Spanish portfolio acquisitions – recent trends, challenges and outlook for the future

The general rule under Spanish law is that credit rights are freely transferable. In this context, there are no statutory provisions setting out special requirements for assignees of credit rights such as buyers of loan portfolios.

This has been a key element for the development of the Spanish market for secured non-performing loans, which has become one of the largest and most active markets in Europe and a preferred jurisdiction for international investors. As such, the acquisition of most secured loan portfolios in Spain has been structured as a direct sale of credit rights to special purpose vehicles domiciled in different European jurisdictions (also in line with the free movement of capital promoted by the European Union). 

Notwithstanding the above, we are recently witnessing certain trends which have somewhat challenged the general principle described above and are starting to test the legal certainty and stability required by investors. In particular, we are referring to the decisions by certain Land Registrars which have denied the registration of the assignment of mortgage loans to European vehicles, arguing that the assignee should have been registered with certain administrative registries and incorporated in Spain.

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