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Can you sell a home with a mortgage?: Legal steps in the process amid the boom in new loans - Infobae
Source:
February 03, 2025
Given the upturn in the segment and with 15% of properties sold in December between CABA and the province of Buenos Aires through credit leverage, doubts are growing about the sale of properties still encumbered by a mortgage. What does the law say, steps to follow and what to evaluate to avoid legal and financial risks?
By Jose Luis Cieri
Clauses may prohibit selling properties without prior bank approval
In a different real estate market, with operations recovering to 2017 levels ( between CABA and the province of Buenos Aires, 28,000 homes were sold last December , of which 15% were with credit leverage ) and with mortgage credit as a viable option, there is no shortage of owners looking to sell and in some cases they must do so even when their properties are encumbered by mortgages .
Is it possible to sell a property under these conditions? What legal aspects should be considered in the process?
This operation is legally possible, but it presents specific challenges and details that the parties involved must meticulously attend to in order to guarantee a safe and regulated transaction, which are detailed below.
According to industry sources, selling a property subject to a mortgage requires the consent of the mortgage lender, such as a bank or other financial institution . This step is crucial to avoid problems such as residual liability of the seller.
Pablo Pirovano , a mortgage law specialist and partner at Pasbba Abogados, explained to Infobae that “the owner must have the consent of the mortgage creditor to stop being a debtor of the loan taken out with that guarantee.”
However, he added that there is an alternative scenario: selling the property without this conformity, but the seller will continue to be responsible for the credit in case of problems.
In this process, the buyer's solvency analysis also comes into play, an assessment that the creditor must carry out if he plans to authorize the transfer of the mortgage loan to the new owner, as noted by Bibiana Varela Guijarro , lawyer and real estate broker: "The creditor verifies the financial capacity of the buyer before allowing the transfer of the credit."
The creditor must assess the new debtor's ability to pay, requiring him to meet the same requirements that the original buyer had to meet to access the credit," he explained.
Enrique Abatti (h.) , a lawyer specializing in Real Estate Law and director of the Chamber of Property Owners of the Argentine Republic, pointed out that, “among the aspects that are analyzed, the buyer's income is considered - and, in some cases, that of the family group -, their age, credit history, reports from the Central Bank and from risk assessment consultants.”
As well as any criminal record. “The requirements vary depending on the financial institution, bank or private lender that granted the credit,” Abatti (h.) clarified.
A vital aspect when carrying out this type of operation is the review of the conditions established in the mortgage deed. These often include clauses that prohibit sales without the creditor's authorization.
In the event of default, the bank would be within its rights to initiate legal proceedings against the seller. Indeed, Pirovano warned that “the creditor could denounce the debtor's default if there are clauses prohibiting alienation .”
A buyer with a mortgage may be forced to sell his property due to changes in his financial situation, difficulties in meeting the payments or the need to move. He may also seek to cancel the debt to access new financing under better conditions (Illustrative Image Infobae)
In these situations, consulting a specialized lawyer is essential, not only to monitor the conditions of the contract, but also to verify the current status of the mortgage.
"It is important to process domain reports and seller's inhibitions to ensure that the mortgage is up to date and is not in judicial execution ," Pirovano said.
Another common resolution model in these cases is the simultaneous cancellation of the mortgage at the time of the sale of the property .
Varela Guijarro indicated that "these operations require the intervention of both the parties' notaries and the mortgage creditor."
In this dynamic, the process generally follows this logic: the money from the transaction is first used to pay off the mortgage debt and associated expenses; whatever is left will be the balance received by the seller . This may even include penalties for prepayment, depending on the terms of the contract.
An alternative option could involve the buyer requesting a new mortgage loan to finance the acquisition of the property. In such cases, the role of the notary becomes even more relevant, as he will be responsible for managing both the deed of transfer of ownership and the implementation of the mortgage in the same transaction.
Both sellers and buyers frequently have specific questions regarding this type of transaction.
Abatti (h.) highlighted that one of the most common questions is whether “ the buyer can assume the existing mortgage and replace the seller as the mortgage debtor ”.
This situation depends entirely on the authorization of the mortgage creditor, who will evaluate whether the transaction meets its financial solvency criteria.
On the other hand, buyers should ensure that the information provided on the debt is up to date, considering not only the principal, but also accrued interest, legal fees and any resulting court costs.
It is essential that this data is legally verified to avoid surprises in the future.
Purchase and sale transactions involving mortgaged properties usually require more time and attention to technical and legal details than a conventional transaction.
