The Directorate General for Legal Certainty and Public Faith is reviewing an appeal filed by the ICO against the suspension of the registration of various financial covenants in a business mortgage deed (Art. 19 bis of the Mortgage Law). The Registrar had excluded clauses such as 'Change of Control', 'Loan to Value Ratio', or 'Material Adverse Effect', considering them to be of a personal nature without real legal significance (Art. 2 and 98 of the Mortgage Law). The appeal argues that these stipulations define the guaranteed obligation and are effective against third parties.
For credit institutions (such as the ICO), the resolution suggests the possibility of providing greater legal certainty to business mortgages by registering complex financial clauses that registrars currently tend to exclude for lacking real significance. For borrowing companies, this implies that their financing terms (ratios, special accounts, control conditions) could be reflected in the Land Registry, affecting their relationship with third parties. The legal conflict lies in whether these financial clauses can be registered without violating the nature of the registry.
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