MORTGAGE REPOSSESSION OR FORECLOSURE


Repossession(1) refers to taking back property through judicial processes, foreclosure, or self-help when a creditor fails to make required payments. Many types of property are subject to repossession when there are loans securing the property or liens on the property, such as houses, cars, and furnishings. Foreclosure(2) is the procedure by which a party who has loaned money secured by a mortgage on real property (or has an unpaid judgment), forces the sale of the real property to recover the money due, unpaid interest, plus the costs of foreclosure, after the debtor fails to make payment. So both repossession and foreclosure are synonymous legal items.

The Mortgage is a civil contract which must be fulfilled and satisfied by both parties, the mortgagee (bank) and the mortgagor (person or company), if default on payment or breach of the contract(3) occurs, this situation must be submitted to Court by a Mortgage Foreclosure Proceedings. This proceedings is regulated in Civil Proceedings Act 2000, (hereinafter LEC) from section 681 to 698.

Section 682 LEC establishes two legal requirements that must be carried out:

1.- The mortgaged property valuation, taking into account that this Proceedings has no specific valuation stage, a valuation must be provided by the bank for the future auction of the property in Court.

2.- An official mortgagee’s domicile for notifications and summons(4) must be provided also. Although some Resolutions which have established binding precedents have been issued by The High Court of Justice in Madrid, since May 30th 1947, stating that the notification or summons could be sent to the real address of the mortgagor, rather than the one provided on the Mortgage, if this is the real address, of course.

There are only two main options for the basis of defence, both established in section 695 LEC. One is because the ,mortgage has been cancelled, in which case a certificate of cancellation should have been issued by the Land Registry to prove it. And the other is because a mistake or extra claim in the claimed amount occured. To show this the most important aspect is to make your valuation of the debt providing your bank certificate to your reply in Court.

According to section 693.3 LEC there is a chance to get the house repossessed back and the foreclosure proceedings stopped by paying the overdue amount, plus any interests and costs, but it has mandatory to be your family home. This is a mechanism to be applied for social reasons and is subjected to some requirements and temporary limits which allows the settlement and rehabilitation of the mortgage, as it used to be carrying on, unless the mortgagee would have signed an early maturity clause and claim the total due amount to the mortgagor.

Section 691.4. LEC, establishes if the mortgagor doesn’t update and pay the due amount to the bank before the granted maturity date from the Court, the property will be appointed to be auctioned(5) at Court, and with the profit made the bank will charge and achieve the due amount.

GLOSSARRY:

1.- Repossession: En Derecho Procesal inglés significa ejecutar un hipoteca por parte de una entidad financiera, también recuperación o recobro de una propiedad. No confundir con “enforce”, que es ejecutar un procedimiento, pero para el hipotecario sólo se utiliza o repossession o foreclosure.

2.- Foreclosure: Entablar juicio hipotecario frente al deudor hipotecario, ejecutar un crédito o hipoteca, por tanto, indistintamente se utiliza junto con repossession, al ser sinónimos. También significa embargo de bienes hipotecados, así que no sólo es ejecución en sentido estricto.

3.- Breach of contract: Tiene diversas acepciones, como quebrantamiento, incumplimiento o ruptura de de contrato. En Derecho Civil “breach” suele emplearse como vulneración, contravención, violación o infracción. Los términos “violation” o “infringement” son sinónimos de breach, siendo éste último el más generalmente utilizado. Por su parte, violation connota que ha habido intención de incumplir e infringement se aplica a normas reglamentarias.

4.- Summons: Emplazamiento, cédula de citación, notificación o requerimiento notarial. Por ejemplo, “Court Summons” significa cédula de citación judicial y “Writ of Summons”, por su parte, se usa más para designar el término de minuta de requerimiento notarial o al enviar un burofax.

5.- Auctioned: El término “Auction” se emplea comúnmente para referirse a subasta, pero también significa remate o venta en pública subasta. Por otro lado, “Auction bid” se emplea para el acto de la subasta judicial como licitación o puja, así que “auction bidder” sería licitador o el que puja por un bien mueble o inmueble en la subasta.

Blogs recomendados:
http://www.codigo-civil.net
www.iuriscivilis.com
www.derechocivilhoy.es
www.solicitorsblog.com