Until now it seemed that, unless expressly agreed otherwise, dation in payment to settle a mortgage debt was more of a dream than a reality. However, it seems that compulsory dation in payment is approaching and it does so through the courts.
Last December in Barcelona, a judge ruled in favour of a mortgagor, annulling two clauses in his mortgage loan contract, considering them abusive due to their lack of transparency. In addition, the financial institution is accused of not acting in good faith and not providing all the information. With its ruling, the door could be opened to compulsory dation in payment.
In the case in question, the bank had already carried out the foreclosure, taking over the home of the affected party after he had already paid 60% of the mortgage loan. Moreover, the financial institution had sold the property and, nevertheless, maintained its demand that the mortgagor should pay the remainder of the debt with the rest of his assets or, failing that, that the joint guarantors should do so. In order to do this, it relied on the personal and property liability clauses that had been signed in the contract.
However, the judge saw several particularly important nuances in this case. Firstly, the affected parties were not informed of the relevance of these two clauses, which were masked by “overwhelmingly exhaustive information”, as the ruling states, and as they are not understandable, they cannot form part of the contract and are therefore null and void and unenforceable.
Although it is a disputed ruling and the financial institution’s appeal is awaited, if the courts decide to follow this line, it would be bringing thousands of mortgaged and indebted people closer to dation in payment, and it would be done through the courts.