Real Estate Sales Through the Figure of Remate Assignment
In recent years, a new type of sale has emerged in the real estate sector, gaining popularity, particularly in large transactions involving assets acquired by investment funds. This method is known as remate assignment and is being utilized by companies managing real estate assets bought from banks, which are looking to clean up their balance sheets by selling difficult-to-collect or toxic assets.
The context of remate assignment in the current market
Since the 2008 economic crisis, banks have accumulated a large number of properties as a result of mortgage foreclosures. These properties, often hard to sell, were acquired by large investment funds at very low prices. Nowadays, the method of selling these properties has evolved, with the traditional direct sale being replaced by credit assignment and remate assignment. This new strategy provides more flexibility to investors, allowing them to acquire assets without the judicial process being fully completed.
Previously, the sale of foreclosed properties was only carried out once the judicial process had ended. However, remate assignment allows creditors to sell to third parties before the final adjudication of the property. This gives financial entities a significant advantage, enabling them to remove assets from their balance sheets without having to wait for the process to fully conclude.
What is remate assignment and how does it work?
Remate assignment is a tool used in mortgage foreclosure processes. It involves a contract in which the creditor who initiated the foreclosure procedure transfers their right to receive the auctioned property to a third party. This mechanism is regulated in Article 647.3 of the Civil Procedure Act (LEC), allowing the creditor to transfer their position in the auction to a third party once the remate (auction result) has been approved in their favor but before the Adjudication Decree is issued.
Benefits of remate assignment
One of the main benefits of this mechanism is that the creditor can avoid direct adjudication of the property by transferring the remate to an interested investor. In this way, the executing creditor ensures the possibility of finding a buyer before assuming the costs and responsibilities associated with adjudication, such as registration fees, property taxes like IBI, or homeowner association fees.
Additionally, remate assignment allows the investor to acquire the property at a price generally below the real market value, making this operation attractive to those looking for investment opportunities in the real estate market. This is especially relevant in cases where the property may have encumbrances, illegal occupants, or difficult situations, all of which affect the final price.
Legal requirements for remate assignment
Remate assignment must be carried out in compliance with the legal requirements set forth by the Civil Procedure Act. According to Article 647.3, only the executing creditor or subsequent creditors have the power to make a bid in the auction, reserving the right to transfer the remate to a third party. This transfer must be formalized before the Court Clerk, in the presence of the transferee, who must accept the assignment, and before or simultaneously with the payment or deposit of the remate price.
It is important to note that the transfer must be notified to the court and ratified before or at the same time as the payment of the adjudication price. The deadline for making this assignment is 40 days, as established in Article 670.1 of the LEC.
The price in remate assignment
The price of remate assignment does not necessarily match the remate price. The parties are free to agree on a different price depending on the conditions of the property and negotiations between the creditor and the investor. This gives the transferee flexibility, allowing them to conduct a detailed analysis of the property’s encumbrances, debts, taxes, and potential illegal occupants before making their final offer.
Differences between remate assignment and credit assignment
It is essential not to confuse remate assignment with credit assignment. In a credit assignment, what is transferred is the right to collect a debt. Unlike remate assignment, credit assignment does not necessarily involve the transfer of ownership of the auctioned property but instead refers to the transfer of a credit right, allowing the new creditor to occupy the position of the previous one in a judicial procedure.
The Civil Code regulates credit assignment in various articles, such as Articles 1112, 1198, 1526, 1528, 1529, and 1530. These articles establish that the new creditor takes on the rights of the original creditor, including the right to continue the judicial procedure to claim the debt.
Credit assignment in judicial procedures
Once the credit assignment is completed, the transferee must notify the court of their new position in the procedure. From that moment, the new creditor will take the place of the original creditor and continue the judicial actions from where they left off. It is crucial that this transfer is done properly to avoid any delays or issues in the process.
Remate assignment lawyers in Alicante
At Carlos Baño Law Firm, we have extensive experience in real estate law and in handling remate assignments and credit assignments. If you need legal advice on these procedures, do not hesitate to contact us. Our team is ready to offer you the best service and guidance in all stages of your real estate transaction.
For more information, visit our page of legal services.
