Spanish legal advice in plain English

Realising assets in Spain for creditors

A guide for creditors to realising assets in Spain.

Hi.  I’m Jonathan Eshkeri, English solicitor and Spanish abogado, practising law in London and in Tarragona, just south of Barcelona.

During the 60s, 70s and 80s and even more so in the period between the early 90s and the crash in 2008, the purchase of homes in Spain became extremely prevalent amongst Brits.  Even after the crash there is a healthy appetite amongst Brits for Spanish property. The result is that a huge number of UK nationals now own property in Spain, very often unencumbered.  It stands to reason that a proportion of those property owners incur liabilities which they can’t discharge and they may even be declared bankrupt as a result. Sometimes properties are purchased in the name of companies registered in foreign jurisdictions, such as England & Wales, or Scotland, or perhaps in the name of a Delaware registered company.   

The question for the creditor, the Trustee in Bankruptcy, the AIB’s agent in relation to Scottish sequestrations, or the Liquidator in relation to companies, is how to register an interest in the asset and then realise it, if necessary, without huge difficulty, delay, or expense.  As many of you will already know or will’ve heard from others, recovering assets in Spain is usually difficult, slow moving, and expensive. It can also be difficult to identify professionals with suitable experience in the market and an understanding of your needs, in terms of responsiveness and competitive pricing.

At E&G Solicitors we’ve handled a great many such matters over the past 14 years and so we’re in an excellent position to advise and assist you.

I’d like to take you through the broad steps necessary to register an interest in Spanish assets, with a particular focus on real estate, and then consider how to realise the asset successfully and cost effectively if needs be. If you’re watching via our website then further down the page you’ll find some bullet points setting out each step, and below that a transcript of everything I’m saying, in case you find that easier to follow, either now or later on.  Of course, I’ll be more than happy to speak with you either on the telephone or in person about a specific matter when I’ll be able to provide you with a lot more detail.

The starting point will be registering your interest in the Spanish asset, and in order to do that we’ll need a court order of some sort, or the consent of the owner of the asset.

This is one of three videos considering how to realise Spanish assets and how to secure any debt owed by way of a charge registered against a Spanish asset.

In this video, I shall be considering what a creditor needs to do in order to recover a debt by way of a Spanish property registered in the sole or joint name of the debtor.

If you’re a creditor then you’ll need a judgment against the debtor.  It can be a judgment of the courts of England and Wales, Scotland, or any country in the EU for that matter, or indeed a judgment of any court anywhere in the world.

In order to be able to enforce a judgment in Spain it’s essential that the defendant has been served with the proceedings. As in Spain documents are served by the court, the Spanish court will expect to see that either the foreign court has served proceedings on the defendant, or the defendant was personally served.  It is also essential that the foreign judgment is final, meaning that it is no longer open to appeal under normal circumstances.

In terms of judgments from countries within the EU, then provided the judgment relates to a liquidated sum and proceedings were served on the debtor, you ought to obtain a European Enforcement Order certificate from the court that made the order.  The European Enforcement Order certificate is set out as prescribed in Annex I of Regulation 805 of 2004 of the European Parliament and of the Council.  By obtaining the European Enforcement Order certificate you’ll avoid the need to make an application via the procedure known as “exequatur”, which is the default process for the enforcement of a foreign judgment in Spain.  “Exequatur” is a time consuming and so costly process, so it’s best to avoid it if at all possible.

The European Enforcement Order certificate will need to be legalised, that is it’ll need to have the Hague Apostille attached to it, as will the court order itself.  As a lawyer will need to make the application to enforce the judgment on your behalf, as a creditor cannot do so as a litigant in person, you’ll need to grant power of attorney to your lawyer and to at least one procurator.  A procurator is the administrative intermediary in the Spanish civil and criminal justice system who presents documentation to the court, and receives documentation issued by the court and presented to the court by the other party or parties, forwarding copies of the documentation issued by the court to his or her client, through the lawyer with conduct of the matter, as soon as the documents are received.

