In a ruling that will depress many struggling householders, the Court of Appeal in Évora has decided that the handing over of a property to the bank does not abolish the mortgage when the sale of the property is less than the amount owed to the bank, and ordered the seizure of the former householder's wages.
Millennium BCP bank lost the last round when the court in Portimão decided not to seize wages from a debtor's salary having received and later sold the householder’s property, but has won its case on appeal in the Court in Évora.
"Contrary to the arguments in the contested decision, it is not possible to prevent further recovery action by the petitioner (BCP) …. when the enforceable debt was not fully paid off, because the value of the sale of property was insufficient," reads the court judgment.
After the owner gave back the house he had bought in 2006, the proceeded of the subsequent sale of the property to the bank itself, apparently the only buyer interested in the house, were €81,720, less than the €90,000 advanced for the acquisition in 2006 when the bank valued the property at €117,000. Somehow the customer has to find €25,500 which is the difference between the bank’s valuation and the eventual sale price.
According to BCP’s lawyer, Helder Ferreira, "in law there is no doubt that the bank always has to be compensated for the funding it advances," noting that "the bank sells money, not real estate," and that the risk of the devaluation of the asset is down to the owner, not the bank which financed the purchase."
It was also decided in court that the bank only has the function of helping the buyer fund his purchase, the choice of property has already been made by the buyer.
The court's decision contradicts the Portalegre ruling of April 2012 which gave hope to thosands of debtors in trouble with their banks when the local court ruled that the entire loan was cancelled when the property in this instance was handed to the bank. This of course was appealed by the bank in question and also is scheduled to be heard in Évora by the Court of Appeal.
Helder Ferreira argued that the bank is limited to advancing the money to fund the customer’s purchase and that the risk of the purchase must be assumed by the buyer of the property.
In today’s case the former householder has a job and presumably some disposable income that can go towards paying off his loan. In the Portalegre case the two property owners were in dire financial straights and the court ruled that therefore handing back the property was all the bank was going to get.
