Nullity of simulated sales contracts that conceal loan operations with direct appropriation of goods
The prohibition of the commission agreement or how to recover ownership of the vehicle or home given “as collateral” or “as collateral” for a loan</p >
The term “commissory agreement” may seem like an old or unintelligible concept but, unfortunately, its application and meaning are still fully topical, even more so in a context like the current one where The escalation of prices and the increase in the cost of bank financing have forced families and individuals to resort to loans in the secondary or non-bank circuit.
“Commissory pact”: what it is and its prohibition
The premise from which we have to start is very simple, namely, a lender cannot directly appropriate the debtor’s assets as collateral for the repayment of the loan , even when the debtor does not return the amount of the loan (totally or partially).
In this way, what is known as a “commissory agreement” is the agreement by virtue of which the person who gives money on loan (lender) appropriates the assets (or any of the assets ) of the debtor as collateral for the repayment of the loan, and its prohibition is found in art. 1,859 of the Civil Code (“The creditor cannot appropriate the things given in pledge or mortgage, nor dispose of them”) in what does not cease to be but the transfer to our positive law of a prohibition that It dates from Roman Law, was maintained during medieval times and, currently, has been extensively contemplated by the First Chamber of the Supreme Court.
In conclusion: whoever gives money as a loan cannot require the debtor to deliver assets or rights as collateral for such repayment and, if so agreed, because the lender imposes such clause (normally, taking advantage of the need of the person requesting the loan), it will be radically null (arts. 1,276, 1,282, 6.3 and concordant Civil Code) as we will explain later.
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Typical cases of simulated purchase-sale loans with a “commissory agreement”: microloans with a vehicle “guarantee” and loans with the “guarantee” of a property without a mortgage and with simultaneous rental
Assumption of quick microloans with vehicle “guarantee”
It is common to find advertising in different media where companies that offer loans “with the guarantee of your car” are advertised with which, in addition, you can continue driving.
However, on many occasions what those who resort to this type of financing do not really know is that the operation they are really going to sign is another, namely, they are going to sell his car to the lender for a ridiculous price (the amount of the loan that is intended to be obtained) to, in the same act, sign a second lease contract for the vehicle in favor of the person who until then was its owner with a purchase option.
In this way, the lender obtains the ownership of the car at the time of granting the loan (authentic operation) and also, month by month, will receive the amount established as rent so that the borrower can use it (the famous “…and keep circulating”), plus the repurchase price when the borrower wants to get it back.
Assumption of sale of property with simultaneous formalization of a lease
Another very common assumption and one that has been echoed massively by jurisprudence is that of those who, requiring financing and owning a property, cannot, due to various circumstances, obtain financing banking and opt for private lenders (on many occasions, usurers) that require them to articulate the operation as follows: sign a Public Deed for the sale of the home (once again, for a value much lower than its actual market value, which coincides with with the value of the requested loan), simultaneously signing a lease on the property that allows its occupants, owners until then, to continue residing in it, also granting them a purchase option to recover it by paying its price another time.
We would again find ourselves before a “commissory agreement” by virtue of which the lender, taking advantage of the needs of others, becomes the owner of a property as collateral for the repayment of a loan that In addition, it is of much lower value than the property transferred.
Characteristics common to both cases
The usual notes revealing the existence of a “commissory agreement” in both cases that the jurisprudence has been identifying would be the following:
- The lender usually advertises itself as such, not informing applicants for financing how the operation will actually be carried out until later and in a completely opaque and abusive manner.
- The sale price, both of the vehicles and of the homes, coincides with the amount that the loan applicant needs.
- Such purchase price bears no relation to the real value of the property, of which an appraisal is not even made.
- Whether the “guarantee” is a vehicle or a property, a revealing element of the existence of a “commissory agreement” is that as a unit of action (that is, simultaneously with the signing of the sale), an agreement is signed second lease with purchase option under which the borrower can continue using the vehicle or residing in the home, having to pay a monthly fee or rent unilaterally established by the lender.
- Likewise, in both cases, the lease includes a “purchase option” in favor of the person who is already a mere lessee or tenant. If he exercises it and pays the price established for the repurchase of the vehicle or property, he can recover his property. Usually the repurchase price is higher than the sale price, and this without counting the installments paid month by month for rent.
- In both cases, if the lessee of the vehicle or property that he previously owned fails to pay the established rent, he definitively and forever loses the possibility of recovering the property, which remains in the lender’s assets. </ li >
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Radical nullity of the simulated contract and validity of the disguised contract
The Supreme Court has repeatedly ruled on this issue, among others, in its Judgment of January 27, 2012, affirming that a simulated contract that disguises a loan and incorporates a “commissory agreement” becomes null and void ipso iure pursuant to art. 1859 of the Civil Code.
Annulment would affect the simulated contract, which is the sale contract, while maintaining the validity of the disguised contract, which is the loan. The practical effects of a judicial declaration of nullity due to the existence of a “commissory agreement” and the existence of a simulated contract is that ownership of the asset (vehicle or home) would return to the loan applicant, and the lender would not be able to appropriate it. For his part, the debtor must repay the loan, but without the risk of losing ownership of the vehicle or home and enjoying all the guarantees and rights that the legal system offers, such as the fact that in order to seize against a possible non-payment of the loan, the creditor must file a claim before the Courts and Tribunals, or that most of the salary is unattachable in any circumstance (art. 607 LEC).
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María Olivares Sánchez
Commercial Law Department
06/02/2023