You may ask yourself why you’d need to grant a power of attorney to engage a lawyer to act on your behalf.  It’s because in Spain the courts will not recognise a lawyer’s standing, or indeed the standing of a procurator, unless the client has granted each of them full authority to litigate on behalf of their client and to do everything in relation to the litigation, including but not limited to reaching a settlement, receiving funds, appealing decisions, and making applications to recover costs.  These are extremely broad powers as you’ll recognise, particularly when contrasted with the position in the UK. Notwithstanding the very broad authority conferred to us by a power of attorney for litigation purposes, at E&G Solicitors in Spain we’ll only ever take steps on your behalf once we have set out the options available to you, advised you as to each option, and have received from you your written instructions as to the steps you want to take.

Of course, before we do anything towards enforcing an order in Spain, we need to be certain that the debtor owns property in Spain registered in his or her name, the value of the property, and whether there is sufficient equity in the property for it to make sense enforcing a court order through the realisation of the property.  Fortunately, the Spanish property register can be searched by the full name of the debtor. This isn’t a foolproof system, as surnames can be spelt incorrectly when first entered on the register and other anomalies may arise that make searching the property register far from an exact science. If you know where in Spain the property is located, or better still you have an address for the property, or can identify its location on a map, or on Google maps for example, then that helps with finding in whose name the property is registered.

Once you’ve located the property and we’re holding documentation that proves that the debtor is a registered owner of the property, as well as a European Enforcement Order certificate and supporting documentation, all duly legalised by having the Hague Apostille attached to it, we can make an application to the Spanish court to enforce the order.  This is where delays can begin. Even if we make our application to court immediately and our procurator delivers the documentation to court without any delay, we are then in the hands of the civil servants at the court and the judge him or herself. Unlike the system in England & Wales for example, where the claimant serves documentation on the defendant, in Spain this step is taken by the court.  

There are strict time periods set for the defendant to respond to any documentation received from the court, equally strict time periods set for the claimant to respond to any representation the defendant may make through the court, and clear time periods set for the court to respond to documentation received and to send out documentation to the parties. Unfortunately, while defendants and claimants may forfeit their right to continue with the proceedings by failing to comply with a deadline, the Spanish courts almost invariably flout the rules almost as a matter of course. We can say that the timekeeping rules of the Spanish courts are honoured by them far more in the breach than in the observance. The vital ingredient here is patience, I’m afraid, as an application to court challenging any delay will almost certainly take longer to be dealt with than the matter itself.

Once the court has been able to serve documentation on the debtor and the time period for response to that documentation has ended, the court will move towards making an order to enforce the judgment debt.  If the court hasn’t been able to serve documentation on the debtor, then it’ll publish the notification of the enforcement of the judgment debt. The effect of that publication is constructive notice of the proceedings, so effectively the debtor is on notice of what’s to come.

In order to enforce the judgment debt, the court will determine where in Spain the debtor owned assets.  Whereas in the UK the creditor has to make his or her own investigation into registered assets, this is done by the court in Spain, which locates assets by reference to the name and Spanish tax number of the debtor.  The court will then enter a charge on the register in relation to any real estate or moveable assets such as vehicles. If there are bank accounts holding funds, the court will debit funds from those accounts, to the value of the debt if possible.  In terms of funds, the court will then inform the creditor’s procurator that he or she can collect the funds from the bank holding the court’s account, funds that will be received by the creditor’s lawyer and sent on to the creditor.

In respect of vehicles, these can be sold at auction to realise their value, once the creditor makes an application to court to force a sale of the vehicles.  Real estate is realised in a similar way, so that once the charge has been entered on the property register the creditor can make an application to the court to enforce the charge.  This involves the court recognising that the creditor has a right to realise the asset in order to recover the debt owed. It’s customary to allow the debtor the opportunity to repay the debt once the creditor is in such a strong position, but in the absence of any payment being made to satisfy the debt, the next step is to apply to the court to order the sale of the property at public auction.  

