OPPORTUNITIES FOR DEBT DEPOSITORS FROM BANKS
The new Marciano agreement tries to give new vigor to the credit market. The institute, amended by the Banks decree, stands out for the definition of the methods for estimating the asset subject to the agreement at the time of the debtor’s default, for a precise setting of the conditions that determine the default of the debt and for the establishment of a procedure dedicated to ascertaining the occurrence of the condition precedent with consequent definitive transfer of the asset to the creditor. The institute is completed by a series of legal and anti-abuse guarantees and the prohibition of using the agreement for assets used as a principal residence. The concept of “principal residence” referred to in the rule remains to be clarified and the effects in the event of subsequent assignment of the asset to the separated or divorced spouse.
The success of a credit investigation, and therefore the possibility of obtaining a loan, depends on two factors: the possibility that the debtor is able to generate liquidity flows and the extent and quality of the guarantees given.
Until a recent past, real estate collateral was considered among the best because there was a dynamic market for such assets that allowed it to be easily transformed into money. Currently, however, given the stagnation of the sector, the time required for the sale of properties has significantly reduced the appeal of these guarantees.
To tell the truth, previously there was the awareness that to sell a property it was necessary to wait a short period of time and, for this reason, the credit institutions have always entered mortgages for values higher than those of the guaranteed credit.
In an attempt to give greater prominence to the guarantees constituted by real estate, the Banks Decree gave a detailed legal status to the Marciano agreement, a contract in which the debt is guaranteed by the transfer to the creditor of a property or another real estate right, owned by the debtor or of a third party, suspensively conditioned by the debtor’s breach.
The new art. 48-bis of Legislative Decree 385/93 contains in fact a detailed discipline of the procedures for the constitution and execution of such agreements.
Definition of march pact
The Marciano pact is a contract by which, against the granting of a loan, the debtor assigns a specific property to the creditor with a suspensive condition. If the loan is regularly honored, the condition precedent is not fulfilled and the asset becomes the property of the debtor, in the event of default, the transfer of the asset to the creditor is concluded.
However, a more careful reading of the standard reveals a whole series of facets that make this contract far more complex and interesting than the simplified description provided above.
Property value on the date of the default
To begin with, with the March agreement the fact is taken into account that the property, in the period between the stipulation of the contract and the occurrence of the debtor’s failure, could increase in value. If this happens, in fact, the creditor is required to pay the debtor the difference between this value and the sum of the defaulted debt and the cost of transferring the asset.
In a stagnant real estate market, this offers a number of advantages for both the creditor and the debtor. The first avoids the costs, the delays and the uncertainties of the ordinary executive procedures by entering the property promptly and then selling it or managing it comfortably on its own.
The debtor has the opportunity to get rid of his debt or to collect a sum in cash where the value of his asset is estimated to be higher than the value of the unfulfilled debt, which is an easy occurrence if the default occurs after the repayment of a certain share of the debt.
If, on the other hand, the reference market is more “lively”, and the value of the property is growing, the debtor could easily find an investor willing to provide him with the money needed to honor his debt and sell the asset directly, making money on the greater market price.
The rule says nothing for the case in which the value of the asset at the time of the default should be less than the sum of the defaulted debt and the costs of transferring the asset but it is obvious that in this circumstance the debt will remain unfulfilled for this difference.
It is evident that the “balance point” of these choices lies in the correct assessment of the value of the property on the date on which the breach occurs and, precisely for this reason, the law remits the determination to an expert appointed by the Court of place where the property is located.
Once the commercial value of the property is known, the debtor is in a position to make the best choices and therefore not passively suffer the effects of the Marciano agreement.
Guarantees of legitimacy and anti-abuse
To protect compliance with the rules governing it, it is mandatory to use the notarial deed for the stipulation of the agreement, both when the loan contract is concluded and in the case of a condition added to pre-existing contracts and for the deed that certifies the fulfillment of the condition precedent with consequent transfer of the asset to the creditor.
Against possible abuses of this legal instrument, the rule requires that the creditor can only be a bank or other subject authorized to grant loans to the public pursuant to art. 106, Legislative Decree 385/93 and that the debtor must be an entrepreneur.
Furthermore, the agreement cannot have as its object the property used as the principal residence of the owner, spouse or relatives of the same by the 3rd degree.
This aspect presents, in the opinion of the writer, some unclear points. First of all, the standard does not give a definition of a principal residence. The term, which already has different meanings in the field of taxation, should be better specified so as to allow an exact identification of which building is used by the debtor as a principal residence, excluding its usability for a possible Marciano pact.
Nothing is specified for the case in which the property is used as a main residence after the stipulation of the agreement. In fact, the limit seems to operate only when the contract is stipulated and therefore any subsequent payments should have no effect on the validity of the agreement.
