Mortgage OVERvaluation - common practice?


Kay bustin

New Member
We have had an offer on our apartment, but we have discovered at the last mnute, that it seems unusual....
My lawyer (who has power of attorney, so I don't need to be in spain to sign documents) advised me that the buyers mortgage broker seems to have raised a mortgage for 170% of the value of the property, but they want me to accept this as the "official" sale price (on the official deeds),even though they will only pay me the real 100% price.
This has 2 issues
1) Extra capital gains tax for me, based on the 170% price - they have offered to pay most of this though.
2) My lawyer has advised this is fraudulent and violates money laundering regulations.

The mortgage broker is advising that this is "common" practice, and has no repercussions. My lawyer does not want to sign the documents in her name as they could lose their license, though they may be willing to do something that gives them "plausible deniability" - if the money goes straight to me, they could claim that they never knew that the full money (the 170% value) wasn't transferred. They are, however, very reluctant to do this, and has advised we could be convicted of money laundering!

I have asked a Spanish colleague and they have never heard of this practice, which is quite different than the "undervaluation" (with a cash bung on top) that I believe used to be fairly common in Spain. It's probably a no-brainer that i should have NO part of this deal, BUT.........I am aware that in Spain, things are not always so simple! There seem to be plenty of practices that are not "technically legal" but are common practice.

I just want to make sure it isn't a case of, "Yeah, everybody does that, why is your lawyer being so fussy!" (which is what the mortgage broker is saying to me!)


Active Member
This all sounds very dubious to me, why on earth would someone pay more than the advertised price for a property? Do not touch this with a barge pole!

Kay bustin

New Member
This all sounds very dubious to me, why on earth would someone pay more than the advertised price for a property? Do not touch this with a barge pole!
Thanks for your reply. We agree it sounds dubious! To clarify, the buyer is not intending to actually PAY more than the advertised price. They just want the deeds/sale documents to say that they have. They say that they need to do this so that they can have enough money to pay for all the fees and refurbishment they need to do. Example - get mortgage for 240,000, pay seller 140,000 (but have 240,000 added to all legal documentation),have 100,000 to cover fees and refurbishment.


Surely the buyer’s mortgage company would want to carry out their own valuation of the property?

Brian Dellinger

New Member
This was a common fraudulent tactic in the pre-recession days in the US. It was a method to allow the buyer, with no money down, to buy the property with an "80 percent" mortgage that in fact covered the entire purchase price and the closing costs. If reported it could cause the seller a catch-22 wherein they either have to admit to abetting fraud or else underpaying taxes.


As a seller I am not sure why you would wish to get involved in fraud - doesnt make sense to me. Sell the property at the right price and file the correct paperwork.