Encumbrances (Section C)

EASEMENT

Original name:Hipoteca

Definition of this right: The right whereby properties are subject to the fulfilment of the obligations related to the security provisions directly or indirectly, no matter who the owner is.

Type of right according to national classification: Security right, guarantee right or right of security

Observations:  From the point of view of the Land Registry, you must keep in mind that the entry, and thus, the information provided, will always include:

1.- the identity of both the mortgagee or creditor, the mortgagor and the debtor, if the late two are not the same person. The only possible exception would be the mortgage that guarantees a credit represented by securities that are transferable by endorsement, or those that are to be payable to the bearer. In such a case, the mortgage is established in favour of the endorsee or holder, whose identity is unknown at the time;

2.- the essential basis of the obligation is also included both in the registration and in the information, with a different sum of responsibility for the debt, its interests, financial penalties, costs and expenses;

3.- Deadline of the guaranteed obligation is also included. It’s not usual, but it’s possible, to agree on a deadline for the collateral, and, if so, is should also be included.

Nevertheless, there are some cases, rather unusual, indeed, where the law gives some people the right to demand the creation of a mortgage as security for a possible future debt, for example by the exercise of certain charges, or even in the remaining cases of dowry brought to the marriage by wives. In such cases, while there’s a maximum of mortgage liability, that’s not the same for the deadline, which depends on the extinction of the legal relationship that led to the creation of the mortgage.

1.1. With respect to the mortgage liability, the Spanish mortgage system prepares in general two options:

a) Extracts include itemized liabilities arising from the loan, so that can be distinguished amount of loan and the other liabilities due to interests of the loan or others, guaranteed by the mortgage. [E.g. The loan is 100,000 and has agreed interest at 20,000 and mortgage cover up to 10,000 from other debts related to loan. LR extracts shall include separately information about these three types of debt].

b) In the event that a mortgage guarantees a not monetary obligation (not a loan or other money debt), there’s an identification of this obligation in the extracts.

1.2. Regular LR information in this system also comprises ordinarily:

1. Contract or basis of obligation guaranteed by a mortgage (e.g. a loan)
2. Deadline of the loan or credit or other contract which is basis of the mortgage.
3. Deadline of the mortgage.
4. Name of the mortgagee or creditor
5. Name of the mortgagor or debtor (land owner)
6. Deed whereby mortgage was constituted or awarded

1.3. With respect to the mortgage rank (preference of the mortgage in comparison with other mortgages or encumbrances), this LR system has the following criteria:

1. Mortgage rank depends on date of registration of the mortgage, so whoever may ascertain mortgage rank taking into consideration the information on the date of registration of the mortgage.

In this LR system these are the following:

USUFRUCT

Original name:Usufructo

Definition of this right: The right to enjoy goods of others at a profit, whether economic or not, with the obligation to keep the subject matter of the right, if not otherwise established.

Type of right according to national classification: Rights of use

Observations:  Any particularity, as the attribution to the beneficial owner of the right to dispose of the property -usufruct to dispose – or if the right has been established with a joint and/or subsequent character, shall be recorded in the Land Registry and the information it provides.

USUS

Original name:Uso

Definition of this right: The right to receive, from other’s property, those utilities that are essential to meet the user or his/her family’s needs

Type of right according to national classification: Rights of use

Observations:  Due to the uncertainty of its content, linked to the needs of the owner, it’s a quite unusual right, actually.

HABITATIO

Original name:Habitación

Definition of this right: The right to occupy that part of a dwelling of another person, that is necessary for the holder of such right, or his/her family.

Type of right according to national classification: Rights of use

Observations:  In case of separation or divorce, the law attributes to the children of the marriage and the spouse in whose company they stay, the right to occupy the family home. Although the property of the house can be the other spouse, the consent of both of them is required to dispose, and so, such circumstance will also be registered.

EASEMENT

Original name:Servidumbre

Definition of this right: An easement is an encumbrance imposed on an immovable property for the benefit of another belonging to a different owner. The immovable property in whose favour the easement is constituted is called dominant tenement; the property suffering it is the servient tenement. Easements may also be established for the benefit of one or several persons or a community to whom the encumbered property does not belong.

Type of right according to national classification: Right of use

Observations:  There are many kinds easements in Spanish Law, common and regional, characterized by their purpose (right to way, servitude of waters and/or sewers, communication of buildings, distance between buildings…).

From the point of view of Land Registry’s information, the easement on a certain property – servient tenement – will always be included in “C”, and will also appear as a quality of the property in the case of the dominant tenement.

