The purchase of a property often requires significant financing, which is typically obtained through a bank loan secured by a mortgage that is registered in the Property Registry.
A mortgage serves as a guarantee for the fulfillment of an obligation, usually the payment of a debt. Therefore, it is essential, when conducting a property transaction, to ensure that any existing mortgages are either canceled or will be canceled.
In the event that the mortgages cannot be canceled in time, it is necessary to demand a «certificate of zero balance» or for the buyer to withhold a portion of the price. The certificate of zero balance is a crucial document because the mortgage cannot be canceled without it.
The mortgage cancellation must be recorded in the Property Registry. If it is done at the same time as the property purchase, a representative of the bank must appear before a notary to sign the mortgage cancellation deed along with the payment of the corresponding portion of the price.
It is possible for a single property to have multiple mortgages, liens, and charges, which are prioritized for collection based on their registration dates in the Property Registry.
Furthermore, the issue of who should bear the costs of cancellation should be addressed.