Property Investment in poland

T

TimLance

Guest
Hi there, I am looking for some advice.

I am originally from UK but now work in Asia as a teacher. I bought a property in Poland in approx 2008 and it 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 deficit 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
 
Hi Tim,

To the best of my knowledge the bank will not negotiate. I have never heard of a single case of them negotiating as per UK banks. I have been involved in the property sector in Poland for 8 years and lived in Poland for 2 years.
After a certain period of time, usually about 6 months the bank will move to take back the property, this is a long drawn out process anywhere from 1-2 years.
They will not chase you to UK/Ireland/Asia as it is just too costly for them - this is my experience.
I know of a guy who stopped paying the mortgage, pocketed the rent for 2 years before they repossessed.
Some people may think that is morally wrong but I don't think the banks acted with best behaviour giving you a foreign currency loan unless you are a seasoned investor which I am guessing you’re not.

Regards Red Truck[FONT=&quot][/FONT]
 
Thanks for your reply really appreciated. Morally I am fine to walk away but I would have rather tried to renegotiate but bank doesn't come back to me on anything. So you are pretty confident they won't chase me ? I have one property and another that I front for a friend so with two units I wondered if they may be more interested in chasing ? The units are not expensive at 320k PLN . I have some assets in UK but not too much and I did wonder as European country whether they could chase me more easily. They also have work email address which concerns me slightly. The developer was very late completing the project so morttage was being paid for months before tenant could even move in so trying to get some compensation to no avail so far. Over that year of delay i did not pay the manGement charges and now they are threatening legal action to chase the debt. Have you heard of many similar cases ? I am certainly not an experienced investor so this whole experience has taught me a lot and I wil probably never buy a property in a country again where English is not the spoken language. How has your experience been on polish property. Can I ask you more about how you are involved in polish property and what success or challenges you have had. Are you polish or from elsewhere ?

If I walk away I plan to get my agent to drop the keys at the bank and let them do what ever they need to do. Does that seem a reasonable course of action ?

Apologies for all the questions - any advice or suggestions would be appreciated

Tim
 
What would you think of talking to an estate agent for the purpose of putting the property up for sale? Tell them the situation.

The sales transaction requires the bank's consent to release the mortgage and this I'm sure would get the bank's attention. You could get your estate agent to establish what the consent process would entail - they will be motivated to earn a sales commission and should do a lot of the groundwork for you. Just be sure that the estate agent is not entitled to any abort fees though.........
 
Yes, I am pretty confident they won't chase you. A friend of mine owed one bank 15M zloty (yes, 15 million) on a building and he didn't even realise they had foreclosed, that is, they weren't sending him any letters etc.....guess they just thought it wasn't worth it. (to be fair....he did buy through a limited company, but he did sign a personal guarantee).
Plus, the fact that you are in Asia makes me think that the chance of them chasing you is less than zero!!

don't bother chasing developer for compensation, you haven't a hope, if the developer had any clue he would have used "Force majeure" in the contract..........chance occurrence, unavoidable accident", is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties.

Polish developers like this clause in case they have a horrible winter etc.but it is a get out of jail card for any delay really.

Management Fees: can't understand how the delay with the developer caused you to have an increases in management charges as you are not liable for any admin fees until you sign the final agreement AND handover of the apartment has taken place. so, to answer your question I have not heard of similar cases....you are the first. I reckon there is some miscommunication there.

I have had a very fortunate experience with Polish property. I am Irish. I have been developing residential apartments and business parks and also investing with other developers as a silent partner in Poland for 8 years.

If I knew how to PM you I would give you my phone number to assist you further. Unfortunately I don't so if you do then send me a PM and I will give you my number so you can call me if you need further advice.

out of interest, which city did you buy in?
 
Hi red truck,
just veering offtopic from what the op asked, but i'm wondering have you ever heard of the Polska Fund that invested in property development in Poland? It was set up by Castlecarberry, or something like that. I'm one of the original investors, but have now been told that at least half of my money is lost, maybe more. I don't want to print the names of the people involved in Castlecarberry, but would appreciate any info from yourself, or anyone else that knows anything
 
Hi Inseventeen,
I have heard of the Polska Fund and also Castlecarbery and its management.
don't know the in depth details but I know the Irish Farmers Journal gave them a not so glowing review recently.
 
Hi Tim,

You say the bank is not responding to your requests. My advice is look at your mortgage agreement and see what it says about defaulting process. There is likely to be something about the steps that must be met before a bank reposesses. Write them an official letter and send it registered post. There is also likely to be info on the Polish FSA on mortgage payment issues and the bank should follow these steps. They are obliged to look at individual circumstances and should offer a reasonable solution. Having said that I don't know what a bank can do to reduce £450.00 monthly but since you say you would rather keep the property you can ask them for interest only for example. Just be careful of the terms and conditions they tend to cheat and increase the interest rate.
 
thanks for your insight. Bought property in Lodz for approx 300K PLN
 
Polish Properties default

RedTruck said:
Yes, I am pretty confident they won't chase you. A friend of mine owed one bank 15M zloty (yes, 15 million) on a building and he didn't even realise they had foreclosed, that is, they weren't sending him any letters etc.....guess they just thought it wasn't worth it. (to be fair....he did buy through a limited company, but he did sign a personal guarantee).
Plus, the fact that you are in Asia makes me think that the chance of them chasing you is less than zero!!

don't bother chasing developer for compensation, you haven't a hope, if the developer had any clue he would have used "Force majeure" in the contract..........chance occurrence, unavoidable accident", is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties.

Polish developers like this clause in case they have a horrible winter etc.but it is a get out of jail card for any delay really.

Management Fees: can't understand how the delay with the developer caused you to have an increases in management charges as you are not liable for any admin fees until you sign the final agreement AND handover of the apartment has taken place. so, to answer your question I have not heard of similar cases....you are the first. I reckon there is some miscommunication there.

I have had a very fortunate experience with Polish property. I am Irish. I have been developing residential apartments and business parks and also investing with other developers as a silent partner in Poland for 8 years.

If I knew how to PM you I would give you my phone number to assist you further. Unfortunately I don't so if you do then send me a PM and I will give you my number so you can call me if you need further advice.

out of interest, which city did you buy in?
Click to expand...

I am in similiar situation . Most gratefull if you could advice . My email : [email protected] .
 
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