't help, it'll make matters worst.


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Tasmaniandevil
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Re: Defaulting on a loan

Post by Tasmaniandevil » 19 Oct 2017 13:58

Thank you for your comments Pan - I do appreciate your input. As regards the developer not being able to find a buyer, I suspect what you said is probably correct. I had the property on with them for approx. 9 years, but hey, I guess they would always push their own properties first.

regards,

TD



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