The importance of being earnest… with your bank loan

Understanding your bank loan and why you need expert legal advice. 

When you buy a property, either alone or with a spouse or partner, in most cases, you take up a loan with a bank to finance this property.

To secure this loan, the bank will ask you to choose between two securities: either a lien on your property or a third party guarantee.

This is a security for the bank, and more often than not, its implications are not fully explained to the customer.

This security means that if you default on your loan, the bank can start a repossession procedure and sell your house.

As most loans are usually subscribed for a minimum of twenty years, you never know what is going to happen in the meantime.

A situation which often occurs with British people who get a divorce in the UK while owning a property in France is that the British judge will transfer the house to one spouse or order him/her to sell it so that in many instances, the other former spouse will stop worrying about the fate of the house.

But sometimes, the spouse will stop paying the loan and the bank will also pursue the one who thought he/she no longer had any business with this property, because the divorce judgment does not concern the bank.

This is the reason why you should contact a lawyer as soon as you receive a letter notifying you of the default on payment.

At BRIGHT AVOCATS we have helped many clients with their repossession procedures and in most cases, clients only contact us after they have received the petition to appear before the court, which is the very last stage of this procedure.

Indeed, under French law, the bank has to respect many procedural stages before it can ask the court to have your property sold at a public auction in order to repay the loan.

By acting early the repossession procedure can often be delayed. In fact, at BRIGHT AVOCATS we have successfully negotiated with banks on behalf of our clients so they could avoid the repossession procedure altogether, but this entails that you contact us before you receive the petition to appear before the court.

However, if you find yourself at a later stage of the procedure, please know that this procedure is not necessarily a death sentence. BRIGHT AVOCATS have, in the past, been able to get the repossession procedure dropped on legal technicalities. If there is no legal ground to drop the case, we help our clients leave this procedure with a profit, if not with their house.

And this is the reason why you need to be very quick in contacting a lawyer when you receive a payment default letter from the bank: under French law, when the repossession court procedure is started, it always ends up with the sale of the property, whether at public auction, or amicably.

Lastly, as we appreciate how important it is to be able to react quickly BRIGHT AVOCATS will answer any and all the questions you may have, usually within 24 hours of reception.

Bright Avocats are French-trained bilingual lawyers that practice throughout France. They advise on Construction law, but also on Real Estate, Inheritance, Tax Planning, Family law, Corporate and Commercial law, Labour law and Criminal law.

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