Usually, a mortgage is signed for the amount the buyer left unpaid. However, this has serious implications for both parties. Therefore, the Contract provides the same effects without the secondary effects of a mortgage.
Parties:
- Trustee- the owner that has intentions of selling (seller). The person that transfers property of patrimony to a trust.
- Fiduciary- third party responsible for the property during the time the Contract is valid. A bank, or trusted third party. This person has a restricted right of property and is destined to obtain the purpose established in the Contract (transfer of property at the time it is cancelled). A trusted third party that has a property registered in his name for the period of time the Contract is valid. The fiduciary`s main duty is the administration of the trustee`s property. The obligations of the fiduciary are:
- To be neutral and impartial.
- To follow the instructions established in the Contract.
- To provide feedback.
- To not use the property, the property is unavailable for sale, mortgage or embargo.
- Beneficiary- the buyer. The person for who the Contract is prepared. The fiduciary has the obligation to give the beneficiary the property as established in the Contract.
Autonomous Patrimony
- Separate from any other type of patrimony.
- Cannot be seized or taken to court even in the case of bankruptcy.
- During the time the Contract is valid, the trust would become the owner of the property.
Benefits
- Avoids the creditor a tiresome court process of traditional guarantees if the debtor fails to comply with the Contract.
- It is established beforehand that all conflicts be resolved by arbitration in case of disagreements.
- Exemption from paying registration rights and taxes while the property is held by the trust or is returned to the trustee.