SUPER AND SUB EDIFICATION

Original name: Derechos de sobre y sub edificación (o de vuelo y suelo)

Definition of this right: The right to erect new buildings on top, or under another existing construction, obtaining the definitive ownership/proprietorship of such new buildings.

Type of right according to national classification: Right of use

Observations:  In fact, these leads to a situation of condominium.

SUPERFICIARY

Original name:Derecho de superficie

Definition of this right: The right to erect new buildings on other’s properties, with the subsequent right to use them as a proprietor, but only for a certain and limited period of time

Type of right according to national classification: Right of use

CENSUS

Original name:Censo

Definition of this right: The right to obtain a pension or regular income, in return for a loan, or the full or less full ownership of the property on which the right is imposed, with the power to impose the sale of the property for the payment of unpaid pensions.

Type of right according to national classification: Right of use / guarantee

Observations:  Although today is an unusual right, there’ are still remaining census established many years ago, particularly in certain territories.

Special emphasis has in Catalonia the emphyteutic census, whereby the beneficial ownership is transferred (dominio útil, the right to use and dispose of the property, charged) retaining the direct ownership and the right to receive a pension. This produces a division of the domain, and it’s possible to register both rights.

LEASE

Original name:Arrendamiento

Definition of this right: The right to use the property of another person, for a certain time and a certain price.

Type of right according to national classification: Right of use

Observations:  Although traditionally considered a personal right, as it attributes a use against third parties, and even pre-emption rights, it can access to the Land Registry and reach full effectiveness.

FIRST REFUSAL

Original name: Opción de compra

Definition of this right: The right to decide on the validity of a purchase contract within a specified period, and thus, on the acquisition of certain property, for the price and the conditions that were previously agreed.

Type of right according to national classification: Pre-emption right or Right of preferential acquisition

Observations:  It may appear on its own, or linked to any other kind of right, usually a lease.

PRE-EMPTION AND REDEMPTION RIGHTS

Original name:Derechos de tanteo y retracto

Definition of this right: The right to be preferred by any other, in the same circumstances, in the event that the owner of the property upon which is right is established intends to sell it (pre-emption); or the right to be subrogated to the position of the buyer, if the owner has already sold the property.

Type of right according to national classification: Pre-emption right or Right of preferential acquisition

RETENTION AGREEMENT

Original name:Pacto de reserve de dominio

Definition of this right: Agreement included in a contract that has to produce the transfer of the ownership -sale, barter in exchange of a future construction, etc- for which it’s stipulated that such transmission will not ocurr until later, usually at the performance by the purchaser of certain obligations -as the payment of the price, or the execution of the building and the delivery of the agreed construction elements.

Type of right according to national classification: Security right, guarantee right or right of security

Observations:  Indeed, it acts almost as a precedent condition and to some extent may be comparable to it.

SUBSEQUENT CONDITION

Original name:Condición resolutoria

Definition of this right: The right reserved by the transfer to annul a contract, both in terms of personal and real effects, thus regaining the ownership of the conveyed property, in case that certain event occurs, generally the non-payment of the sale price, or similar.

Type of right according to national classification: Security right, guarantee right or right of security

ANTHICRESIS

Original name:Anticresis

Definition of this right: The right to obtain a profit on a property of a debtor, allocating them to the payment of the loan

Type of right according to national classification: Security right, guarantee right or right of security

Observations:  In fact, it’s a really unusual right.

TRUST

Original name:Fideicomiso / sustitución fideicomisaria

Definition of this right: The provision establishing the future destiny if the properties, so that, the first recipient -trustee- being the owner, is obliged to keep them, and to deliver them to a previously designated person -beneficiary- when some term or condition is met. If the one establishing the trust has authorized so, the trustee may dispose of all part of the properties, with the obligation to deliver to the beneficiary only those still existing, or those subrogated in place of the transmitted.

Type of right according to national classification: Acquisition right?

Observations:  Usually established in a last will, it’s in fact, a rather rare figure.

This information includes LR entries or notices related to restrictions decreed by judicial orders which mean either a claim on the property, or a challenge on the registered title, or an attachment of the property to debts as a result of judicial procedures, etc.

In this system:

a) Information on judicial restrictions or charges forms part of the regular land register extracts
b) Means of formal publicity ordinarily contains information about the judicial order that leads to the registration of notices or caveats.

For purposes of the information, orders of attachment or seizure decreed by administrative authorities lead to notices or caveats.

Fiscal burdens (tax liabilities falling on the properties and entered in the Land Register) work in this system as remarks warning to third parties so they can’t allege good faith.