Law and regulation of Covid-19 loan moratoriums in Spain

Yes.

Not applicable.

A general moratorium on loans has not been approved in Spain for the time being, except in specific cases. 

Royal Decree-Law 8/2020, of 17 March, on urgent and extraordinary measures to address the economic and social impact of COVID-19 (the “RD-law 8/2020”), approved by the Spanish Government (as recently amended by Royal Decree-Law 11/2020, of 31 March, on urgent complementary social and economic measures to cope with COVID-19 (the “RD-law 11/2020”)), sets forth a moratorium (the “Mortgage Moratorium”) where the debtor becomes vulnerable following the declaration of a state of emergency on 14 March on mortgage loans granted to individuals for the acquisition of:

• the main residence of the debtor
• real estate properties which are used for the economic activity of self-employed individuals
• residential real estate which is rented to individuals who are not paying the rent since the beginning of the state of emergency or up to 1 month after the end of the state of emergency. 

The conditions required to benefit from the Mortgage Moratorium are set out in article 9 of RD-law 8/2020 and article 16 of RD-law 11/2020, which defined such vulnerability as the fulfilment of the following cumulative requisites:

• unemployed debtors or, in the case of employers and the self-employed, a substantial loss of earnings or drop in sales (at least 40%)
• when the family’s combined earnings for the month prior to the moratorium application fall below three times the Multiplier for the Public Income Index (IPREM), increased by 0.1x per dependent child or person over the age of 65, or 0.15x per dependent child for single-parent families, or up to 4 or 5 times the IPREM due to disability of the debtor or a family member
• when the mortgage payment, including basic expenses and supplies, exceeds 35% of the household’s combined net income; and
• when the family has suffered a significant change in its economic circumstances (1.3x increase in the mortgage burden on household income) as a result of the health crisis.  

In addition, RD-law 11/2020 also sets forth the possibility of: 

• a moratorium on obligations arising from unsecured loan or credit facility agreements (the “Moratorium”), subject to vulnerability criteria as defined in the previous paragraph, provided that the debtor is an individual; and 
• refinancing certain loans granted by the General Secretariat for Industry and Small and Medium-sized Enterprises.   

Royal Decree-Law 19/2020, of 26 May, adopting measures in the agricultural, scientific, economic, employment and social security and tax fields to cope with COVID-19 (the “RD-law 19/2020”), provides for the possibility that financial institutions which are members of the sectoral Framework Agreement may agree to certain moratoriums. In other words, this type of moratorium would be the one agreed between the parties within the scope of the sectoral Framework Agreements signed by the lenders, through their representative associations.

Furthermore, Royal Decree-Law 25/2020, of 3 July, on urgent measures to support the reactivation of the economy and employment (the “RD-law 25/2020”), has included a moratorium on mortgage loans for the financing of real estate property in relation to the tourism sector.

Also, article 18 of Royal Decree-Law 26/2020, of 7 July, on economic recovery measures to cope with COVID-19 in the areas of transport and housing (the “RD-law 26/2020”), establishes, in favour of legal entities and the self-employed whose business activity includes the provision of public passenger transport or goods transport, a moratorium on the payment of the principal of the instalments regarding loans, leasing and renting of vehicles dedicated to such public and goods transport. 

Under RD-law 11/2020, a Mortgage Moratorium was available for request until 29 September 2020, and in principle the duration was up to 3 months; in any case, it would cease to be applicable as soon as the specific debtors ceased to fall within the vulnerability criteria. 

The duration of the measures set out in RD-law 11/2020 are: 

• regarding the moratorium: for up to 3 months after being requested, provided that the debtor shows evidence of meeting the requirements, the lender will automatically suspend the credit obligations of the debtor; and 
• regarding the refinancing of certain loans granted by the General Secretariat for Industry and Small and Medium-sized Enterprises: the beneficiaries of this financial support for industrial projects may request an amendment on the prepayment calendar up to 2 years and 6 months from the date on which Royal Decree-Law 463/2020, of March 14 (the “RD-law 463/2020”), entered into force (i.e. 14 March 2020), if as a result of the crisis caused by COVID-19, the beneficiary has suffered periods of inactivity, reduction in the volume of its sales or supply disruptions in the value chain.

Measures arising from RD-law 19/2020 apply to the group of people benefiting from a deferment of their debts (whether or not they are economically vulnerable), and allows those people economically vulnerable to extend the deferment once the legal moratorium period has expired.

