Right to have property excluded from insolvency assets and a non domino acquisition

Abstract

In this work the author examines the legal framework (governed by artículo 80 of the Insolvency Law) with regard to the right of owners to have their property excluded from the assets or estate of an insolvent party, as well as the legal position of the owner seeking exclusion where the said right cannot be exercised because the property in question has already been disposed of by the insolvent party, prior to the declaration of insolvency, to a third registering party from whom it cannot be recovered (art. 81 Insolvency Law). The author connects this provisions of the Insolvency Law with artículos 38 and 34 of the Mortgage Law, focussing her research on exclusion of real property by the owner. Therefore the author examines situations where real property is registered twice, in favour of both the insolvent party and the owner seeking exclusion, situations where the property is incorrectly registered in favour of the insolvent party, situations where the insolvent party also received the property other than from the legal owner [a non domino], and situations where, prior to the declaration of insolvency, the property was disposed of, a non domino, by the insolvent party in favour of a third registering party and concludes that the party that registered the property for the first time cannot be considered a third registering party, even following the enactment by Law 13/2015 of artículo 208.5 of the Mortgage Law. Likewise the author concludes that the party seeking exclusion only has to prove (by way of a registry certificate) that there exists an acquisition recorded at the Property Registry in the name of a third party who acquired from the insolvent party for value, prior to the declaration of insolvency (given that the good faith of the said third party is presumed), for artículo 81 of the Insolvency Law to operate in favour of the party seeking exclusion, who may apply for the proceeds of the loan to be allocated to settling the consideration payable by the party receiving the property other than from the legal owner, or for a loan equivalent to the value of the property to be included among the insolvency liabilities.