The Dacin en Pago Explained

Raymundo Larran Nesbitt - Lawbird Legal Services

28th of March 2009
For all those who've slipped into mortgage arrears in
Spain or are likely to and are thinking of handing back
the keys as a solution, there's a formal legal
procedure to do it known as dacion en pago (datio pro
soluto). This was one of the proposed solutions I
highlighted on my previous article relating to Bank
Repossessions in Spain. For a property owner, a
dacion en pago means basically handing back the
keys to their lender and involves signing a Deed at a
Notary Public in exchange of being discharged for the
remaining mortgage debt. The catch is that the
property must not be in negative equity.

What is a Dacin en Pago Anyway?

In plain English, a dacion en pago means handing

back the keys to the lender, and in exchange the
lender will fully discharge all mortgage debt, not

holding you liable in the future. The lender will also

renounce pursuing the debt in your home country or
elsewhere against any other assets you may hold.
This procedure is based on Art 1175 of the Spanish
Civil Code, which establishes that a borrower can
cancel his creditors debt handing in exchange any of
his assets.
This solution of last resort puts an end to many
borrowers growing nightmare as the mortgage debt
mounts up and becomes unbearable.