Case law. A default mortgage payments lead to an eviction procedure. The procedure was not notified at all to the owners until the property was repossessed by the bank.
This is an interesting case law I had the honour to deal with.
The facts were as follows.
A British couple bought a holiday home in Spain as an investment with a mortgage. Due to some discrepancies with the bank there was a payment default for some months. The bank and the clients were negotiating an agreement. Meanwhile, the bank machinery started the eviction procedure.
The bank notified the extra court requirement to the holiday home which was always empty. Obviously, the debtors did not receive the correspondence at all.
So the eviction procedure started and the debtors did not know nothing about it.
And the eviction procedure finished after a few years and the debtors still did not know nothing about it at all.
And the bank repossessed the holiday home of the debtors and they did know nothing about it.
In this case we were lucky in the way that the bank was trying to sell the property after its repossession but they did not succeed on that. If the house would have been sold it would be impossible for the debtors to recover it all as the buyers in good faith would be protected by the law which is reasonable.
What the regulations say
A mortgage contract is equivalent to a court ruling with regards to enforcement. So when a default payment occurs the only thing the bank can apply to enforce the balance due directly. The bank has to notify before the court procedure starts the balance due to the debtors in order to try an extra court solution. The notification address was the holiday home in Spain. This is the usual practice. This way it easier for the bank to notify in the property that guarantees the debt. This makes some sense when this is the main residence of the debtors but not in all the other cases.
In order to change the notification address both the bank and the debtors should have signed a document before a public notary and register the new notification address in the Land Registry. The regulations of the eviction procedure state that the notification address is the one registered in the Land Registry on the property which is charged with the mortgage. So the bank has to agree specifically to the change of the notification address which is not very likely when you are fighting with the bank.
The “funny” thing
Whilst the eviction procedure was going on the “funny” thing was that the bank kept sending correspondence to the debtors’ UK address. And this correspondence was received in good order always.
The debtors’ postal address since the very beginning of the relationship with the bank had been always the same. The postal address was stated in the mortgage deed as the debtor’s main residence.
During the procedure the bank sent correspondence with regards to the interest rate updates of the loan that had been cancelled already by the bank and that was being claimed in court! Furthermore, the correspondence was in perfect English. So, whilst the bank was claiming in court the balance due of the loan at the same time was sending correspondence to the debtors with information about the interest rates update of that very same loan. Unbelievable, yes. But really, I am not joking.
The debtors were aware of the situation by accident from the bank itself.
Once they were aware of this really weird situation they contacted me and we started the fight. First of all we addressed to the court that dealt with the evicition procedure to point out that the procedure was void and null due to the lack of a fair trial as the debtors were not aware of the procedure at all. Therefore, they had no say at all. So the procedure was void and null since the very beginning when they should have been notified. Besides, in this case, the extra court notification were made by a courier agency which made two attempts to notify but at very strange hours and with no prove of them at all. The court denied the application as expected.
So there was left no other chance than to seek the help of the Constitutional Court applying for a declaration that the right of a fair trial had been violated in this case.
And there we went.
The outcome was good. First of all the Court accepted the claim which is not very likely as only a very small percentage of applications are accepted. Also, the Court put on hold the eviction procedure in order to stop the bank to keep marketing the property and sell it whilst the procedure was going on as this would frustrate completely the outcome of our claim.
The court said the the right to a fair trial was violated in this case. This is because if somebody is not aware of a trial of their interest is going on they cannot be heard at all. And this is what happened.
This is a common sense feeling in this case in my opinion.
But the legal grounds are as follows. Even if the regulations state that the notification made to the holiday home of the debtors in this case was correct it was obvious that it was useless. And when this happens the court has to make all the proportionate efforts to make sure that the defendants are aware of the trial. The Court concluded that in this case the effort to send a letter to the UK was not a disproportionate effort to notify the debtors.
Besides, in this case the debtors’ UK address was so completely well known by the bank. Actually was effectively used by the bank to communicate with the clients. So when the bank sent a letter to their clients in the UK communicating in English whatever they could have added something like: “Oh, by the way, just to let you know that we have cancelled the loan number NNN and we claimed the due balance in court a year ago or so. Thank you for your confidence.” I honestly think that would suffice.
Eviction procedure declared void and null due to the human right to a fair trial’s violation
Finally the eviction procedure was declared void and null and had to start all over again. From the very beginning yes. Many years wasted for both parties. But I feel they do not seem to care at all. At least the bank paid a price for it. The price was that they paid all the legal costs to their clients.
Bank’s bad faith
In my humble opinion the bank acted in very bad faith in court. They notified according to the law yes. But they knew perfectly that the notification was useless. And the most important thing they said nothing about this point to the court. They hide the fact that they knew perfectly how to get hold of their clients. They hide it. And hide is an active attitude which means bad faith.
Thank you for your time and attention and I hope this information is of use. You are very welcome to share if you liked it.
Please, note that this is general information. This is not specific legal advice. It is advisable to seek legal advice for any specific legal issue.