How to protect a real estate against possible repossessions?
As owners of a real estate, we are always weighing the risks that the family heritage runs throughout our lives. For example, when undertaking businesses that involve taking risks, it is natural that a question arises: What means exist to protect the home that is the family patrimony? Especially in a possible bankruptcy situation, how to protect a real estate against possible liens and creditors?
In this article you will discover some actions that we can consider on how to protect a real estate.
Establish a matrimonial property separation regime
If the property is the property of one of the spouses, considering the separation of property is one of the ideas on how to protect a property against a possible future repossession. The property separation regime is legally granted before a notary public in a marriage agreement document. It can be done before or after the marriage occurred. Remaining, yes, a period of 12 months to marry or everything that has been stipulated in the aforementioned capitulation document will be void. This act constitutes an agreement of a preventive nature, which establishes certain guarantees to respond to a possible crisis situation in the future.
In this regime, the spouses each maintain the freedom to manage, dispose and administer their own assets. It is understood that the debts and obligations that one of the spouses has contracted are their sole responsibility, the other spouse being safe from creditors. This freedom does not free them from being subject to a list of limitations established by the Civil Code in its articles 1318 to 1320. Among them, two that are relevant to the subject at hand:
- That both spouses have joint and several liability for debts acquired for the maintenance of the family, to which they will respond with the common goods and those of the debtor spouse. Being able then to respond subsidiarily with the assets of the other spouse (article 1319).
- That both spouses need the consent of the other in case of wanting to have the habitual residence, even if it is owned by only one of them (article 1320). This is part of how to protect real estate.
Are marriage agreements valid before third parties?
No. The document must be registered in the Civil Registry for it to be valid against possible civil lawsuits from third parties. It is important to point out that if either of the spouses is an entrepreneur, the marriage agreements must be registered in the Mercantile Registry of their domicile so that they are valid before third parties (art. 9 RRM). The economic matrimonial regime of the entrepreneurs constitutes a data of interest for commercial transactions and must be published in the corresponding Bulletin for use in the resolution of commercial complaints. This is particularly important for self-employed entrepreneurs, who are liable with their entire assets for debts contracted to third parties.
The responsibility of the self-employed entrepreneur is unlimited and responds in case of seizure with the business assets and personal assets. Finally, marriage agreements, when they affect real estate, must be duly registered in the Property Registry.
Avoid being a guarantor
When a person acts as a guarantor as a personal guarantor, they sign the commitment to bear the same obligations as the person guaranteed. Thus, in the event that the debtor defaults on payment, the guarantor is obliged to respond with all of his present and future assets. This position is especially detrimental when it is signed under the figure of joint and several guarantee.
Under this figure, the guarantor renounces his legal rights of exclusion, division and order, so if you want to know how to protect a property you should avoid this. Such rights establish that the creditor should execute his actions first against the debtor’s assets before against the guarantor’s assets. The lack of due explanation of these clauses are grounds for nullification of this obligation and are considered abusive clauses.
There is the alternative of acting as guarantor under the figure of real guarantee. In this case, the guarantor offers to support the guarantor with a single asset. This figure allows limiting the guarantor’s obligation and reduces the risk of loss. The collateral can be a property or shares of a company.
Freelancers, What Can You Do To Protect Your Estate From Foreclosures?
Self-employed workers are natural persons whose exercise of a commercial, industrial or professional activity causes them to be exposed to unexpected litigation, such as doctors, accountants or lawyers, as well as entrepreneurial entrepreneurs. Normally these people work under unlimited liability, which means that before possible liens they will respond with all of their assets, personal and business, present and future. For them, the figure of Entrepreneur of Limited Responsibility (ERL) was created, as of 2013. Law 14/2013 establishes that if the entrepreneur is in the process of disposing of assets due to debts incurred that derive from his economic activity, his habitual residence is unattachable. If you want to know how to protect real estate against embargo s this is an option.
To qualify for this figure, a series of requirements are established:
- That the house does not have a value that reaches 300,000 euros.
- That the property is fully identified in the document registered in the Mercantile Registry. It should be noted that the aforementioned protection to the habitual residence will not be effective in the event that the entrepreneur has been sentenced for fraud or gross negligence before third parties, during the fulfillment of his obligations.
On the other hand, the legal status of a Sole-Shareholder Limited Company allows limiting the responsibility of the self-employed worker, and also grants them attractive tax benefits. This figure allows to protect not only the habitual residence, but all the assets of the entrepreneur and against all types of creditors. The Capital Companies Law defines this company as one in which only one person owns the company. By law, the company is obliged to expressly state its status as a sole proprietorship. For this reason, it will be explicitly included in every advertisement, document, correspondence, order notes or invoices.
Constitute a trustee replacement
By constituting a trustee substitution, patrimonial security is obtained. Creditors may not seize and / or execute the assets that are registered within the trustee substitution. This legal figure allows planning the legacy of assets to their heirs and is very important in succession matters. As established in the Civil Code in article 781, in the trustee substitution the owner of a set of assets, grants their assets, or part of them to a person, who keeps them with the purpose that after the death of the owner, proceed to transmit them to his heir.
There are three parties involved in the trustee substitution:
- The settlor, who is the owner, the testator and who constitutes the trustee substitution.
- The trustee who is the person who in good faith agrees to preserve and transmit the inherited assets.
- The trustee heir, the person who will receive the trust assets that will be transmitted by the trustee. The importance of this figure is that the assets in trust may not be seized, nor may it be subject to any alienation arising from the bankruptcy or the actions of the creditors of the settlor or the trustee. The completion of the trustee substitution occurs within the term that has been defined in the document, after the death of the trustee.
Entrepreneurship and business activity in general can expose us to a high risk of loss of personal assets, which would affect the entire family group. As you can see, depending on the scenario each person is in, there are various alternatives on how to protect real estate. The actions described can help us protect our assets against creditors.
If you have any questions related to the real estate sector, at Sky Marketing we will be ready to help you. Our experts will help you solve any procedure. Contact us!