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Polish Property - should I keep renting it out?


TimLance 1 | -
14 Jul 2012 #1
Hi there, I am looking for some advice.

I am originally from UK but now work in Asia as a teacher. I bought one property in Poland in approx 2008 and it has not gone as expected. First major issue is that the mortgage is in Swiss Francs and so have seen a huge currency swing - mortgage is worth now double the purchase price. Therefore rent does not cover mortgage and in fact a huge defecit that I cannot afford to pay - I am having to top up approx 450 pound sterling a month. Second major issue is that property prices have also dropped significantly.

In the current position I cannot afford to keep paying the mortgage - one of two things has to happen, either the bank will have to negotiate or I have to walk away from the property and leave to the bank. I have tried to contact the bank on numerous occasions on this matter and other things and got no reply at all. Of course language is an issue but even when I have asked Polish speakers who are legally able to represent me, still no response at all. My preference would be to be renegotiate which happens regularly in UK - is this something that bank likely to do in Poland ?? If not, I will have no option but to walk away - if I do what is the implication for me ? I dont live in Poland, in fact live in Asia and have done for many years. What would the banks response be in this situation and would they be able to track me down ?? This is a very diffiucult situation so if anyone has any advice or relevant experience please let me know

Thanks, Tim
milky 13 | 1,657
14 Jul 2012 #2
Why don't you just keep renting it out ?? How much is the rent short? and where did you buy? and how were you convinced to buy? Did you get a 100% mortgage?
delphiandomine 85 | 18,254
14 Jul 2012 #3
one of two things has to happen, either the bank will have to negotiate or I have to walk away from the property and leave to the bank.

Wrong. What will happen is option 3, where the Polish bank will pursue you for every last grosz that you owe them. And they will - while they might negotiate, they certainly won't tolerate you walking away.

if I do what is the implication for me ? I dont live in Poland, in fact live in Asia and have done for many years.

What they would probably do is obtain a European Arrest Warrant against you. Crossing a European border covered by the EAW scheme would instantly set off a red flag - and you'd be on your way to Poland to answer to court. With the concept of personal bankruptcy not really existing in Poland, you'd be in trouble.

Don't assume that they will do nothing - they will do quite the opposite.
peterweg 37 | 2,321
14 Jul 2012 #4
This is apparently true. Any EU assets would be a target.

And don't try dying to get out of the debt, they will chase your next of kin.

Also, I have heard of a credit card company chasing a debt to Thailand.
f stop 25 | 2,513
14 Jul 2012 #5
Now, there's a cautionary tale.
Wroclaw Boy
14 Jul 2012 #6
do they have a five year law in Poland, if they cant contact you within thsi time the debt is wiped?
jon357 63 | 15,168
14 Jul 2012 #7
Unfortunately they are very good at getting round that.
delphiandomine 85 | 18,254
14 Jul 2012 #8
The law actually helps them - after they send the second registered letter, it is automatically assumed by the court (with proof of postage) that the letter was delivered.

Used that law against a certain Warsaw-based language school once...
milky 13 | 1,657
14 Jul 2012 #9
Don't assume that they will do nothing - they will do quite the opposite.

Let this be a lesson to people not to buy into the shype of real estate prn, its Charlestons, and the "it's different here" brigade of bubble-ponzi denialist.

Has nobody got advice for this man??
wawa_marek 1 | 129
15 Jul 2012 #10
Another way is to sell the property with mortgage.
delphiandomine 85 | 18,254
15 Jul 2012 #11
Has nobody got advice for this man??

The only advice is to attempt to renegotiate, and if that fails, suck it up like a man and pay his debts.
rt3d 10 | 46
15 Jul 2012 #12
two advices, sell the property as a loss then pay what you owe or deliberately damage the property and claim
on the insurance.. I wouldn't advice the 2nd choice..
peterweg 37 | 2,321
15 Jul 2012 #13
. I wouldn't advice the 2nd choice..

Neither would I, firstly because he could end up in jail for it and secondly so could anyone else who advised him to commit a crime.
cms 9 | 1,271
16 Jul 2012 #14
Some of the things written here are way too alarmist. You have made a bad investment, its not the same as being a rapist or a thief. I dont think the poster said anywhere he was speculating - maybe it was a family home ? In any case one lesson you should learn is never to take out loans in an unrelated currency.

Personal bankruptcy does apply in Poland and has done for about 3 years since they changed the law. Its not easy compared to UK or US since you have to make monthly reports in Polish etc but in any case if you have severed your links with Poland its not really worth doing it unless your mortgage debt is crippling.

If I were you I would find a lawyer in the town where the property is and make sure that you are dealing with the correct person in the bank. The best thing to do would be to ask if they will accept a "cesja" for an indefinite period where any money you get in rent is transferred directly to the bank. That way they will know they are getting all the income possibly from the site and they will see it as a show of good faith on your part. This tends to work in commercial properties (where I have lots of experience) and will buy you some more time at least until the zloty gains some strength.

European arrest warrants are I thought for civil matters only. I'm no lawyer but a quick glance at wikipedia states

"An EAW can only be issued for the purposes of conducting a criminal prosecution (not merely an investigation), or enforcing a custodial sentence.[1] It can only be issued for offences carrying a maximum penalty of 12 months or more."

None of the above apply, so I suggest you go about your travels without fear that you will be put in an orange jumpsuit. I know the Polish government is using these for bringing petty criminals back from the UK, but I think even the UK border authorities might baulk at chasing up mortgage defaulters, otherwise the queues at immigration when a flight arrives from Athens would be something to behold.
Harry
16 Jul 2012 #15
I remember reading about Poland issuing an EAW for a man who had had his house seized and sold by the bank which had given the mortgage. But your advice about what to do is very sound.
Richfilth 6 | 415
16 Jul 2012 #16
Considering CHF/PLN has shifted by 65% since 2008, and this has led to you topping up the mortgage repayments by approx 450 GBP, then the original repayment must be around 700GBP. If that's the case, what on earth sort of property did you buy? That's a capital investment of about 750k PLN.

The reason I ask is that the scale of the loan will depend how aggressively the bank pursues you, and how much they may be willing to negotiate. If it were a boxy little kawalerka in a minor town then they may be more lenient, but if you've invested in a grand apartment, a large house or huge tracts of land, they're going to be less sympathetic.

I presume part of the deal for getting the mortgage was being registered at a Polish address. If that is the case, then your current location in Asia will not help you at all, as from the bank's perspective you ought to still be in Poland.
delphiandomine 85 | 18,254
16 Jul 2012 #17
I know the Polish government is using these for bringing petty criminals back from the UK, but I think even the UK border authorities might baulk at chasing up mortgage defaulters.

The abuse of the EAW system for petty things by Poland is well documented, unfortunately :( It's supposed to only be used where the potential punishment is more than 12 months in prison, but UK courts are just rubber-stamping the decision of the Poles rather than actually taking the time to examine what the alleged offense is.


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