When we finish paying the mortgage, we must carry out a last procedure so that the mortgage burden registered in the Property Registry disappears, which is no other than the cancellation of the mortgage in the Property Register. Otherwise, in case we want to transfer the property the buyer will not be able to be 100% sure that the property is free of charges since in the books of the registry of our property will continue to record the registered mortgage.
What is a mortgage?
The mortgage is a security and in rem right. It is a right in rem because it is directly linked to a real estate asset. And it is a security right because it is created for respond to a contractual obligation in case of breaching. When we talk about real estate sales, the mortgage right is created, in general terms, as a guarantee to respond in case of non-payment of the debt generated by the loan agreement that we sign with the financing bank.
Why are mortgages registered in the Land Registry?
In case of having signed a mortgage with a bank, it will appear registered in the books of the registry of our property. This is always the case due to the obligatory nature of the registration of all mortgages in the Land Registry. This obligation is given by the Civil Code, in article 1.875, which reads as follows: “In addition to the requirements of article 1.857, it is essential, for the mortgage to be validly constituted, that the document in which it is constituted is registered in the Land Registry“. The Mortgages Act, specifically article 145, reads as follows: “for voluntary mortgages to be validly established, it is required: 1. That they have been constituted in a public deed. 2. That the deed has been registered in the Land Registry“. Therefore, all mortgages must be registered in the Land Registry in order to be validly constituted. And once the contractual obligation under which they are constituted has ended, the registration of these in the Land Registry must be canceled.
What is required to sign the mortgage cancellation deed?
The most important document that we will need in order to sign the deed of cancellation of the mortgage in the Property Register is the Zero Debt Certificate, that must be issued by the financing bank. This certificate is the document by virtue of which the financial institution declares to terminate the contractual relationship that originated the mortgage. In most cases, this will be the repayment schedule of the loan that originated the mortgage guarantee and will be an essential requirement for the granting of the public deed of cancellation of the mortgage.
Who has to sign the mortgage cancellation deed?
The mortgage cancellation deed must be signed before a notary by the financial institution only, not being necessary for the debtor to also appear at the signature.
Registration of the mortgage cancellation deed in the Land Registry
Finally, the deed of cancellation of mortgage must be registered in the Land Registry in order to cancel the charge attached to the mortgaged property from the registry books, and the property can remain and appear as free of that charge in the Property Registry. To do this, the tax on documented legal acts (AJD) must be self-liquidated, which is exempt from payment and the fees related to the registration of the property will have to be paid, the amount of which will depend on the value of the loan that originated the mortgage.
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