The term dation it derivates from datio, a Latin word. The concept is used in the field of right to refer to act and consequence of giving: deliver, grant, donate.
The notion of Settlement, in this sense, refers to transfer ownership of something to a creditor with the objective of make up for a debt. This donation consists of the delivery of a good for pay off an obligation that was pending payment.
Through a dation in payment, the debtor carries out a different service from the one due. This means that it does not pay the debt directly, but gives something as payment to cancel the debt. obligation. For the operation to be successful, the creditor must accept what is offered.
Suppose that a person acquires a house through a mortgage and then you cannot pay the corresponding fees. The dation in payment, in this framework, supposes an agreement between the debtor and the creditor bank that allows the debtor to hand over the property in exchange for the cancellation of the debt. In this way, the debtor is freed from the installments and the creditor no longer has the need to initiate a process for foreclosure.
Dation in payment can be developed in different ways according to the legislation. In some countries, this dation applies when a mortgage debtor is not in a position to pay his debt in accordance with the agreement and, therefore, delivers the mortgaged asset for the extinction of the obligation.
Like all matters that are directly related to the law, it is important to refer to certain countries to present real examples, since generalizations can lead to confusion. If we focus on the situation of Ecuador, for example, according to a law organic that approved the National Assembly In 2012, while Rafael Correa Delgado was in charge of the presidency, the dation in payment in the field of mortgages cannot exceed 150,000 dollars, which is equivalent to the sum of five hundred basic salaries.
Here we face a first requirement, or a condition, so that not only the form that the dation takes is important, but we must understand that not all situations of non-payment can be resolved through the use of this resource.
As explained in a previous paragraph, thanks to the dation in payment a person can get rid of a bank debt that he could not pay by the means established in the contract, without this implying that their civil liberty or their economy is put at risk. It goes without saying that being dispossessed of a home without recovering the fees paid can represent a great loss of money, although it is always better than going to court and running the risk of losing other belongings or your own freedom.
In Spain, on the other hand, dation in payment is not very common; however it is possible, as expressed in the Mortgage law, make a pact in the writing of the mortgage so that the obligation is made only on the mortgaged property. In a case like this, the mortgage loan will not be able to cross the limits of the contract and if the debtor cannot meet his obligation, the creditor will not have the right to demand the delivery of his other assets as compensation.
If both parties so desire, the payment is possible if a covenant between the creditor party (which can be a credit institution) and the debtor, before the moment in which the mortgage loan is formalized.