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Can A Polish Bank Repossess My Uk Home?


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#1 no1paultaylor1975

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Posted 31 March 2009 - 03:34 PM

Hi All,
Any feedback on this subject would be appreciated. Back in 2007 we signed a preliminary ageement to purchase an off-plan property in Poland. We paid a deposit, and obtained a mortgage. The mortgage has been all paid to the developer and the developer has received the full amount they are due. However, one of the conditions of final handover was that the developer produce (by the end of 2008) a final use certificate for the building and the apartment. They didn't do this, so we served notice that we were withdrawing from the preliminary agreement (entitling us to a full refund plus a 10% penalty). We've been waiting for that money for over two months now, and meanwhile we have had to continue paying the mortgage in Poland. We are waiting to learn from the bank it's position on this issue, and what precisely it is going to do to recover the money from the developer. Here is the crazy bit: The "building contribution" (every penny the developer has received) was signed over to the bank (using an "assignment agreement") as security for the loan. This means that the developer has to pay that money to the bank, not to us. We have no right to demand that money. As for the bank, that apartment is only one form of collatoral that they have access to. In theory, the bank in Poland can choose to not recover the money from the developer, and instead come after our assets in the UK, although our house is heavily mortgaged here anyway and I am sure our UK lender might have something to say about that...Here are my questions:

-Would the polish lender realistically have any chance of touching our UK assets or credit rating in a situation like this?
-Would we be pretty safe to just say "sorry bank. we are not paying any more, we suggest you recover this money from the developer"?

In theory we should receive quite a bit more from the developer on top of the mortgage amount, but the legal system out there gives us no confidence that we could actually recover it through the courts. If we get just 100%, or even 90% of what we paid, we will probably have to just accept it. The main priority is for us to lose the mortgage, as the monthly payments are really quite significant.

Any insight or feedback would be most appreciated.

Regards


Pul

#2 24gray24

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Posted 31 March 2009 - 03:55 PM

You need to pay a polish lawyer!

How can they sign over your deposit to the bank, if you've still got a lien on it? Surely, it's signed over subject to your lien; if your lien comes up, the bank has no claim, conceptually. If you leant developer a tractor, the bank can't say it's been signed over. Hence polish lawyer needed to tell you what status is of deposit in polish law; is it the developer's? or is it still yours as might have to be returned? Is the mortgage or building still the bank's until completion? Can you square off mortgage against money developer owes you? What happens when developer goes bust? Are you left owing the mortgage, and the bank gets the house? get a lawyer to explain who gets what when developer goes bust.

As for collecting in Uk. I don't see why not. They just get a judgement in poland, and come here to enforce it. Hence you need polish lawyer to defend in poland.

Edited by 24gray24, 31 March 2009 - 04:04 PM.

2012 prediction:

banks fall like dominoes in 2013, as funds are withdrawn into PMs.

Sarkozy, Obama and Merkel all fall from power.

the british housing crash is not gradual and slow, it drops like a stone on the day interest rates rise.

#3 WATP

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Posted 31 March 2009 - 04:03 PM

You need to pay a polish lawyer!

How can they sign over your deposit to the bank, if you've still got a lien on it? Surely, it's signed over subject to your lien; if your lien comes up, the bank has no claim, conceptually. If you leant developer a tractor, the bank can't say it's been signed over. Hence polish lawyer needed to tell you what status is of deposit in polish law; is it the developer's? or is it still yours as might have to be returned?

As for collecting in Uk. I don't see why not. They just get a judgement in poland, and come here to enforce it. Hence you need polish lawyer to defend in poland.



I am not an expert on Polish law but it appears your money is gone. In these cases the best thing to do is normally stop paying anymore cash out. Could the Polish bank come after your UK house. Legally it depends on a huge amount of things such as the documents you signed, the laws applied to the documents and the merits of the case. The reality is that it is highly unlikely that the Polish bank will come after you as the cost in legal fees would vastly exceed any money they could hope to make. They will seize your Polish house and I doubt you will get anything back.
If you would be wealthy, think of saving as well as getting.
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#4 Peter Hun

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Posted 05 April 2009 - 08:07 PM

I am not an expert on Polish law but it appears your money is gone. In these cases the best thing to do is normally stop paying anymore cash out. Could the Polish bank come after your UK house. Legally it depends on a huge amount of things such as the documents you signed, the laws applied to the documents and the merits of the case. The reality is that it is highly unlikely that the Polish bank will come after you as the cost in legal fees would vastly exceed any money they could hope to make. They will seize your Polish house and I doubt you will get anything back.



