Antichresis is the contract by which a real estate is delivered as a guarantee of a future payment. Thus, the property passes into the hands of the creditor, allowing the latter to receive the income from the use and exploitation of the asset.
The antichresis lasts, in principle, until the borrower fulfills his obligation (except in cases that we will detail later). Once this objective has been fulfilled, the asset can return to the debtor.
Explained even more simply, antichresis is a pact between two parties in which one party (as a guarantee of payment) gives another to another (in case of not complying with their payment) a real estate. When, with the benefits of the real estate or the payment of the debtor, the debt disappears, then the real estate returns to the debtor's hands.
At the end of this article we will see an example, but first we will detail the characteristics of the antichresis; and the rights and duties of the parties.
Characteristics of antichresis
The main characteristics of antichresis are:
- The borrower offers a collateral, that is, he is backing his payment commitment with a tangible asset, which in this case is a property.
- Antichresis is an accessory right, since it is constituted to ensure payment of an obligation, and of its interests if these are generated. If the outstanding debt is extinguished, so does the antichresis.
- The participants in the contract are the antichresist, who gives up possession of the property, and the antichretic creditor, who makes use of it.
- The antichresist cannot recover the property without first paying off the pending debt.
- It is unfeasible to carry out several antichresis contracts on the same good because its dispossession is required. To explain it in another way, the antichresist could not simultaneously deliver the property to more than one creditor. On the other hand, it is feasible to constitute several mortgages with respect to the same asset because it is not necessary for the debtor to dispose of his property.
- This is perhaps one of the reasons why antichresis contracts are less popular than mortgages. The latter allow the debtor to continue occupying their home.
- Each legislation defines antichresis differently. In the Peruvian case, for example, it is a real right (immediate and absolute power of attorney) by virtue of which the debtor delivers a property to its creditor as collateral. Thus, it grants him the power to exploit it and to perceive its fruits. Peruvian legislation also requires that the contract be recorded in public records as a formality.
- The contract is not only extinguished after the payment of the obligation, but with the destruction or expropriation of the property, or if the creditor renounces the antichresis. The latter occurs if the lender considers, for example, that the use of the property does not generate sufficient income. Then, you will demand that the antichresist pay your debt in another way.
Duties and rights of the antichristic creditor
The most important duties and rights of the anti-crete creditor are:
- The creditor has the obligation to safeguard the integrity of the property
- You must assume the expenses in basic services (water, electricity, among others) that allow you to use the property.
- By taking possession of the guarantee, the creditor will enjoy the fruits of its exploitation. In the case of an apartment, for example, you can occupy it and save on rent. Another alternative is that you lease it to a third party, receiving the respective periodic benefit from the tenants.
- The creditor will first collect the interest generated by the debt, if applicable. Once these financial expenses are paid, the income from the use of the property can amortize part of the principal of the loan.
- If the parties have agreed that no interest will be accrued, the fruits of the exploitation of the asset will go directly to reduce the principal of the loan.
- In the event of non-payment, the creditor may request judicial enforcement of the guarantee.
Duties and rights of the antichresist
The main duties and rights of the antichresist are:
- You have the obligation to assign possession of the real estate, being able to request its restitution only when canceling your debt.
- You can sue the creditor for damages if the creditor is not diligent in managing the property.
- It is your responsibility to pay taxes related to the property.
- You must bear the expenses for repairs and maintenance, unless the damages have been produced by the creditor.
- You agree to replace the investment in improvements, which must have your consent.
- You can object to misuse of the asset, for example, if the creditor plans to drastically change a space on the property.
Example of antichresis
Let's look at a very simple example of antichresis. Suppose that Luis Antonio Olivares owes José Gutiérrez $ 45,000. Then, both sign an antichresis contract to ensure the return of the financing.
The agreement allows Mr. Gutiérrez to occupy, or rent to a third party, one of the properties that Olivares owns. The term of the contract is ten months, assuming a rental price of US $ 4,500.
In this case, it should be noted that the participants have not agreed to earn interest on the loan. Thus, once the debt is paid, the asset returns to Olivares.