SPAIN Law and Practice Contributed by: Ángel Pérez López, Luis Jiménez and Rodrigo del Saz, Uría Menéndez
Real Estate Mortgages Real estate mortgages are granted over any real estate asset and are registered with the rel- evant land registry. Consequently, the furnish- ing of real estate mortgages involves significant costs, such as notarial and registry fees and taxes, including stamp duty (discussed in 8. Tax Issues ). The maximum liability amount secured by the mortgage, which usually ranges between 110%-130% of the principal, is used for the cal- culation of these costs. In recent times, Spanish lenders have become more open to considering non-traditional real estate collateral, such as surface rights. Spanish law also allows for floating mortgages, which is a security interest created over a spe- cific real estate asset to secure liabilities which are not identified at the time of the furnishing of the mortgage up to a maximum cap or maximum liability amount, which provides an important advantage in multiple-debt transactions. Float- ing mortgages can only be granted in favour of financial institutions and public authorities (and in this latter case, exclusively to guarantee tax or social security receivables). The floating mortgage deed must include a description of the actual or potential secured liabilities, the maximum mortgage liability (which will cover all obligations without allocating mort- gage liability to each), the term of the mortgage and the method to calculate the final secured amount and payable balance. Floating mortgages are not advisable for facil- ity agreements where the syndicate of secured lenders may be comprised, at any time, of non- banking institutions since they will not be legally entitled to benefit from the floating mortgage.
resentations and warranties, covenants, events of default). Two types of master agreements are used in Spain: (i) the International Swaps and Deriva- tives Association (ISDA) master agreement, and (ii) the Spanish law-governed Contrato Marco de Operaciones Financieras (CMOF), which was updated in 2020 by the Spanish Private Banks Association as the local master agreement pre- ferred by local banks. 5. Security 5.1 Types of Security Commonly Used The following security interests are usually grant- ed under Spanish law. Ordinary Pledges Pledges are granted over movable assets and credit rights. For an ordinary pledge to be legally valid, the possession of the collateral or credit right must be transferred to the pledgee. Stand- ard pledges include: • pledges over shares; and • pledges over credit rights, such as those arising from the balance of bank accounts, leasing, operational or services agreements, insurance policies, hedging agreements or intra-group loans. Pledges over the shares of the Target and share- holder loans granted to the Target or SPV are the main security taken in acquisition finance trans- actions, except in the context of asset deals in real estate transactions, where the key security will be the real estate mortgage.
445 CHAMBERS.COM
Powered by FlippingBook