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What are the expected terms for the investment?
Investing in real estate through the takeover of unpaid mortgages can be a very profitable process, but it is essential to understand the terms involved. Most properties assigned through this method are usually completed within a time frame of around 12 months. In some cases this time can be halved, but generally a year is a realistic expectation.
But let's be honest: what other 12-month investment can offer you a return of 15% to even 45%? This far exceeds the profit you would make by leaving your money idle in a bank account.
Important recommendations
We emphasize that it is not recommended to make this type of investment with money that you need for your daily expenses. This is a process with terms and variables that depend on third parties such as banks, investment funds and courts. It requires patience and good financial planning.
Investment Process Stages
Here are the main steps and estimated timelines:
Selection of the property and offer to the bank
You choose a property that is linked to an unpaid mortgage and decide to take over that mortgage.
The time it takes for the bank or investment fund to respond to your offer can vary. It depends on when they hold a meeting to discuss the offer and make a decision. This process usually takes between 1 week and 2-3 months.
Acceptance of the offer and setting a date
Once the offer is accepted, a date is set for the signing with the bank or responsible party. This process can take between 1 and 4 weeks.
Signing and registration of the credit transfer
After signing the credit transfer at the notary, it is registered in the register. This process takes approximately 30 working days, counting from the moment the notary submits the documents.
Application for provisional assignment and auction
Once the mortgage is in your name, our lawyers will apply to the court for a provisional assignment of the property, if possible. They will then organise the auction to assign the property to you. This process usually takes between 2 and 6 months.
What are the expected terms for the investment?
Investing in property through the takeover of unpaid mortgages can be a very profitable process, but it is essential to understand the associated terms. Most properties assigned through this method are usually completed within a time frame of around 12 months. In some cases this time can be halved, but generally a year is a realistic expectation.
But let’s be honest, what other 12-month investment can offer you a return of 15% to even 45%? This far exceeds the profit you would make by leaving your money idle in a bank account.
Important recommendations
We emphasize that it is not recommended to make this type of investment with money that you need for your daily expenses. This is a process with terms and variables that depend on third parties, such as banks, investment funds and courts. It requires patience and good financial planning.
Phases of the investment process
Below you will find the main steps and the estimated terms:
1-Selection of the property and offer to the bank
You choose a property that is linked to an unpaid mortgage and decide to take over that mortgage.
The time it takes for the bank or investment fund to respond to your offer may vary. This depends on when they organize a meeting to discuss the offer and make a decision. This process usually takes between 1 week and 2-3 months.
2 - Acceptance of the offer and setting a date
Once the offer is accepted, a date is set for the signing with the bank or responsible party. This process can take between 1 and 4 weeks.
3 - Signing and registering the transfer of credit
After signing the transfer of credit at the notary, it is registered in the register. This process takes approximately 30 working days, calculated from the moment the notary submits the documents.
4 - Application for provisional assignment and auction
Once the mortgage is in your name, our lawyers will file a request with the court for a provisional assignment of the property, if possible. They will then organize the auction to assign the property to you. This process usually takes between 2 and 6 months.
Summary
Although the entire process can take 12 months, the potential return makes this investment a unique opportunity for anyone looking for safe and profitable real estate investments.
Would you like to know more about our services? Do you have any questions or comments? Then get in touch with us. You can do so via our phone number, by e-mail or via the contact form on our site.
+31 6 55 77 24 23 (NL) +34 6 74 46 07 65 (ES) info@favorable-real-estate.comRegistration in the Land Registry: This step formalises the ownership of the property and guarantees that it is legally recognised in the name of the company. This is essential to protect the rights to the property.
Name of the company: It is important that all the information in the deed corresponds to the legal details of the company (name, Chamber of Commerce number, etc.), as any errors could delay or complicate the process.
Guarantee of the investment: By registering the property in the name of the company, the legal security of the transaction is strengthened. This is particularly important if the property is linked to a loan, mortgage guarantee or investment.
Cadastral extract: After registration, you can request a simple extract or a cadastral certificate as proof of ownership.
The legal process of auctioning properties for unpaid mortgages in Spain is a means used by banks to recover the money lent when a debtor is unable to meet their mortgage payments. This process takes place under judicial supervision and has several well-defined stages. Here I explain step by step how it works:
1. Start of the mortgage enforcement process
• Notice of default: When a debtor stops paying several mortgage installments (usually after three months of default), the bank sends a formal payment reminder to the owner.
• Mortgage enforcement procedure: If the debtor does not pay, the bank can file a request for mortgage enforcement with the court. This is the start of the legal procedure.
• Execution order: Once the request is accepted by the judge, an enforcement order is issued and the debtor is notified. The debtor has the option to pay the outstanding debt or reach an agreement with the bank before the auction begins.
2. Valuation of the property
• Valuation of the property: The bank must have the property valued to determine the auction value. This valuation is usually carried out by a recognised valuation agency and must reflect a fair market value.
• Publication of the auction value: The valuation value is used as the starting price for the auction. This information is published in the Official Gazette (Boletín Oficial del Estado, BOE) and in the judicial registers.
3. Judicial auction of the property
• Announcement of the auction: Once the date has been set, the auction is announced on the BOE Auction Portal, with information about the property and the starting price.
• Participation in the auction: The auction is public and online, which gives everyone the opportunity to participate. For this, a deposit of 5% of the starting price must be paid as a guarantee. • Creditor’s bid: If there are no bids higher than 70% of the appraised value, the bank has the right to acquire the property. If there are bids, the property goes to the highest bidder.
• Assignment to the creditor: If there are no interested parties, the bank can acquire the property for 60% of the appraised value or less, depending on the circumstances of the case.
4. Processing of assignment and payment
• Payment of the remaining balance: The winner of the auction must pay the remaining balance within the set period (usually between 20 and 30 days). If this is not done, the winner loses the 5% deposit.
• Formalization at the notary: Once payment has been made, the deed of assignment is signed at the notary and registered in the Land Registry.
5. Eviction and repossession
• Eviction: If the former owner does not leave the property voluntarily, the court can order eviction. This is carried out by judicial staff, with the assistance of the police if necessary. In April 2025, a new law will come into force that will facilitate the fight against illegal squatters in Spain. The law will make it possible to take faster action against squatters in cases of trespassing and unlawful appropriation. With an accelerated legal procedure, squatters can now be evicted within a maximum of fifteen days.
• Handing over of keys: Once the eviction is completed, the property is transferred to the new owner.
6. Possibility of appeal
• Opposition by the debtor: The mortgage debtor can file an opposition to the enforcement procedure, although the grounds for opposition are limited. For example, he can refer to unfair terms in the mortgage agreement.
• Appeal: If the debtor believes that his rights have been violated, he can appeal to the Provincial Court.
Conclusion
The judicial auction of real estate due to unpaid mortgages in Spain is a structured and legally regulated process. It offers both creditors the opportunity to get their money back and buyers the chance to acquire property at potentially lower prices than on the regular market. However, it is essential to understand the process and be prepared for the risks involved.
