By Welex, lawyers in Spain specialising in real estate law.
The health crisis situation in Spain caused by the coronavirus Covid 19 and the Royal Decree Law 11/2020 puts many people in a situation of special vulnerability.
Some, foreigners in Spain with loans without mortgage guarantees, who are limited or sometimes unable to comply with such loans due to the health situation. In the same way, we find those who have guaranteed, by means of a bond or guarantee, the fulfilment of the obligations contracted on the occasion of these loans.
Throughout this blog the lawyers in Spain specialising in real estate law of our firm Welex are pleased to expose the essential lines to suspend the payments, managing to give financial relief to the already complicated, health crisis situation.
In cases where there is a loan or credit without a mortgage guarantee in Spain, the Royal Decree-Law provides for the suspension of the same when the borrowers, individuals, are in a situation of economic vulnerability in Spain as a result of the health crisis, applying equally to guarantors and sureties.
This subjective limitation means that it does not apply to contracts and debtors other than those mentioned in the Royal Decree-Law itself.
In order for the suspension of loan and credit contracts in Spain to take place, this may be requested to the creditor, up to one month after the end of the state of alert.
The creditor, once the situation of vulnerability is accredited, will proceed to the suspension of the obligations derived from the credit, extending the termination of the contract automatically.
Consequently, the suspension will not require any agreement between the parties nor will it imply a novation of the contract signed, and will take effect from the time of application.
In those cases where we find rights that can be registered in a public registry, the suspension must be registered, for which a public deed must be granted after the restoration of the freedom of movement of the citizenry.
The suspension of loans and credits in Spain will have a duration of 3 months, which can be extended. During this period the following effects will occur:
– no payments or other items may be demanded
– no interest will be earned
– the amounts affected by the moratorium shall not be considered as having expired.
Finally, with regard to guarantors and sureties, they may take advantage of the benefit of exemption (exhaustion of the principal debtor’s assets prior to the realisation of his assets) even if they have contractually waived it.