B2B · Servicers and investment funds

Strategic resolution of NPL/NPLJ portfolios. From deadlock to liquidity.

When a borrower dies, mortgage enforcement proceedings are drawn out considerably, because the court must meet the requirements of Article 791 of the Spanish Civil Procedure Act (LEC). At Arias Advocats we get ahead of this by issuing a legal heir identification report, setting out the order of succession of the relatives we have located, for submission to the court.

Talk to our team Call us: +34 93 209 31 31 Presentation (PDF, in Spanish)

Play the Arias card: NPL Unlocker An interactive walk-through of a file's court proceedings, all the way to the end (in Spanish).

3.5 yearsstandard time-to-cash
+18–24 monthsextra when a borrower has died
≈ €16daily cost per file
Since 1988in succession law

What happens to your portfolio when a borrower has died

According to the General Council of the Judiciary (CGPJ), mortgage enforcement proceedings with no complications already take 3.5 years on average. When one of the borrowers has died, that period grows significantly — and the costs keep running.

Tracing heirs through the courts' Neutral Point (Punto Neutro Judicial), the subsequent notifications and publication by public notice add a further 18 to 24 months to the process. And that is the best-case scenario: no opposition, no unfair terms and no borrower who died even before the claim was filed.

But the risk is not only time. If the inheritance investigation has not been carried out properly, you are exposed to the proceedings being struck out, the proceedings being declared null and void, or a registration defect when the certificate of award is filed with the Land Registry. The doctrine of the Directorate-General of Registries (Resolution of 2 December 2022) and Article 791 LEC are very demanding: suing the unknown heirs is not enough.

The operational outcome is always the same: tied-up capital, an eroded IRR and a file that blocks the servicer's judicial pipeline.

The real cost per file

Typical case: nominal value €100,000 · purchase price €40,000 · duration 5 years

Cost of capital (target IRR): 10% per year
Servicer cost: €600/year
Total legal cost: €2,500
Costs of the awarded asset: €4,000

≈ €16.16 / day of accumulated cost per blocked file

The Arias 360º Method: from investigation to settlement, in a single process

Instead of waiting for the court to complete its investigation through the Neutral Point, we take the initiative from day one.

Three-level investigation
Genealogical research in Civil Registries, official records (death and birth certificates, the Register of Last Wills) and field investigation, including visits to the property, interviews with neighbours and digital footprint analysis. We rebuild the complete line of succession.
Preliminary report and actual location
A first report with the identity and address of the potential heirs. It opens the way to out-of-court negotiation from the outset, without waiting for the court's findings.
Final legal report
A full report with a family tree, the order of succession under Spanish common law or regional law, and certified copies. Ready to be filed with the court and to formally notify the heirs of the pending proceedings.
Out-of-court negotiation
Once the heirs have been identified, we approach them following the client's instructions to explore out-of-court solutions: deed in lieu of foreclosure, direct sale of the asset, redemption of the mortgage or handover of possession.
Closing the deal
As a law firm specialising in succession law, we handle the declaration of heirs and the acceptance of the inheritance swiftly, making it easier to close the deal with every legal safeguard. Everything signed in a single notarial act.
Portfolio review
We review NPL portfolios to determine what percentage of files involve deceased borrowers. This adds competitive value to the portfolio and its future transactions: the real status of each file and the expected time to recover the debt.

The heir identification report: a tool to move proceedings forward and add value to the portfolio

Identity of every related relative
Full identification of the people with potential inheritance rights uncovered during the investigation.
Registry certificates proving kinship
Copies of the relatives' official certificates to prove the relationship before the court and the Land Registry.
Family tree of the deceased
A graphic and legal representation of the line of succession, essential for clarity in court and before the notary.
Order of succession under the applicable law
Who the priority heirs are, depending on the type of succession (testate or intestate) and the law in force: Spanish common law or regional law.

Portfolio revaluation: NPL portfolio transactions are running at considerable volumes in today's market. Having the potential heirs already identified in files with a deceased borrower gives the portfolio a distinctive value in due diligence. Less procedural uncertainty means a better price in the next transaction.

From discovery to liquidity: different routes, a single point of contact

Deed in lieu of foreclosure
Negotiation with the heirs to settle the debt by handing over the asset, avoiding further court proceedings.
Debt settlement
Through direct payment by the heir or a direct sale of the asset to a third party, with full management of the transfer.
Assignment of the loan to a third party
Brokering with investors interested in buying the loan, opening an alternative route to fast recovery.
Handover of possession
Direct negotiation with the occupants of the property to secure a voluntary handover without a court eviction.

Operational efficiency — «signing in a single act»: notarial processing of the affidavit of notoriety and declaration of heirs, payment of inheritance tax and municipal capital gains tax (plusvalía), clearing of the land registry and guaranteed registration of title. All coordinated in a single process, with one point of contact for the asset's entire legal life cycle.

We are not a general practice with an NPL department. We are succession law specialists working for investment funds and servicers.

1988
Specialists since 1988
Pioneers and a benchmark in succession law in Catalonia.
360°
Our own method
From preventive portfolio analysis to notarial closing of the deal, without coordinating multiple providers.
3×1
Hybrid team
Succession law specialists, professional genealogists and field investigators working on the same file.
KPI
Direct contact
Regular reporting, KPI tracking and direct access to the team, with no intermediaries.