Foreclosure Opposition

If we receive a bank foreclosure, we must be aware that not any opposition is valid. Unfortunately, well-intentioned previous attempts of negotiation, fraud between partners or a traumatic divorce are not valid grounds for opposition. We are not saying that these arguments are not well-intentioned, but they are not valid in Court.

The four grounds for opposition to foreclosure

As previously said, in foreclosure litigation, there are four grounds for opposition as regulated in the article 695 LEC. Following 695LEC’s rules, the foreclosed opposition will be admitted only when based on the following causes:

First ground for opposition: Extinction of the guarantee or obligation

That the guarantee or guaranteed obligation has been extinguished; Cancellation of the pawn or mortgage.

LEC allows to prove that debtor does not owe anything or that the guarantee has been cancelled. To this end, article 695LEC provides two ways of proving the above:

• A Registry’s certification expressing the cancellation of the mortgage/pledge (Depending if the guarantees are real estate or movable assets).
• A letter of payment or cancellation of the guarantee extended in front of a Public Notary.

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Second: Error when determining the due amount

Debtor can contest miscalculation of the requested amount claiming that said amount is larger than the owed amount.
So, it is possible to oppose an error in the calculation of the debit balance accompanying the claim.

Normally creditor entities will issue a debt certificate including the debit balance calculated as agreed in the loan contract. The opposition will be based on the error of calculation according to debtor’s interpretation of the contract.

Third: Foreclosure of mortgaged assets that are also pledged

A mortgage on personal property cannot be foreclosed if it is also pledged.
In other words, you cannot foreclose on mortgaged movable property with previous guarantees to the foreclosure. This circumstance must be accredited by the debtor by means of the corresponding registry certificate. These kinds of assets are the ones related in Article 12 of the Mortgage and Non-Possessory Pledge Act.

Fourth: Abusive terms

It is possible to oppose the inclusion of abusive contractual terms on which the foreclosure is based. We are referring to the clauses such as interest rate floors, due moratorium interest or early maturity.

Given our vast experience in Court we can assure you that lately this has become the most common opposition.

These kinds of clauses can lead to the dismissal of the procedure or to the nullity of the clause. That is to say, their elimination from the deed with retroactive effects:

1. If the clause is essential for the execution, it can lead the dismissal of the procedure. An example is the early termination of a contract for non-payment of amounts under three months. That is an abusive clause for the consumer and might imply the dismiss of the foreclosure.
2. If the clause applies for determining the due amount, it will be not applied, but enforcement will continue. For example, if agreed interest has been charged above the legal limit.

The judge has the power to rise up the existence of this type of clause and to deny the order dispatching execution. (art. 552.LEC)

This is the only ground of opposition on which, if rejected, an appeal may be lodged.

This is all, if you are going through a similar experience to the ones described hereinbefore, please look for lawyer’s advice.

If this article has been of interest, we also suggest you to read the following article published on our website:

Impossible enforcement of a court decision