The legal aspects of selling receivables.

What is an assignment of receivables declaration? And which receivables is it even permissible to sell in Germany? Read on for all the answers about the legal aspects of selling receivables.

You have the right to sell your receivables.

In Germany, the legal situation pertaining to the sale of receivables is very simple. In general, any receivable can be sold provided e.g. there is a legal entitlement to payment and no prohibition on assignment. If these conditions are met then it does not matter what kind of payment claim is involved or whether or for how long the payment has already been in arrears. The defaulting payer has no say in respect of the assignment of the receivable.

If you have any other questions about selling your receivables please don’t hesitate to contact us.

For more than 50 years we have specialized in the valuation and acquisition of secured and unsecured receivables portfolios. Please contact our experts if you have any questions. 
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How is a receivable transferred?

For the purchase and transfer of receivables to take effect, two kinds of contracts are necessary: a purchase agreement and an assignment agreement. Normally, both steps are represented in just one contract. This means that generally, only one contractual document is required that governs both the sale and the assignment of the receivables. In addition, a declaration of assignment, usually a one-page document, is formulated to document the transfer to outside parties. The process can be described as four simple steps:
1. 1.


Generally, two parties – a seller and a buyer – negotiate the purchase of receivables
2. 2.


Following agreement, the negotiated receivables and the purchase price to be paid for them, along with the effective date for the transfer of the receivables, are set out in writing. If any other provisions are necessary these will also be recorded in the agreement for the purchase and assignment of receivables. Such provisions could include, for example, quality agreements, grounds for exclusion, or provisions on liability and data privacy in agreements on the purchase and assignment of receivables.
3. 3.


In addition, a deed of assignment or declaration of assignment of receivables is formulated to document the transfer of the receivables.
4. 4.


After signing the purchase and assignment agreement, the claims are transferred to the new creditor with all rights and obligations. If the purchase concerns real estate/land (even if only as collateral), leasehold rights or receivables already legally enforceable, the purchase agreement must be notarized.

Assign your receivables and transfer your risk at the same time

EOS purchases almost any kind of receivables, from cell phone bills to secured or unsecured loans, provided that the claim is legally valid and the defaulting payers are in arrears with their payments. It does not matter how long the payment has been delayed. You can also readily offer legally enforceable receivables for sale. 

If you sell us your receivables, this purchase is of course without recourse. The no-recourse sale of receivables means that that the buyer assumes the del credere risk, i.e. the risk of payment default. In the event of a non-recoverable debt in relation to the creditworthiness of the defaulting payers, there is no recourse to the seller. This means that once the assignment agreement has been signed, EOS bears the full risk of recovery, while you can focus on pursuing your core business again.

Other questions on the legal aspects of selling receivables:

The basic difference lies in the assignment of the receivables. Whereas when you sell your receivables the receivables including the associated rights and obligations change ownership, i.e. are assigned (transferred), in conventional debt collection a fiduciary mandate is assigned, i.e. the debt collection service provider does not own the receivables but acts in the capacity of an authorized agent.

Both forms have their benefits. Read here what the benefits of selling receivables are:

In the event of the sale of receivables without recourse, the buyer renounces any recourse to the seller in the event of a payment default. This means that the seller is not liable for the creditworthiness of the defaulting payers. Nevertheless, the seller is liable for the legal validity of the receivable. If it is not legally valid then the sale of the receivables can be rescinded.
A purchase and assignment of receivables agreement is a purchase contract. The creditor undertakes to sell the outstanding receivables to a third party, to which they thus also transfer the creditor status. Within the scope of the agreement the seller confirms that they own the receivables under negotiation and that there is a legal claim to payment (liability for the legal validity of accounts receivable). Moreover, the receivables purchase and assignment agreement states which specific receivables are under negotiation and which purchase price has been agreed. By means of an assignment declaration incorporated into the agreement, the rights and obligations are transferred from the previous creditor to the new creditor. In addition, the parties agree on an effective date from which the buyer is entitled to receive payments and has to bear the costs associated with the recovery of the receivables. Receivables purchase and assignment agreements often also contain provisions on data privacy, liability, and quality agreements.
Für Sie als Verkäufer unterliegt der Forderungsverkauf in keinem Fall der Umsatzsteuer. Das Umsatzsteuergesetz (UStG) legt in Paragraph 4 Nr. 8 Buchstabe c fest, dass bereits zahlungsgestörte Forderungen im Falle eines Verkaufs nicht der Umsatzsteuer – häufig auch Mehrwertsteuer genannt – unterliegen. Als zahlungsgestört gilt eine Forderung, wenn sie, soweit sie fällig ist, ganz oder zu einem nicht nur geringfügigen Teil seit mehr als 90 Tagen nicht ausgeglichen wurde. Eine Forderung ist auch zahlungsgestört, wenn die Kündigung erfolgt ist oder die Voraussetzungen für eine Kündigung vorliegen. Im Volksmund sind zahlungsgestörte Forderungen bzw. Non-performing Loans (NPL) auch als notleidende Kredite bekannt.

All the information you need on the sale of receivables.