Nullity of mortgages on illegal properties

A thinking after finding some excellent Court Decisions by Appeal Courts (Burgos is always great on protecting consumers rights of off plan buyers):

Nullity of sale due to lack of consent by the buyer as he did not know or knew wrongly on important features of the property BRINGS ATTCHED the nullity of the mortgage loan that the buyer took for that purchase.

Effects: According to Civil Code ( art. 1303) : effect of nullity is retroaction of contract exchanges to the moment previous to the signing of the contract. This effect has been recently softened by our Supreme Court – when deciding about  nullity of Floor Clauses in mortgage loans-, by allowing some limits to the full retroaction in order to protect constitutional principles such  of legal safety, public order and good faith.

In my opinion, effects of nullity in cases of illegal properties must be complete, of  full retroaction as, in these cases, the buyer is burdened with the weight of paying an everlasting mortgage for nothing. As the house has no license.

Property back to buyer ( if he exists) but, as Bank have big enforcement rights on it, it will repossess it and will bear the problem of selling an illegal house…..

Problem not with the individual buyer who bought in good faith anymore

 

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