Any RD-law 25/2020 moratorium will last for a period of 12 months for financing operations subscribed between the debtors and the financial entities.

Article 20 of RD-law 26/2020 set forth a period of up to 6 months from entry into force of RD-law 26/2020 (i.e. 9 July 2020).

No extension of the periods of any of the abovementioned measures has been approved so far.

None of the measures mentioned herein are mandatory. Borrowers within the scope of the Relevant Acts may request application of the moratorium to the relevant lender and, provided that the debtor shows evidence of meeting the requirements, the lender shall proceed to its implementation.

Moratorium on mortgage loans regulated under RD-law 8/2020 is available to both commercial and consumer loans, since mortgage loans granted for the acquisition of real estate properties used for the economic activity of self-employed individuals, which could be considered as commercial loans, fall within the scope of application of the moratorium. Available only for individuals, not for corporate borrowers.

Moratorium on the obligations arising from unsecured loan or credit facility agreements regulated under RD-law 11/2020 is applicable to commercial and consumer loans, but only granted to individuals, not to corporate borrowers. 

Both article 3 of RD-law 25/2020 and article 20 of RD-law 26/2020 provide for a moratorium which may be available for self-employed individuals and corporate borrowers.

All type of lenders.

This aspect has not been regulated. However, it is arguable that Spanish debtors can apply for these measures even when the loan is governed by foreign law or has been granted by a foreign entity, considering the general rules of international private law.

With regards to the moratorium on mortgage loans, according to article 6 para. 2 Rome I Regulation, if the consumer loan agreement is lawfully governed by foreign law, such choice of foreign law may not, however, have the result of depriving the consumer of the protection afforded to him by mandatory consumer protection provisions of the country where the consumer has his habitual residence. However, the measures mentioned are non-mandatory provisions, as the borrower may continue its payments and the parties may agree otherwise. 

Notwithstanding the above, the Relevant Acts in their entirety could be considered a mandatory provision in the meaning of article 9 Rome I Regulation as it pursuits public interests. If this is true, a foreign court may (not must) apply the provisions of the Spanish payment moratorium also to a loan agreement with a Spanish consumer that is lawfully governed by such foreign law (article 9 para. 3 Rome I Regulation). Additionally, if the chosen law is more favourable to the consumer, the consumer may also choose to exercise the rights afforded to him under the chosen law.

Yes. 

The moratorium on mortgage loans for the financing of real estate property in relation to the tourism sector established in RD-law 25/2020 shall only be applicable to loan agreements which were in force prior to the date on which RD-law 463/2020 entered into force, if as a result of the crisis caused by COVID-19 (i.e. 14 March 2020).

The Mortgage Moratorium shall only be applicable to loan agreements which were in effect on the date of entry into force of the Relevant Acts (i.e. 17 March 2020 as regards the Mortgage Moratorium and 31 March 2020 as regards unsecured loan or credit facility agreements). 

Article 20 of RD-law 26/2020 shall only be applicable to agreements which were in effect prior to the entrance into force of RD-law 26/2020 (i.e. 9 July 2020).

The moratoriums described above shall lead to the suspension of all payment obligations thereunder in the terms described above and to the suspension of the accrual of interest. During such moratorium, the lender shall neither claim the payment of any interest, principal, fee, or any other cost, nor may accelerate the loan or credit facility on such basis, with the following exceptions: 

• deferment based on RD-law 19/2020, in which interest may continue to accrue as agreed under the initial agreement
• moratorium of RD-law 25/2020, where during the moratorium period, the lender may not claim the payment of the principal amount of the loan; and 
• moratorium of RD-law 26/2020 on the payment of the principal of the instalments regarding loans, leasing and renting of vehicles dedicated to public and goods transport.    

Yes. However, be aware that, although the moratorium does not formally require entering into a deed of amendment of the relevant agreement for its effectiveness, the extension of the initial maturity of a mortgage loan agreement or any other credit or loan facility agreement secured by a registrable right, will need to be notarised and filed with the relevant registry to produce effects vis-à-vis third parties. However, it has to be considered that there are some moratoriums, such as the ones provided for in RD-law 19/2020 and RD-law 26/2020, which also provide for the reallocation of quotas without changing the maturity date.

Please see question 3.2 above.

The Relevant Acts do not regulate this aspect; therefore, the parties will be subject to the clauses of their agreement. A general reference is made to the inapplicability during the moratorium of acceleration clauses, but it seems to be referred to the event of default caused by the breach of payment obligations.