But the reform does not stop there. It also overhauls real estate foreclosure and auction procedures, applicable to all foreclosures initiated after 3 April 2025. The substantial reform is expected to have a direct impact on the real estate market. For this reason, we outline the most important aspects for the real estate industry below:
- Mandatory Update of the Registered Details of the Property in Case of Delayed Auction
If the petition for auction of a property is delayed by more than six months after the issuance of the certificate of encumbrances (certificado de cargas), the court clerk (Letrado de la Administración de Justicia) may, ex officio, request an updated extract of the Property Registry (nota simple). This measure ensures that the market value and registered encumbrances of the property are up to date, which is crucial for investors and buyers participating in the auction.
- Higher Deposits for Participating in Auctions
One of the most important changes for investors is the increase in the mandatory deposit for bidders at property auctions from 5% to 20% of the minimum bid, with a minimum of EUR 1,000. This regulatory change is intended to discourage bidders with little solvency from participating, resulting in greater legal certainty in the proceedings.
- Inspecting the Property: Incentive for the Cooperative Debtor
The reform makes it easier to inspect properties that are being auctioned, while creating an incentive for the debtor to cooperate. Within 10 days of receiving the auction notice, they can agree to grant interested parties access to the property and provide them with photos, contact details and information about the state of the property. Cooperative debtors can benefit from a debt reduction of up to 2%, while interested bidders enjoy the increase in transparency.
- Greater Involvement of the Creditor and Less Abandoned Auctions
Under the new rules, the creditor can place bids at the auction from the beginning, with the same conditions and terms as other bidders. Furthermore, they can no longer automatically be awarded the property if there are no other bidders. This reduces the risk of auctions being abandoned and at the same time increases competition and the transparency of the procedure.
- Anonymous Auctions and No Extensions
Auctions have also become fully anonymous under the reform. Now, neither the number of bidders nor the bid amounts will be disclosed, and only the final result will be published. Extensions for bids in the last hour before the auction closes have also been eliminated. Furthermore, auctions may not end on weekends or public holidays such as Christmas or Three Kings’ Day, nor in August (in Spain all courts close in August, hence these days are not taken into consideration regarding deadlines etc.). This will further professionalise the process and enable better planning for investors.
- Changes to Awards in Favour of the Highest Bidder
The rule for awarding the auctioned property to third parties appointed by the debtor has been amended. Now it is sufficient for the third party to offer 60% of the auction value or enough to settle the debts. In addition, the possibility of direct award to the debtor in enforcement proceedings in the absence of bidders is has been eliminated, thereby ensuring fair competition in the procedure.
- Chances in Auctions Without Bidders
If an auction has no bidders, the debtor may propose a person to purchase the asset for at least 50% of the auction value or for an amount that covers the debts, provided that this is not less than 40%. This measure opens up opportunities for direct purchases at competitive prices.
- Shorter Payment Deadlines and New Consequences for Non-Payment
The deadline for payment of the winning bid price at real estate auctions is reduced from 40 to 20 working days from the end of the auction. If the successful bidder or the creditor fails to meet the payment deadline, the auction is declared insolvent (quiebra de subasta). The costs incurred as a result are borne by the successful bidder or the debtor.
- Restrictions on the Transfer of Bids
The debtor may no longer award the property to themselves outside of the framework of the auction proceedings. Furthermore, the transfer of the auction is now only possible within the proceedings and under strict conditions. The aim of this new regulation is to restrict speculative manoeuvres and protect the market value of the property.
- Excess Amounts
If the property is auctioned at a higher price than requested by the creditor, the excess amount must be paid to the court. If this is not done within the specified period, the auction will also be declared insolvent. This protects the interests of the debtor and promotes fair liquidation.
Conclusion: Impact on the Real Estate Industry
These reforms brings about profound changes for judicial auctions of real estate property, strengthening legal certainty and transparency, while restricting abusive practices. The real estate industry, especially investors, should be aware of these new regulations in order to evaluate opportunities, adapt investment strategies and plan ahead in view of the changes to the legal framework.