Sections 681 to 694 of the new Civil Procedural Law to come into effect on February 8 2001 will allow the sale of mortgaged property as a result of debts, to be managed by a professional dealer. The new law also simplifies the selling procedure.
The new law is consistent with other regulations in that the security only can be enforced by the court where the mortgaged land is situated.
Under the new law a lawsuit is issued and the court formally requests that payment be made by the debtor. The claimant is entitled to formally request payment himself before filing the suit: if he does so he should attach such evidence to the suit. The court then asks the Registry of Property for a report about the location of the plot and whether or not the mortgage is still in place. Again, the claimant may get such a report in advance, but must attach it to his lawsuit.
The court issues summons to those creditors of the debtor, which according to the records in the registry, have a preference right on the plot of land. The claimant can make a submission in order to remove the debtor's possession of the land
The new law will also establish that the debtor and the creditor can agree to the way in which the plot is going to be sold, and can entrust the selling to a professional dealer, so that the price obtained is a market price. The public auction procedure has been simplified. There will be only one auction instead of the three auctions stipulated by the old regulations.
After the auction, the money obtained is distributed according to the preferences recorded in the registry.
For further information on this topic, please contact Jorge Hernández at Cuatrecasas by telephone (+34 91 524 7100) or by fax (+34 91 524 7153) or by e-mail ([email protected]).
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