The Directorate General of Legal Certainty and Public Faith has ruled on an appeal against a registrar's refusal to cancel a lease registered on a property following a mortgage foreclosure. The ruling examines whether a previously registered twenty-year lease can be cancelled through a decision on an eviction incident (Art. 675 LEC) issued within the foreclosure proceedings themselves. The case establishes the relevance of judicial rulings that determine that occupants hold no rights against the purchaser of the property.
For entities acquiring properties through mortgage foreclosure (such as REITs), the ruling reinforces the utility of judicial decisions issued under Art. 675 LEC to clear property titles of leasehold encumbrances. For tenants, it highlights that the existence of a registered lease agreement is not absolute if a court determines, within the framework of the foreclosure, that they hold no title against the mortgage. The risk for the purchaser is a negative assessment from the registrar if they do not possess a final judicial ruling specifically ordering the cancellation of the lease.
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