Of course they can come after him in the UK. The legal fees will simply be added to the debt (if there is any). A debt collection agency would be happy to take it up, its money after all.

Get a Polish lawyer.

#5 no1paultaylor1975

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Posted 06 April 2009 - 04:53 PM

Guys,
THanks for your comments. I have got a Polish Lawyer. There were a lot of questions in the first response and I have all the answers, it's just that in the post I wanted to only put in what I thought were the most important relevant points.

The crucial document here is something called the "assigment agreement". This was signed by our lawyers on our behalf. It is a condition of the mortgage. The document confirms that we hand our rights over the property to the bank. The place hadn't been built at the time, but we signed over our rights attached to that property to the bank, as collatoral against the loan. However, it is just one form of collatoral. They can choose to go after anything else to recover the debt, technically. That is one thing that really gets my goat.

Now, the developer doesn't want us to walk away from the final agreement, obviously. They are treatening court action to force us to conclude the final agreemnet, but they are genuinely in the wrong. We were in the right to withdraw because the thing wasn't anywhere near ready in time. We threatening them with court action to return our money, which they are just not doing of course. The thing is, technically, the full amount paid for the apartment is due to go to the bank, not to us, because of this assignment agreement. As our lawyers put it, they are not our "receivables". The money should be paid by the developer to the bank, then credited to the loan, then we should get the remaining amount. How much is due back to us is under debate. We believe we are definitely due 110% of the purchase price. The developer would probably say 90% (with us paying a penalty because we "pulled out") or the minimum they can possibly get away with in truth. The developer is getting quite a name for itself in relation to very dodgy tricks and behaviour. They will stop at nothing to grab and keep every single penny.

The polish legal system is like that in a banana republic. This is apparently common knowledge, and polish lawyers acknowledge it. There is loads of curruption, inconsistent decisions, and it takes ages for anything to actually get to court. The developer also knows this. Nobody advises doing anything through the polish courts.

More interesting points:

Our bank (our mortgage lender in Poland) is also the bank that financed the development.
Our Lawyer also represents the bank

For these reasons we have to worry about a conflict of interest on the bank's part (The developer is a far bigger and more important customer to the bank than we are). Also in terms of our lawyers, they have told us that they cannot represent us, or even advise us about, any dispute or potential dispute with the bank, because the bank is a client of theirs.

We are currently putting pressure on the bank to recover their debt from the developer. I have made the decision pretty much that I am not going to make another payment against that mortgage.

Our argument to the bank is "we signed the assignment agreemnet. We have now withdrawn, lawfully, from the preliminary agreement. The full amount that the developer has received is therefore due to be paid back to you (with the part remaining after the loan due back to us. The money is there with the developer, and you should be recovering it from them. As far as we are concerned, we are not your debtor anymore, the developer is (and they also owe us money that we are banking on you to recover from us)"

I think that our position is very reasonable. We cannot keep making interest payments on money that the developer should have paid to the bank, and the bank should now be taking real steps to recover.

I am quite hopeful that in the UK given a similar situation our position would be seen as reasonable. If the bank got a judgement in Poland, then I don't know how or what the system is for enforcing it here in the UK. The thing is, we don't have cash, only our heavily mortgaged house and two other BTL's both with mortgages. Those other lenders have their claws on the other properties, so there really is nothing in the UK for the bank to claim. Surely we would be able to defend ourselves in an English court...? I can't even find an UK lawyer who can advise on this sort of thing - hence the original post.

#6 Peter Hun

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Posted 10 April 2009 - 04:04 PM

In theory, the bank in Poland can choose to not recover the money from the developer, and instead come after our assets in the UK, although our house is heavily mortgaged here anyway and I am sure our UK lender might have something to say about that...Here are my questions:



What the UK lender would do is repossess you house at the first opportunity to prevent the Polish bank getting hold of it. If they become aware of the Polish banks claim they may look at your three existing properties and demand you increase the equity - banks have started doing this with property investors. I suspect they could use this as an excuse to repossess your UK holdings if they feel threatened.

The point is, getting in trouble with the Polish bank could affect you in the UK. Whether you are in your rights to reject the Polish agreement is difficult to say, but banks don't tend to lend money to people if they are not able to claim it back....

