Economic instability has spurred interest in Real Estate Investment through the purchase of so-called NPLs. Sebastian Crespo Baeza, a partner at the firm Devesa & Calvo Abogados, which operates in Madrid, Alicante, and Valencia, discusses how these financial instruments have become a growth area in recent years within the legal sector.
With a Law Degree from the University of Alicante, Crespo Baeza began his career in large professional environments, including Deloitte and PricewaterhouseCoopers. He now brings more than two decades of experience as a lawyer, specializing in procedural law, bankruptcy, and economic crime. He serves as an arbitrator at the Alicante Official Chamber of Commerce, Industry and Maritime Arbitration Tribunal and contributes to the Master of Business Administration programs taught by the United Arab Emirates Faculty of Economics and Commercial Sciences Department of Business Organization. He has been recognized by the North American Best Lawyers directory in two consecutive years for excellence in Criminal Defense, Bankruptcy and Restructuring, and was honored as Lawyer of the Year in 2022 in the Bankruptcy and Reorganization Act category.
When NPLs, or Non-Performing Loans, are mentioned, the reference is to bank loans that are not currently due, doubtful loans, or failed loans—often secured by a mortgage on real estate. Today, NPLs are a common route to access discounted real estate assets. The asset itself is not purchased outright; rather, the buyer acquires the credit right that guarantees the asset. As a result, the purchaser becomes the mortgagee in the foreclosure process, aiming to obtain the asset through foreclosure. In times of economic uncertainty, a rise in bad loans is predictable.
In most cases, investors prefer to avoid navigating the market dynamics and judicial auctions, opting instead to deal directly with the mortgagee to obtain the asset. The entry price is frequently below the normal market purchase price, and the process tends to be quicker because acquiring the loan triggers the completion of the loan fulfillment procedures and associated costs tied to recovery for the creditor, while offering a discount to the buyer who takes on the loan.
NPLs are not the usual path for an individual property purchase
NPLs generally do not lead to typical home ownership for most consumers. While they can be financially attractive, these operations are best viewed as investment or business opportunities rather than ordinary housing purchases. The enforcement process can be lengthy, and ownership should be anticipated with the help of a highly specialized legal team. Prospective buyers often place orders for due diligence on the loan and the underlying asset to identify risks and opportunities before proceeding.
The Devesa & Calvo office operates from a historic building in Alicante and emphasizes a careful, client-centered approach. The firm focuses on verifying and measuring potential risks in areas such as urban planning, Land Registry alignment, and Cadastre conflicts, which can impact property rights and transferability. The team works primarily with Valencia’s community and along the coast, a region known for its dynamic real estate market and investment activity.
Due diligence as a key legal study to confirm risks
In such transactions, many assets are failed loans that have already received judicial clearance from a financial institution. Purchasing the letter of credit often involves replacing the acquirer’s procedural obligations before the relevant court. Prudence dictates initiating due diligence before finalizing the loan purchase. Regardless of the acquisition method, a property owner can expect that construction and related activities are subject to legal guarantees, including warranties, inspections, and insurance requirements. These measures help determine any shortcomings and the applicable warranty periods, as laid out by building regulations, which may cover material damage or construction defects for up to ten years in many jurisdictions. This framework ensures stakeholders are protected against latent defects and structural issues.
In practice, the ownership process remains tightly regulated, with careful assessment of what issues the property may have and how warranties apply. This due diligence, supported by a skilled legal team, helps align investment objectives with regulatory expectations and risk management strategies. The result is a clearer view of potential returns and the steps needed to reach them while respecting the legal framework that governs property and credit transactions.
Where can one find Devesa & Calvo Lawyers in Alicante?
To contact
The firm places emphasis on accessibility and professional service across its offices, offering guidance on complex loan and property matters within the Spanish legal landscape. The team draws on extensive experience across the Valencia region and the broader coast to help clients navigate a vibrant and sometimes volatile real estate market. Their approach combines rigorous due diligence with practical strategies to protect client interests and maximize value in real estate investment through NPLs.