Assisted Antichresis: how to finance dependency with the income from your home

Traditionally, the reverse mortgage has been the best-known solution to convert a home into liquidity, but in recent years a legal alternative with great potential has emerged: the assisted anticresis, aimed at financing the dependency of elderly people.

This instrument, traditionally regulated in the Civil Code (arts. 1881 and following) and in the Civil Code of Catalonia (arts. 569-23 and following), has gained new relevance following the Additional Provision 13.º of Law 5/2019, on Real Estate Credit Contracts, introduced by Law 31/2022, of the General State Budgets.

This provision does not create a new figure, but rather strengthens and promotes the use of anticresis as a financing mechanism, especially when its purpose is to cover expenses arising from dependency or personal assistance.

To facilitate its use, the regulation provides for tax incentives and reductions in notarial and registration fees, equating its treatment to that of the reverse mortgage.

The assisted anticresis combines the elements of the classic real right of anticresis — regulated in articles 1881 to 1886 of the Civil Code — with a specific social purpose: to finance care for dependent persons from the income generated by a property.

In accordance with article 1881 of the Common Civil Code and article 569-23 of the Catalan Civil Code, by means of anticresis the creditor acquires the right to receive the fruits of a debtor's property, applying them to the payment of interest and capital.

In its assistance modality, these fruits are the rental income from the property, which are applied to the repayment of the credit granted to the dependent holder.

The loan is usually formalised by means of a public deed of credit with anticresis guarantee, with a specific purpose for the payment of residence, day centre or home care.

• The accredited person: a person officially recognised as being in a situation of dependency, in accordance with Law 39/2006, on the promotion of personal autonomy and care for people in a situation of dependency.
• The creditor or financial institution: grants a loan or advance and, in return, receives the income from the property (usually, the rental income).
• The rental manager or administrator: may be the creditor themselves or a third party appointed by them to whom the exploitation and administration of the property is assigned, taking on the management of the lease, collection of rents and accounting.
• The tenant: pays the rent directly to the managing entity or to the creditor.

The relationship is structured so that the property “works” to cover the owner’s care costs, without the need to sell it or encumber the main residence.

The property offered in anticresis must be free of tenants and occupants, so that the anticretic creditor can manage and lease it freely, thus guaranteeing the effectiveness of the operation and, where appropriate, the right to request judicial sale in case of non-payment.

However, although in theory a procedure could be initiated to request the judicial sale of the asset, in assistance-type anticresis it is common for the creditor to expressly waive the realisation of the value.

In these cases, the anticresis acquires a merely satisfactive function, limited to the collection of credits through the receipt of rents or fruits, and the exercise of personal actions against the debtor is excluded.

The property may be contributed by a third party, who will have the status of non-debtor anticretist, responding only with the asset offered as collateral.

The Additional Provision 13.ª of the LCCI does not exclude the possibility that the anticresis may fall on the owner’s main residence, provided that the conditions set out in the regulation are met. Its purpose is twofold: to provide liquidity to people in a situation of dependency through obtaining income derived from their home, and to encourage these properties to enter the rental market.

In practice, people with a recognised degree of dependency — especially levels II and III — usually leave their main residence to enter care centres, without returning to occupy it, so the home can legitimately be used for rental. For this reason, the law requires that there be an administrative resolution certifying the degree of dependency and that the anticresis deed expressly states the commitment to allocate the home to the rental market, a necessary condition to access the tax and fee benefits provided.

The reason is practical: the main residence is not suitable for renting, as the creditor may need to return to occupy it if they decide to leave the care home or change their care circumstances.

Therefore, it must be expressly stated in the deed that the property given as collateral no longer constitutes the debtor’s main residence, an essential requirement for the application of the reduced regime. In practice, at the time of signing the operations, the creditor has already entered or is in the process of entering a care home for the elderly.

The LCCI, amended by Law 31/2022, on the General State Budgets for 2023, introduced Additional Provision 13.ª, which recognises a treatment comparable to that of the reverse mortgage for credits secured by anticresis intended for the financing of care services, establishing a series of requirements.

