{"id":348478,"date":"2024-04-09T15:20:15","date_gmt":"2024-04-09T13:20:15","guid":{"rendered":"https:\/\/aq-acentor.com\/?p=348478"},"modified":"2024-04-09T15:27:50","modified_gmt":"2024-04-09T13:27:50","slug":"lieu-of-payment","status":"publish","type":"post","link":"https:\/\/aq-acentor.com\/en\/lieu-of-payment\/","title":{"rendered":"What is property in lieu of payment?"},"content":{"rendered":"\n

Debt <\/strong>can often feel truly suffocating, but there are ways you can free yourself from it. Many people with a lot of assets resort to payment in kind<\/strong>. Do you know what this involves? We will explain everything below.<\/p>\n\n\n\n

What is payment in kind?<\/h2>\n\n\n\n

If you\u2019re wondering how payment in kind works<\/strong>, it\u2019s very simple. It refers to a payment method to settle a debt<\/strong>. In other words, provided that the creditor accepts the debtor\u2019s offer, the debt shall be settled, even though the means of payment is different to that initially agreed.<\/p>\n\n\n\n

To settle debts with this payment method<\/strong>, both parties must be willing to negotiate. At the end of the day, there is an unsettled debt<\/strong> and the aim is to find an alternative means of payment that leaves everybody satisfied.<\/p>\n\n\n\n

However, once the transfer takes place, the creditor has full control<\/strong> over those assets, so it is a decision that needs to be carefully considered.<\/p>\n\n\n\n

What is payment in kind for a mortgage?<\/h3>\n\n\n\n

This type of transaction enables you to make an agreement with the bank to settle an outstanding mortgage debt by transferring ownership of a property. It is a way to avoid the bank initiating a foreclosure process<\/strong>, where it raises a claim for non-payment<\/strong> of the mortgage<\/a> and initiates seizure of the property. All in all, it\u2019s a way of settling your debt with the bank and maintaining all your personal assets.<\/p>\n\n\n\n

There is also the option of a main residence in lieu of payment, where you hand over to the bank the property<\/strong> that secures the loan, thus settling the outstanding debt<\/strong>.<\/p>\n\n\n\n

Regulating payment in kind in Spain<\/h2>\n\n\n\n

The Civil Code <\/strong>and the Supreme Court<\/strong> case law contain various chapters that regulate payment in kind. It is also important to know that cases of property in lieu of payment (which are the most common) are regulated by the Spanish Royal Decree-Law 19\/2022 of 22 November<\/strong>.<\/p>\n\n\n\n

This Decree-Law establishes the Code of Good Practice<\/strong> to mitigate interest increases on mortgage loans for main residences<\/strong><\/a>. Below we will explain some of the most important articles of the Civil Code on this issue:<\/p>\n\n\n\n