Foreclosure: Turning the Property Over to the Bank Will Effectively Cancel the Mortgage

12 July 2010

On Wednesday June 16, 2010, the Congressional Housing Commission approved a parliamentary discussion document which gave the government three months to determine the legal reforms necessary to completely conclude foreclosures with the handing over of the mortgaged property as payment.

The objective of this discussion is to allow the debtor to cancel said mortgage by turning over the attached property when the financial entity forecloses on a mortgage loan.

Currently, Article 570 of the Spanish Rules of Civil Procedure determine that the foreclosure only ends when the creditor is fully repaid, and therefore, if the property value is less than the mortgage amount at the time of foreclosure, even when the mortgaged property is turned over to the bank, the debt remains and the creditor can seize other assets until the total debt amount is repaid.

For further information please contact Ana Lizano: