Tag Archives: REOs NPLs in Spain now

Spanish real estate legal context post-Covid19- REO, NPLs: Keys and tips for investors.

Spanish Real estate market has suffered for some years from the public scrutiny, from authorities and society representatives and numerous rules and intervention measures aim at favoring and protecting debtors, especially consumers and small businesses, widening a gap of legal uncertainty that has been exacerbated by the economic crisis following the outbreak of the Covid-19, which now discourages the interest of investors and, at the same time, as all crisis this one brings opportunities for those who can identify them on the right time.

1   At present we have:

  • Law 29/1994 of 24 November on Urban Leases, in its latest reform on the subject of rental periods, extended the term of the tenant of dwellings from 3 to 5 years.
  • Law 5/2019, on real estate credit, reinforces the protection of the mortgage borrower and/or guarantor, debtor, and guarantors, with longer and more complex procedures. Spanish central Bank has been warning of its interpretation that loan portfolio assignments must respect the rights of debtors and guarantors provided in this Law.
  • Multiple scattered rules at regional and municipal level on housing policies with debtor-friendly measures for vulnerable groups complicate the picture, e.g. in Catalonia, Law 18/2007, of 28 December, on the right to housing, and more recently Decree-Law 17/2019, of 23 December, on urgent measures, amended by Decree 1/2020, forcing the exploitation of empty housing, and house availability as a solution for vulnerable groups at risk of eviction, even accepting squattering.
  • COVID-19 measures: aids after the coronavirus crisis substantially consist of moratoriums on evictions, on mortgage loan installments and rents, for residential houses and offices, retail stores, and industrial premises of small businesses.   The impact on the real estate sector will not be uniform, but rather will vary according to the sector (tourism, hotels, and restaurants, etc.), the type of product (offices, commercial premises vs. residential) and location, etc

2. In this new context, investments in REO and non-performing Loans NpLs portfolios will sustain a significant impact:

Investors must review the composition mix of each portfolio, taking into account,

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