"These operations require greater coordination, due to the contractual conditions that must be met simultaneously," concluded Varela Guijarro.
www.buysellba.com
Source:
February 03, 2025
Given the upturn in the segment and with 15% of properties sold in December between CABA and the province of Buenos Aires through credit leverage, doubts are growing about the sale of properties still encumbered by a mortgage. What does the law say, steps to follow and what to evaluate to avoid legal and financial risks?
By Jose Luis Cieri
Clauses may prohibit selling properties without prior bank approval
In a different real estate market, with operations recovering to 2017 levels ( between CABA and the province of Buenos Aires, 28,000 homes were sold last December , of which 15% were with credit leverage ) and with mortgage credit as a viable option, there is no shortage of owners looking to sell and in some cases they must do so even when their properties are encumbered by mortgages .
Is it possible to sell a property under these conditions? What legal aspects should be considered in the process?
This operation is legally possible, but it presents specific challenges and details that the parties involved must meticulously attend to in order to guarantee a safe and regulated transaction, which are detailed below.
Legal steps to transfer a mortgage
According to industry sources, selling a property subject to a mortgage requires the consent of the mortgage lender, such as a bank or other financial institution . This step is crucial to avoid problems such as residual liability of the seller.
Pablo Pirovano , a mortgage law specialist and partner at Pasbba Abogados, explained to Infobae that “the owner must have the consent of the mortgage creditor to stop being a debtor of the loan taken out with that guarantee.”
However, he added that there is an alternative scenario: selling the property without this conformity, but the seller will continue to be responsible for the credit in case of problems.
In this process, the buyer's solvency analysis also comes into play, an assessment that the creditor must carry out if he plans to authorize the transfer of the mortgage loan to the new owner, as noted by Bibiana Varela Guijarro , lawyer and real estate broker: "The creditor verifies the financial capacity of the buyer before allowing the transfer of the credit."
The creditor must assess the new debtor's ability to pay, requiring him to meet the same requirements that the original buyer had to meet to access the credit," he explained.
Enrique Abatti (h.) , a lawyer specializing in Real Estate Law and director of the Chamber of Property Owners of the Argentine Republic, pointed out that, “among the aspects that are analyzed, the buyer's income is considered - and, in some cases, that of the family group -, their age, credit history, reports from the Central Bank and from risk assessment consultants.”
As well as any criminal record. “The requirements vary depending on the financial institution, bank or private lender that granted the credit,” Abatti (h.) clarified.
Legal and contractual factors
A vital aspect when carrying out this type of operation is the review of the conditions established in the mortgage deed. These often include clauses that prohibit sales without the creditor's authorization.
In the event of default, the bank would be within its rights to initiate legal proceedings against the seller. Indeed, Pirovano warned that “the creditor could denounce the debtor's default if there are clauses prohibiting alienation .”
A buyer with a mortgage may be forced to sell his property due to changes in his financial situation, difficulties in meeting the payments or the need to move. He may also seek to cancel the debt to access new financing under better conditions (Illustrative Image Infobae)
In these situations, consulting a specialized lawyer is essential, not only to monitor the conditions of the contract, but also to verify the current status of the mortgage.
"It is important to process domain reports and seller's inhibitions to ensure that the mortgage is up to date and is not in judicial execution ," Pirovano said.
Simultaneous: purchase-sale and cancellation
Another common resolution model in these cases is the simultaneous cancellation of the mortgage at the time of the sale of the property .
Varela Guijarro indicated that "these operations require the intervention of both the parties' notaries and the mortgage creditor."
In this dynamic, the process generally follows this logic: the money from the transaction is first used to pay off the mortgage debt and associated expenses; whatever is left will be the balance received by the seller . This may even include penalties for prepayment, depending on the terms of the contract.
An alternative option could involve the buyer requesting a new mortgage loan to finance the acquisition of the property. In such cases, the role of the notary becomes even more relevant, as he will be responsible for managing both the deed of transfer of ownership and the implementation of the mortgage in the same transaction.
Frequently asked questions and preventive measures
Both sellers and buyers frequently have specific questions regarding this type of transaction.
Abatti (h.) highlighted that one of the most common questions is whether “ the buyer can assume the existing mortgage and replace the seller as the mortgage debtor ”.
This situation depends entirely on the authorization of the mortgage creditor, who will evaluate whether the transaction meets its financial solvency criteria.
On the other hand, buyers should ensure that the information provided on the debt is up to date, considering not only the principal, but also accrued interest, legal fees and any resulting court costs.
It is essential that this data is legally verified to avoid surprises in the future.
Purchase and sale transactions involving mortgaged properties usually require more time and attention to technical and legal details than a conventional transaction.
"These operations require greater coordination, due to the contractual conditions that must be met simultaneously," concluded Varela Guijarro.
www.buysellba.com
