Short answer: yes, but only in one case. Article 1535 of the Spanish Civil Code lets a debtor extinguish a litigious credit by paying the buyer the price they paid, the legal costs and interest on that price, within nine days of the buyer demanding payment. The Spanish Supreme Court requires ordinary proceedings about the debt, defended and with no final judgment, and rules it out for portfolios sold at one overall price. If the debtor uses it, you get your money back, but not your margin.
In this article
- What you are buying when you buy an NPL
- Litigious credit redemption, step by step
- What the Supreme Court and the EU Court of Justice have said
- How a buyer looks at it before going in
- What happens to your money if the debtor redeems
- Seen from the debtor's side: a way out that can work for everyone
- Common mistakes
- When to get help
- Frequently asked questions
What you are buying when you buy an NPL
An NPL is a non-performing loan (see what is an NPL). When you buy one, the bank or fund assigns you its right to be paid. The Civil Code allows this without the debtor's consent (articles 1112 and 1526 onwards), and the sale carries the mortgage and other security with it (article 1528). The mortgage assignment is made by public deed and recorded at the Land Registry, and the debtor is not bound to anything beyond what they already owed (article 149 of the Mortgage Act). And the registry entry states the price (article 11): what you paid is rarely secret.
Tell the debtor early: a payment to the previous creditor made without knowing of the sale releases them (article 1527). If there is a court case, ask to step in as a party (articles 17 and 540 of the Civil Procedure Act).
Litigious credit redemption, step by step
What the law says
If a litigious credit is sold, the debtor may extinguish it by reimbursing the buyer the price paid, the legal costs incurred and interest on the price from the day it was paid. A credit is litigious from the moment the claim is answered. And the debtor has nine days, counted from when the buyer demands payment (article 1535).
When is there a "lawsuit"?
This is where almost everything turns. For the Supreme Court, a litigious credit is one its holder has taken to ordinary (declaratory) proceedings to have it declared existing and enforceable, which the debtor has disputed, and on which there is still no final judgment (judgment 151/2020 of 5 March). It runs from the defence (or the expiry of the deadline to file one) until a final judgment or settlement. In that same judgment, challenging a mortgage floor clause was not enough.
What the debtor has to pay
The assignment price, the legal costs and interest on the price. Not the debt: that gap is the whole attraction. With the claim, they must show they have deposited the price or given security (article 266.2 of the Civil Procedure Act).
When it does not apply
Assignments to a co-heir or co-owner, to a creditor in payment of their claim or to the holder of the property (article 1536); transfers with no price; and bulk portfolio sales (article 1532).
What the Supreme Court and the EU Court of Justice have said
The Supreme Court treats article 1535 as an exception and reads it narrowly (judgment 151/2020). In judgment 505/2020 of 5 October it added that a portfolio sold for one combined price is a bulk sale, even if each loan is identified.
The most recent, judgment 276/2026 of 23 February, came out of a mortgage enforcement. The Barcelona courts had allowed redemption: the opposition to enforcement was pending and the contract gave that loan a value. The Supreme Court dismissed the claim. That value was only for court and registry purposes; the portfolio had a single price. It did not decide whether opposing an enforcement makes a credit litigious, so that point is still argued.
What if the debtor is a consumer? The Supreme Court notes that article 1535 is not limited to a main residence or to vulnerable people. The EU Court of Justice, in its judgment of 7 August 2018 (joined cases C-96/16 and C-94/17), told a Barcelona court that the unfair terms Directive 93/13 does not apply to selling loans without offering the consumer the chance to settle at the price, nor to rules such as article 1535. Spanish case law governs; we know of no later EU ruling changing that.
How a buyer looks at it before going in
- The stage of the proceedings. Ordinary proceedings, defended and with no final judgment, are the risk scenario. An unopposed enforcement, or a debt already confirmed by final judgment, lowers it sharply. With an opposition pending, it is a grey area. Ask for the court file.
- How you buy. A single loan with its own price in the deed is the target of article 1535. A portfolio at one overall price is outside it.
- Price versus debt. The bigger the discount, the more the debtor gains by redeeming and the more margin you lose.
- The debtor's cash. They need the money, or security, very quickly. With no savings or financing, that is hard.
- The other buy-back route. For assignments made from 8 October 2026 of defaulted mortgage loans on a main residence, if the debtor shows within six months that they qualify under Royal Decree-law 6/2012, the selling bank must buy the loan back at the same price (article 25 bis.5 of Law 5/2019). It comes from a royal decree-law still awaiting approval by Parliament.
The rest of the review is in real estate NPLs in Spain.
What happens to your money if the debtor redeems
You get back the price, the legal costs and interest on the price from the day you paid it, and the credit is extinguished. You do not get back the margin: the gap between what you paid and what you would have made by collecting the debt or taking the property. Buying costs (notary, registry, taxes, due diligence) are not mentioned in the article, so do not count on them.
Redemption does not usually cost you your capital, but it leaves the deal at zero or close to it. So it is priced in from the start. The numbers are in NPL returns. No deal has a guaranteed outcome, and you can lose money.
Seen from the debtor's side: a way out that can work for everyone
For the debtor, redemption means paying what you paid rather than what they owe. For you, it is your money back with interest, quickly, with no years of enforcement or uncertain auction. Not your best outcome, but not your worst.
Even when it does not apply, the idea works: a settlement between your price and the debt, time for the debtor to sell the house themselves, or a deed in lieu of foreclosure can leave both sides better off than a trial. Their side of the table is in a fund has bought my mortgage: what can I negotiate and in deed in lieu of foreclosure: when it makes sense.
Common mistakes
- Buying a single loan without reading the court file. What matters is whether the debt is disputed and whether there is a final judgment.
- Demanding payment with no provable date. The nine days run from that demand, so send it in a way you can prove.
- Taking the margin for granted. With live proceedings, it is not.
When to get help
Before you buy a single loan with a case under way, or when the debtor offers to redeem. From Valencia we review the court file, the assignment deed and the registry, and tell you what the risk is and how much margin is left. The decision is yours.
Frequently asked questions
Can a debtor keep their debt by paying what the fund paid for it?
Yes, but only if the credit was litigious when sold and was not sold within a portfolio for one overall price. They pay the price, costs and interest on the price within nine days (article 1535 of the Spanish Civil Code).
When is a credit litigious under the Spanish Civil Code?
From the moment the claim about it is answered. The Supreme Court also requires ordinary proceedings on its existence or enforceability, with no final judgment when it is sold.
How long does the debtor have to redeem a litigious credit?
Nine days, counted from when the buyer of the credit demands payment (article 1535 of the Spanish Civil Code). It is a strict deadline that cannot be extended.
Does redemption apply if my loan was sold as part of a portfolio?
No, if the portfolio was sold in bulk for one overall price. Supreme Court judgments 151/2020, 505/2020 and 276/2026 confirm it.
What does the NPL buyer get back if the debtor redeems?
The price, the legal costs and interest on the price from the day it was paid. The buyer loses the expected margin and, probably, the buying costs.