Acquisition of Non-Performing Loans (NPL) and Real Estate Owned (REO) Properties with Specialized Legal Advice

28 October, 2025
–
Real Estate
–
Neus Vallara

!Legal advice on NPL and REO investments – MES Advocats

The purchase and sale of non-performing loans (NPL) or real estate owned properties (REO) has become one of the most attractive real estate investment opportunities for both small and large investors.

According to a recent article published by El Economista, in 2025 the sale of NPLs will reach its best year since 2019, demonstrating the growing interest of investors in this type of asset.

At MES Advocats, we offer specialized legal advice on the acquisition of NPLs and REOs, guaranteeing the highest level of legal security throughout all stages of the process.

What is an NPL (Non-Performing Loan) and why can it be a good investment?

NPLs are loans that have not been repaid by their debtors and have therefore ceased to be productive for financial institutions.

To clean up their balance sheets, banks usually transfer these loans to private investors at a price lower than the outstanding debt, with the objective of obtaining a short- or medium-term return.

This operation allows investors to access assets with significant discounts compared to their real market value, making NPL investment a particularly interesting option.

What are the key factors to acquire an NPL with legal certainty?

Investing in non-performing loans can be highly profitable but also involves a certain level of complexity.

For this reason, having multidisciplinary legal advice is essential. Specifically, the areas of law whose knowledge is fundamental for investing in NPLs are as follows:

Real estate law: when the loan is secured by a mortgage, it is essential to analyze the legal status of the property, as enforcement of the loan may lead to the acquisition of the real estate asset.

Tax law: the profitability of the investment depends on its associated costs. Therefore, tax planning of the operation is crucial.

Procedural law: if the loan is under judicial proceedings, its procedural situation and the estimated timelines until the recovery of the property must be carefully assessed.

At MES Advocats, our team of experts in real estate, tax, and procedural law has extensive experience advising both investors and financial institutions. This comprehensive vision allows us to accompany you through all phases of the process.

Express Due Diligence of the property: an essential step

In the case of acquiring loans secured by a mortgage over real estate, we carry out an express Due Diligence that includes:

Registry review: ownership, encumbrances, and their correspondence with the cadastral description.

Occupancy status and analysis of possible lease contracts.

Identification of debts associated with the property that could result in direct or subsidiary liability for the new owner (Property Tax, Homeowners’ Association fees, etc.).

All this is carried out based on the documentation provided by the institution and the information available in public records or from public administrations.

If you would like to learn more about what a Due Diligence entails, what aspects are analyzed, when it is advisable to carry it out, and its benefits, you can read this article published a few weeks ago on our blog about Real Estate Due Diligence.
If you are interested in learning more about Property Tax (IBI) debts that may be claimed from the buyer, you can also read this article on our blog.

Loan analysis and its judicial status

Examining the loan is key to determining its viability and profitability. Among the factors to consider are:

The amount of the debt and its relation to the market value of the property.

The status of any ongoing judicial proceedings, if applicable.

The estimated timelines for recovering the property.

Our team of lawyers specialized in procedural law has extensive experience in handling mortgage proceedings throughout the national territory and is capable of performing a quick analysis of the judicial situation and an estimation of the approximate time until property recovery.

Tax planning and operation costs

To accurately calculate profitability, it is essential to anticipate all associated costs:

Taxes and expenses related to the acquisition of the loan or the judicial adjudication of the property.

Judicial deposits if the adjudication value exceeds the debt.

Costs for adapting or refurbishing the property prior to commercialization.

Regularization of debts associated with the property (Property Tax, Homeowners’ Association fees, etc.).

At MES Advocats, we help our clients project these scenarios through our profitability calculator for NPL and REO investments, specifically developed for this type of investment.

What is an REO (Real Estate Owned)?

When a financial institution awards itself ownership of a property through judicial proceedings, the loan is written off, and the asset becomes an REO.
Although this type of asset improves the bank’s balance sheet, these assets also generate maintenance and management costs, which is why banks seek investors to purchase them.

For the acquisition of an REO, an express Due Diligence is also required, focusing on tax aspects, adaptation and refurbishment costs, occupancy status, and possible contingencies.
It is common for these properties to be occupied by former owners or by third parties without legal title, making it necessary to initiate judicial eviction proceedings.
Our procedural law team has extensive experience in this type of procedure, allowing us to streamline the recovery of possession of the property.

How to access investment opportunities in NPL or REO?

Thanks to our more than twenty years of experience, at MES Advocats we have access to portfolios of mortgage loans secured by real estate located throughout the national territory.

Select your areas of interest and preferred asset types, and we will customize an investment perimeter tailored to you.

Our experience allows us to identify the best market opportunities for our investor clients.

Contact us today through this link and discover how we can help you achieve your financial goals. Our team will be delighted to design a personalized strategy that ensures the success of your investments.

At MES Advocats, your success is our commitment.

###


NPL InvestmentReal estate assetsReal estate due diligenceReal estate investmentReal estate lawReal Estate Legal AdviceREO PurchaseTax planning

---