#7 doomandgloom2

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Posted 04 July 2009 - 03:23 PM

How could Polish bank give you mortgage without final use certificate?
Why did you proceed with purchase without that certificate? Its like buying a house in UK without planing permition.
I bought and sold many properties in Poland and the sysytem is simple and efficient and excellent, certainly not banana republic! Lastly, 2007 was top of the market! I sold all my properties then... so your flat is now worth at least 25-40% less then you have paid for. Lots of Poles are loosing their deposits now on off plan properties, with prices collapsing its easier to loose deposit and walk away.

#8 doomandgloom2

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Posted 04 July 2009 - 04:04 PM

Just spoke to my g/f. We dont understand what you have signed while buying the property. Have you had final " akt notarialny" ? Yes? then you are the owner of the property and cant back out of the agreement.
There is no way you could have signed akt notarialny without final use cert. nor your bank paid the final money to developer.

#9 doomandgloom2

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Posted 04 July 2009 - 04:28 PM

You just cant hand over the flat back to the bank. You may try to get the money only from the developer and if you paid already (I assume) 90% of the purchase price then developer will never refund you the money cos prices have now collapsed. The bank wll ask you to pay the mortgage. You simply handed back the keys and it doesnt mean you can walk away from the debt. Perhaps you were too greedy , 2 BTLs and flat in Poland.

#10 Markie6

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Posted 04 July 2009 - 04:38 PM

I don't wish bad luck on people.... but ..live by the sword......

#11 doomandgloom2

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Posted 04 July 2009 - 07:08 PM

It seems you dont want your investment property cos you lost money, had the value gone up since 2007 i`m sure you would wait for the developer to finish it off.
The agreement was with the developer not the bank. You stopped paying the mortgage so the interest and penalties are mounting up, 25% interest on missed payments is normal in Poland. You left the bank in limbo: who is the owner of property? They will have to sort it out and you will bear the costs.
Most important: In Poland its almost impossible to declare yourself bunkrupt, not in your case anyway. You are liable for your debt untill you pay it off or die ... and then it passes on to your children. It also is criminal offence to live debt and run away. Jail is normal.
Polish banks are quite efficient and they know where you are and what you owe in UK. Poland is part of EU so they will get you with ease.

#12 ajay

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Posted 04 July 2009 - 09:05 PM

... and then it passes on to your children.



Hahahahha, i think that is so blatant a lie.

Now where did i hear "the sins of the father...."

#13 doomandgloom2

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Posted 05 July 2009 - 03:37 PM

Haha, not funny at all. Thats Polish law. Under Polish law you can only leave your estate to your family, unlike UK where you can leave it to your dog. The estate and its debts are passed on to the children. Quite simple really.

#14 Warszawski

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Posted 06 February 2010 - 10:09 PM

How could Polish bank give you mortgage without final use certificate?
Why did you proceed with purchase without that certificate? Its like buying a house in UK without planing permition.
I bought and sold many properties in Poland and the sysytem is simple and efficient and excellent, certainly not banana republic! Lastly, 2007 was top of the market! I sold all my properties then... so your flat is now worth at least 25-40% less then you have paid for. Lots of Poles are loosing their deposits now on off plan properties, with prices collapsing its easier to loose deposit and walk away.


I also have bought and sold property and more recently land in Poland and I find the Polish legal system very efficient. It is correct that the Polish real estate market is softening I would not agree with collapsing. On a more important point it is a well known fact in Poland that a bank underwrites a development in order to secure the mortgage contracts.

#15 jonb

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Posted 06 February 2010 - 10:52 PM

It seems you dont want your investment property cos you lost money, had the value gone up since 2007 i`m sure you would wait for the developer to finish it off.
The agreement was with the developer not the bank. You stopped paying the mortgage so the interest and penalties are mounting up, 25% interest on missed payments is normal in Poland. You left the bank in limbo: who is the owner of property? They will have to sort it out and you will bear the costs.
Most important: In Poland its almost impossible to declare yourself bunkrupt, not in your case anyway. You are liable for your debt untill you pay it off or die ... and then it passes on to your children. It also is criminal offence to live debt and run away. Jail is normal.
Polish banks are quite efficient and they know where you are and what you owe in UK. Poland is part of EU so they will get you with ease.


You can however declare yourself bankrupt in England / Scotland etc as appropriate and that is effective throughout the EU. You have to show some sort of link with the country you are declaring yourself bankrupt in, and a lot of people travel to England to take advantage of England's bankruptcy law.




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