A date will be arranged for the public auction of the real estate in question.  This means that an auction will be arranged for that asset only. Any interested parties will need to attend the auction, which’ll almost always take place in an office in the court building and will be run by two civil servants.  No judge will be present. There is also an option to attend an auction by way of the court’s internet portal. Anyone attending to bid will have to have either deposited funds with the court amounting to 5% of the auction value of the property, or deposited a bank guarantee with the court to the same value.   

The auction value of the property will be determined by a valuation provided by a court appointed valuer upon application by the chargee.

Anyone attending the auction will be able to bid for the property.  The lowest price at which a bidder will be able to own the property will be as little as the total value of the debt secured against the property, subject to the way in which other bidders behave, including the person forcing the sale of the property.

If nobody attends the auction, or nobody bids successfully for the property, then the party enforcing the charge can be awarded the property for as little as 50% of the auction value if the property is not the primary residence of the debtor, or as little as 60% of the auction value in the case of a primary residence. The property may then be registered in the name of the creditor, who’ll have to pay transfer tax as if he or she was purchasing the property.  It’s for that reason that sometimes people or banks who are awarded property in this way don’t register the property in their name until they find a purchaser.

Of course, finding a purchaser for a property in the Spanish market is not as easy as finding a purchaser in London.  There are pockets of intense activity, such as in the cities of Barcelona and Madrid, and perhaps a few other areas with extremely buoyant property markets, but on the whole the market is relatively soft.  Hence, the key to selling a Spanish property is to engage an estate agent who’s motivated to sell because the selling price is sufficiently attractive for it to be the type of property that sophisticated buyers are looking to purchase.  Estate agent’s fees tend to be 5% of the purchase price plus Spanish VAT, currently 21% and are usually payable by the seller, unless one is selling in Valencia, in which case the custom is to charge the seller 3% plus VAT and the buyer a further 3% plus VAT.  That’s also a pretty good incentive, but only if the price is sufficiently attractive to secure a sale. The idea should be to find a purchaser within two months or so, rather than to have the property sitting on the market for between six and 12 months, or longer, which is not unusual if one doesn’t take care when appointing an estate agent.  An independent lawyer with significant experience of realising assets in this way ought to be able to introduce an effective estate agent to market the property for sale.

In terms of the sale itself, it’s essential that a creditor engages an independent specialist lawyer to handle the transaction. Closing a sale in the Spanish market is never a straightforward matter and an experienced lawyer will understand very well the pitfalls to avoid from the outset.  The completion of the sale of Spanish property is always attended. It takes place at a Notary’s office. Present are the Notary, the buyer (or someone representing the buyer), the seller (or someone representing the seller), and often at least one of the estate agents responsible for introducing the purchaser. Purchase monies are typically paid by banker’s draft and it’s common for part of the purchase monies to be paid directly to the estate agent or estate agents at the completion meeting, also by banker’s draft.  Photocopies of the banker’s drafts are included with the completion documentation, so it’s clear to see how the purchase funds were paid. It’s likely that the buyer will retain some funds, whether to cover expenses relating to the property that have yet to be paid by the seller, or to cover 3% of the purchase price on account of the Spanish tax liability of a seller who is not a Spanish resident, which is a requirement of Spanish law in those circumstances. The net proceeds of sale are then paid into a Spanish Euro account and then transferred to the seller, less any expenses relating to the sale.

At E&G Solicitors in Spain we have been helping creditors to enforce debts against assets located in Spain since 2004. Please be in touch with me directly for specific advice in relation to your matter. You can find my details on our website,  Thanks for watching.   


(Buying a property in Spain) was a new experience for my wife and I and we wanted a solicitor that we could rely on and help us through this process. Stacey and the team acted very professionally throughout and we felt confident that E&G Solicitors in Spain would complete the transaction. It all went very well!

Brian and Elsa Surridge, Horsham