What are the stages of mortgage enforcement proceedings?

Question

José Manuel Alburquerque · Accepted Answer

Mortgage enforcement is the procedure in which the bank asks the court to auction the mortgaged property in order to recover the loan that has not been repaid. It normally begins when the bank is entitled to claim the whole loan and files its claim. Then come the formal demand for payment to the debtor, the time limit for objecting, the online auction, the award of the property and, if it is still occupied, the “lanzamiento”, which is the eviction carried out by the court. In Catalonia, if the party enforcing the mortgage is a large-scale landlord (“gran tenedor”), such as a bank, it must offer a social rent to occupants with no other home who are at risk of housing exclusion before bringing a claim, although this is not a requirement for the court to admit the claim. Before the claim The bank usually enforces once it is entitled to declare the whole loan due, which is called early termination of the loan (“vencimiento anticipado”). If the mortgage is over a home and the person who signs it is an individual, the law only allows this when the missed instalments reach a statutory minimum and the bank has first served a formal demand for payment giving at least a month to pay. In Catalonia, the law requires large-scale landlords, such as banks, to offer a social rent before bringing a claim if the occupants have no other home and are at risk of housing exclusion. Following the judgments of the “Tribunal Constitucional”, Spain's Constitutional Court, it is an administrative obligation for which the Generalitat de Catalunya (the Catalan government) can impose penalties. If no offer has been made, the court cannot refuse to admit the claim or suspend the enforcement. In court Once the claim has been filed, the proceedings go through these steps: The enforcement order. The claim is filed with the first-instance court (“tribunal de instancia”) for the place where the property is located and must state whether it is the debtor's principal residence and whether the bank is a large-scale landlord. The judge checks on their own initiative whether any clause is unfair and, if everything is in order, orders enforcement. The formal demand for payment. The debtor is required to pay at the address they designated for this purpose in the mortgage. If the debtor cannot be found there or at any other address that is traced, they are notified by publication (“edictos”), by means of an official notice. The registry certificate. The court asks the “Registro de la Propiedad”, the Land Registry, for a certificate stating who owns the property and what charges it has. The certificate is used to notify those whose rights were registered after the mortgage. The objection. The debtor has ten days from notification to object, only on limited grounds set by law, such as that the debt has already been paid, as shown by the deed of payment or discharge or by the Land Registry certificate, or that a clause forming the basis of the enforcement or of the calculation of the amount claimed is unfair. An objection suspends the enforcement until the judge decides on it. The auction. It can be applied for once twenty days have passed since the formal demand for payment. It is held online, on the “Portal de Subastas” (the auction portal of the “Boletín Oficial del Estado”, Spain's Official State Gazette), for twenty calendar days, at the value set in the deed, which cannot be less than 75 % of the valuation made for the mortgage. Third parties and the bank itself can bid. After the auction If there are sufficient bids, the court approves the sale to the highest bidder and, when that bidder pays the balance of the price, awards the property to them. If the bids are low, the law lays down specific rules, which are more protective when the property is the debtor's principal residence. There are also rules for when nobody bids. The bank is paid out of the proceeds. If they are not enough, what remains owing is another matter. Whoever has acquired the property can ask for it to be handed over and, if the debtor is still living there, the court sets the day and time of the eviction. If it is the principal residence of a family that falls within one of the cases of special vulnerability in the law and meets its financial requirements, there is no eviction until 15 May 2028.