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EULawyer
EULawyer, Lawyer
Category: German Law
Satisfied Customers: 224
Experience:  Titular Attorney (Avocat) at Ioan-Luca Vlad Law Office
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I have a house in Germany currently rented out. Tenants are

Customer Question

Hi,
I have a house in Germany currently rented out. Tenants are leaving on the 29 Feb 16. I have sent the mortgage company a letter explaining the circumstances and come March I have informed them that I can only pay 500 euros a month until the house is either sold or repossessed as we cannot pay the mortgage without the tenants rent money. we have decided not to return to Germany when we retire in six years time, (I am 60) I am not sure what is the best option except that due to the distance (us in the UK and the house in Germany) we are not looking for other tenants as it will just delay the Inevitable i.e. having to sell the house as we will not be returning. The worries I have is how much power has the German legal system got in retrieving the moneys owned. We owe 256k euros on the mortgage and house might sell for 200k.
Submitted: 1 year ago.
Category: German Law
Expert:  EULawyer replied 1 year ago.

Dear Customer,

From your question I assume that your mortgage is contracted in Germany with a German bank, on your house in Germany.

The German bank has quite a lot of opportunities to chase you for the money, or even make problems in the sale of the house.

Step-by-step, here is what they can do:

1. Depending on the mortgage contract, they can block any amiable sale of the house, if it does not cover their entire debt. Thus, they can force you to keep it until you find a better deal or they decide to sell it at auction, to raise as much money as possible. Remember that if they are smart, they will have already registered the mortgage in the property registry, and therefore they will be notified and given opportunity to object to any new charge or sale of the house.

2. Supposing that the house is sold (either amiably or at auction) and some of the debt is left unpaid, and that you have no other assets in Germany, they can still obtain a court order against you for the remainder of the debt.

3. With this court order, they may pursue you (in civil court, this is not a criminal matter) in the UK, as the UK is an EU member where the various EU Directives and Regulations on recovery of debt apply. We are speaking in particular about Regulation 44/2001 and its successor, Regulation 1215/2012, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Also, Regulation 1896/2006 on the European order for payment procedure is applicable. To sum up what these Regulations do, once the bank has the judgment against you it may go directly to a local bailiff / sheriff and enforce against your assets in the UK. There is no need for a second trial. You may be therefore forced to make any defenses before a German court.

As you can see, this is not very encouraging, and please do not shoot the messenger. I would strongly advise to negotiate with the bank a payment plan, or an understanding where they would receive the money off the house directly and sooner, in exchange for dropping their claim on the rest. Remember that a settlement with the bank would be much stronger than any defense because once they have agreed to renounce any part of the debt they normally cannot go back on that.

I hope that I have clarified the position and look forward to your rating which is essential to my activity.

Cordially,

Dr I L Vlad

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