When a person tries to sell his house or a piece of land and the buyer offers to buy him in installments, what can be the best guarantee he can have to ensure the payments: the retention of title or the mortgage?
Of course, both have their pros and cons; however, procedurally speaking, that is, if you end up having to sue the buyer-debtor for non-payment, the best guarantee is the mortgage.
Explain to me: The guarantee offered by the domain reservation is quite broad, since the buyer-debtor does not become the owner, since the property is reserved by the seller; and even if he wants to, he cannot sell the property he bought, since he is not the owner until he finishes paying the price. And this is so because the reservation of title consists in the fact that the creditor-seller reserves the property right for himself and the seller buys as if it were a lease, in which what he pays could be taken as the payment of rent. .
However, it has a very big disadvantage: If the sale that has been made has to be terminated because the buyer-debtor could not make the payment of the property that he owes and the seller-creditor demands it, he will have to return it to the buyer- debtor, the amounts that have been paid up to that time, plus legal interest on that sum of money; For his part, the buyer-debtor will have to pay the seller-creditor, rent for the use of the property, if he received and took possession of the property, for the use he gave it while he was in possession of it.
The disadvantage, in this case, is for the seller-creditor, because he will have to return to the buyer-debtor the sums of money he has received from him, plus interest on what has been received up to that moment, which, in real numbers, is a burden that the seller-creditor will have to bear.
The same does not happen with the mortgage. The seller-creditor does not have to return anything to the buyer-debtor, but, on the contrary, it is he who has to pay an agreed interest on the amount owed, which represents a notable advantage for the seller-creditor. This, of course, happens in the event that the seller-creditor has to sue the buyer-debtor for payment of what he owes.
Since he does not have to return any of the money he received, since that will depend on the value given to the property at the time the mortgagee-debtor, when auctioning off the property that he had sold to the buyer-debtor, determined by judicial approval.
If a bidder does not appear when the property is put up for auction, the mortgagee-creditor will be awarded the property, becoming once again the owner of the property that had been sold to the mortgagee-buyer.
All this highlights the procedural advantage that the mortgage represents over the retention of title. The only advantage of the latter is the ease with which the reservation of title is lifted; On the other hand, in the mortgage, a new deed must be made so that the former owner of the house or property becomes again the owner of the property that he had sold to the mortgagee.
On the other hand, and this represents another advantage of the reservation of title, is that when it is constituted it is established in the deed of sale itself. On the other hand, when it is intended to mortgage, it is usually done in two deeds: One for sale and another for mortgage, although they could be done in the same one, from the notarial and procedural point of view it is more convenient to do it in two deeds.
But, again we ran out of space, so we will continue next week with a new topic or we will return to this last one, in order to continue bringing the Notary to your homes.
*Head of Notary Public Number 5 of Ensenada
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