1. Assistance purpose: the credit must be mainly intended for the payment of the costs of residence or home care for the dependent.
2. Affected property: the property given in anticresis must be intended for the rental market, so that the rents generated are applied to the debt.
3. Record in public deed: the deed must expressly include
4. the purpose of the credit for assistance purposes, and
5. the borrower's commitment to rent out the property.
6. Material transparency: the operation is subject to the protective regime of the LCCI, which requires a prior notarial certificate of transparency, explanation of the product and warning about its implications.
7. Tax and fee benefits: it enjoys the same treatment as the reverse mortgage in Tax on Documented Legal Acts and in notarial and registry fees.

It is worth highlighting, however, that these requirements — assistance purpose, credit destination to care and rental of the property — are a necessary condition to access such benefits.
Therefore, it is perfectly possible to establish an anticresis with an assistance purpose that does not meet all the requirements demanded by the LCCI; in such case, the contract will be fully valid according to the Civil Code or the Civil Code of Catalonia, but will not benefit from the tax or fee advantages provided for in the aforementioned additional provision.

The notary must verify not only the formal aspects, but also the real purpose of the credit, the suitability of the property for renting and the understanding of the contract by the dependent person.

In many cases, the legal supports provided for in Ley 8/2021 will intervene, ensuring the effective participation of the person with a disability in the decision.

During the granting, it is recommended to record the care budget, the rental plan and the management conditions of the property (who rents it, what expenses are charged and how accounts are rendered).

The core of the operation lies in the fact that the rented property generates income which the creditor applies directly to the repayment of the loan. This income replaces the periodic payment that the debtor would make in a traditional mortgage.

In practice, two flows can coexist:

• An initial disbursement or monthly payments that the entity provides to the borrower to cover immediate care expenses.
• The periodic receipt of the income which is allocated to the repayment of the loan.

If the income exceeds the accrued interest, the excess reduces the principal; if it is lower, debt accumulates until its final settlement, usually upon the death of the borrower.

The creditor or the managing entity usually assumes the management of the lease, the collection of rents and the payment of charges, with the obligation to report periodically to the owner or their representatives.

In Catalonia, article 569-25 CCCat reinforces this duty of annual reporting, guaranteeing transparency and preventing abuses.

The creditor or the managing entity must manage the asset diligently and report annually to the owner, in accordance with article 569-25 CCCat. This control makes the Catalan system a model especially suitable for operations with a social or welfare purpose.

However, even if not subject to Catalan law, it is advisable to establish rules on reporting.

The assistance anticresis can be extinguished by:

• Total payment of the debt,
• Resolution due to breach of the obligations of the parties,
• Death of the debtor, at which point the credit is settled charged to the estate of the deceased. If the property remains rented, the rents generated until the final cancellation are applied to the outstanding balance.

Once the debt is extinguished, the registration cancellation must be carried out, formalising it by public deed with the corresponding payment letter or statement from the creditor.

It should also be borne in mind that the effective obtaining of fruits or rents is part of the own risk of the anticretic creditor. If the property does not generate income, is not rented, or produces returns lower than expected, this does not constitute a breach attributable to the debtor, but rather an inherent risk in the economic exploitation of the asset.

Hence the importance that the creditor —or the appointed manager— administers the property with due diligence, maintains its proper conservation, and seeks its profitability through professional management of the rental.

Unlike the reverse mortgage, the assisted anticresis allows obtaining liquidity without losing ownership of the property.

The debtor retains ownership and, once the debt is extinguished, freely recovers possession.

The law allows the encumbered property not to be the main residence, which makes it easier for families with more than one property to turn a second home into a source of welfare income.

Loans with an assistential anticresis guarantee enjoy the same tax treatment as the reverse mortgage:

• Exemption from AJD.
• Reduction of notarial and registration fees.
• Taxation only in the event of a subsequent transfer of the property.

The notarial intervention, material transparency and the obligation to allocate funding to care ensure a framework of effective protection against possible abuses.

The system combines autonomy and legal control, in line with the principles of Law 8/2021 and the New York Convention on the Rights of Persons with Disabilities.

The operation depends on the success of the lease. Vacancies, non-payments or extraordinary expenses can affect profitability and delay amortisation. Therefore, it is advisable to choose properties in areas with high demand and good maintenance.

It requires professional management: hiring, maintenance, insurance, taxation and accountability. The intervention of specialised management companies or guardianship foundations is advisable.

In Common Law, the enforcement of the guarantee is governed by article 1884 CC (judicial sale), a procedure slower than mortgage enforcement.

By contrast, in Catalonia, the anticretic creditor can realise the value of the property through direct sale or notarial auction, which gives greater effectiveness to the guarantee.