What is a mortgage cancellation?
A mortgage cancellation (cancelación de hipoteca) is the legal act whereby the mortgage charge on a property is removed, leaving the property free of any mortgage encumbrance. This takes place once the borrower has paid off in full the debt secured by the mortgage.
It is an essential step to release the property and be able to deal with it without mortgage restrictions.
When and how is the cancellation carried out?
- When the borrower has repaid the mortgage loan in full.
- To formalise the cancellation, a public deed (escritura pública) must be executed before a notary, or a notarial record of statements (acta de manifestaciones) may be used where appropriate.
- The bank or lender must issue a zero-balance certificate or certificate of cancellation.
- The cancellation must then be registered at the Land Registry (Registro de la Propiedad) in order to take effect vis-à-vis third parties.
What does a mortgage cancellation before a notary involve?
- Formalising the actThe notary authorises the public deed recording the cancellation or extinction of the mortgage.
- Document checksThe notary verifies the existence of the loan and its repayment by means of the bank's certificate and the registry documentation.
- AdviceThe notary explains the legal implications and the subsequent formalities.
- RegistrationThe deed is submitted to the Land Registry to remove the mortgage entry.
- Legal certaintyIt ensures that the property is free of charges and protects the owner's rights.
Formal requirements before the notary
- A certificate issued by the lender confirming that the debt has been repaid in full.
- The original deed creating the mortgage.
- Documentation of the property registered at the Land Registry.
- Identity documents of the person requesting the cancellation.
- Consent or authorisation to cancel the mortgage.
Main legal effects
- Extinction of the chargeThe property is freed from the mortgage and any associated encumbrance.
- Registry updateThe cancellation is registered so that it takes effect vis-à-vis third parties.
- Full ownershipThe owner regains full title, free of mortgage charges.
- Makes future transactions easierThe property can be sold, mortgaged again or otherwise disposed of without restrictions.
Advantages of carrying out the cancellation at the Notary's Office
- Legal certaintyThe public deed guarantees the validity and lawfulness of the act.
- TransparencyThe notary checks all the documentation and prior conditions.
- Ease of handlingThe notary can take care of submitting the deed to the Registry.
- Legal proofThe public deed is conclusive evidence before the courts and third parties.