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Purchase of a mortgaged property

In the purchase of a mortgaged property, the property is transferred with the mortgage guarantee, but it does not mean that the debtor is personally released from the guaranteed debt and that the buyer assumes it; the buyer will suffer the consequences of the foreclosure, but if the money obtained in public auction does not cover the debt and its interests, to collect the remaining balance the creditor can only address against all the assets of the first debtor, but not against those of the later buyer.


However, the buyer and seller may agree to the following:


A) The subrogation in the mortgage and in the secured personal obligation (the loan or credit). The seller is released from debt when the creditor consents to subrogate himself, expressly or tacitly. This assumption of debt by the buyer of the mortgaged property is tacitly produced when the mortgage is agreed that the secured obligation is made only effective on the mortgaged property. That is when the bank waived in the mortgage deed to pursue other assets of the debtor.

B) They do not agree to the transfer of personal liability, only the mortgage liability, and the buyer discounts the outstanding amount of cancellation of the sale price. In this case, the debtor continues to respond personally to the creditor, until the buyer pays the retained price to the creditor bank and the creditor provides a «letter of payment.»

With the retention of the corresponding part of the price, the buyer avoids relying on the seller to pay the debt, as it can cancel with the retained price.

This does not involve a personal assumption of debt because the creditor bank has not given its consent to personal subrogation. For the seller to be released from the debt secured by mortgage, it is necessary the concurrent consent of the buyer and consent of the creditor; If this double consent is not given, the debtor will continue to be subject to the debt, even if he sells the mortgaged property.

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