Limited responsibility mortgage

Mr. Blanco

Dear Mr. Blanco,

My parents bought a property in Spain over 15 years ago. Unfortunately, they had trouble paying the mortgage and the bank foreclosed and proceeded through auction to sell the property. Though the auctioning the Bank obtained 100.000€, but the total amount to be recovered from the loan was 120.000€. The question is, can the bank order my parents to pay the balance of the pending debt??

Thank you for your inquiry. With regard to your question, it is important to know that article 1911 of the Spanish Civil Code establishes that to fulfil their obligations, the debtor responds with all his present and future assets. Article 105 of the Mortgages Act says that the Mortgage can be constituted as a guarantee of any kind of obligation and does not change the personal limited liability of the debtor according to the mentioned article 1911.

This means that when a debt is granted by Mortgage, the debtor not only responds with the mortgaged asset but also responds with the rest of his heritage until the totality of the debt has been paid. There is a personal action that could be against the total assets of the debtor to cover the full debt of the loan, if the amount obtained of the mortgaged asset is not enough. Although there is an exception, called the Mortgage of limited liability, art. 140 of the Mortgage Act, which states that, the responsibility of the debtor is limited to the amount of the mortgaged assets.

It is in fact essential that we take into account that the limited responsibility must be established by express agreement, or in the case of people who are at risk of social exclusion to comply with the requirement of the Lay 1/2013, of 14th May.

In your case, if this is not the case, with the execution of the mortgaged property the debt has not been cancelled, there is still a pending debt of 20.000€ that the bank could claim and take actions against other assets of your parents. Please note that the information in this article has been given considering the details provided by the reader, please contact us for specific information, our work requires study of the corresponding documentation to offer you the best legal advice


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