Two Negative Equity Properties in The Algarve
30 November 2022 • 2 min read • by Tom Miskelly
EU Property Solutions were approached by a gentleman with two property shortfalls in Portugal. Our client purchased the properties in the Algarve in 2008 with promised rental yields. These yields did not materialise, and our client had to find funds to top up the mortgage payments.
He carried this on for years, but it was becoming unsustainable, and our client fell into arrears. The respective lenders repossessed the properties and subsequently sold them at a discounted price.
The issue when a lender sells a property in possession is that they typically gain a maximum price of 70% of open market value. This obviously increases losses to all parties.
Our client’s lender was acquired by another Bank in Portugal, who then sold the asset and appointed a collection agent. The collection agent made contact and requested the shortfall of €228,088 be paid in full.
Our client initially appointed a Portuguese lawyer to deal with this shortfall. They proposed €50,000 payable over a 12-month period from our client. This was immediately rejected.
What we did
Our expert team was appointed to take over the case. We withdrew all offers and started fresh negotiations with the bank.
We negotiated on one property first. Through various legal arguments and work on the client’s finances, we achieved a full and final settlement of €27,500. This is a saving of over €200,000.
We are currently working on the second property and expect this to be settled soon. Are you encountering foreign property shortfalls in your portfolio?
We can assist in nearly any country in the world. This is because our experienced team understand how lenders work and, how to deal with them. Please contact us today to discuss your foreign property issue with one of experienced property experts.
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