Moreover, a different interpretation would make it easy to “deactivate” the effects of the breach by preventing the transfer of the asset to the creditor: it would be enough, in fact, to use the object of the agreement as the principal residence as soon as you realize that you are no longer able to repay. the loan.
But if this interpretation seems unexceptionable when it comes to the debtor’s assets, problems can arise where the property is used as the principal residence of the spouse of the same, given that this can happen, at the time of separation or divorce, due to a provision of the judicial authority.
Thus there would be a paradox in which, due to the effect of the pact, the goods would be transferred to the creditor who, however, could not acquire possession of them, since the same was assigned in use to the debtor’s spouse, which would inevitably reduce its value in case of sale.
The distorted uses (eg false separations of the spouses) that such an interpretation could lead to are easily imaginable. Nor does it seem that specific additional clauses included in the contract with which the Marciano pact is stipulated are admissible on this point (eg bans on the possibility of assigning the property to the principal residence of the debtor, spouse or his relatives and relatives by the 3rd degree after the signing of the agreement).
When the breach occurs
The rule solves the problem of identifying the moment in which the debtor deems himself to be defaulting, thus avoiding that disputes arise regarding the advantage of the expeditious procedure.
Paragraph 5 of the art. 48-bis, establishes, in fact, that there is non-fulfillment in case of non-payment extended for more than 9 months from the deadline:
1) at least 3 installments, even if not consecutive, if the loan provides for repayment in monthly installments;
2) even of one installment only, when the repayment includes installments of more than one month (eg six-monthly);
3) of the repayment envisaged by the loan agreement, when there is no repayment in installments.
However, if on the expiry date of the first installment, even if not monthly, the debtor has already repaid the loan received at least equal to 85% of the principal, the default period is elevated from 9 to 12 months.
The “visibility” of the pact
Considering the effects of the agreement for the debtor, it is clear the importance that the knowledge of the same by third parties assumes.
To this they provide a series of rules (eg art. 48-bis, c. 9) which require registration in the land registry:
– of the pact marciano at the time of stipulation:
– the occurrence of the suspensive condition that involves the transfer of the asset to the creditor;
– cancellation of the agreement if the debtor regularly reimburses the loan.
On the contrary, the procedure that leads to the fulfillment of the suspensive condition and therefore the transfer of the asset to the creditor does not require any external publicity.
The creditor, upon the occurrence of the breach:
1) notification to the debtor or, if different, to the holder of the real estate right, as well as to those who have rights deriving from the registered or transcribed title on the property, a declaration of wanting to make use of the effects of the agreement specifying the amount of the credit for which proceeds;
2) after 60 days, the creditor asks the president of the Court of the place where the property is located for the appointment of an expert to estimate, with a sworn report, the real estate right object of the agreement;
3) the expert within 60 days of the appointment communicates, possibly via PEC, the sworn appraisal report to the debtor or, if different to the owner of the real estate right, to the creditor and to those who have rights deriving from title entered or transcribed on the property;
4) the recipients have 10 days to send notes to the expert who, within the next 10 days, makes a new communication taking into account these notes;
5) if the estimated value is greater than the sum of the default debt and the transfer costs, the creditor pays the debtor the difference on a bank account without charges;
6) otherwise, the suspensive condition is deemed to have been fulfilled by notifying the creditor of the estimated value of the asset;
7) the creditor, with notarial deed, proceeds to the cancellation of the suspensive condition completing the transfer of the asset. To this end, the creditor must produce an authentic extract of his accounting records.
Relations with other creditors
The 4th paragraph of the art. 48-bis, provides that if the loan is already secured by a mortgage, the pact marciano, once transcribed, shall prevail over the transcripts and registrations executed after the mortgage registration.
This may have the effect of discouraging such new transcripts and inscriptions, given the prevalence of the pact over them, but could make them convenient if the property in question presented a value higher than that of the debt claimed by the owner of the Marciano agreement. In this case, in fact, the other creditors could satisfy themselves on the sum liquidated by the Bank to the debtor following the fulfillment of the condition precedent.
For these reasons, if the property subject to the Marciano agreement is subjected to execution by another creditor (eg Equitalia), the ascertainment of the debtor’s breach against the bank, as well as the appointment of the appraiser for the estimate, are reserved for the execution judge and the bank is obliged to pay all the costs of the execution and the value of any credits with pre-emption rights prior to the Marciano agreement (art. 48-bis, c. 10).
Bare ownership and usufruct
Some reflections can be made regarding the usability of the Pact in relation to real estate rights other than full ownership.
In the case of usufruct, the value to be transferred varies according to the age of the holder of the right, decreasing as the latter increases because, with the death of the usufructuary, the possibility of economic exploitation of the law comes to an end.
In addition, the usufruct requires that the asset be “put to income” and therefore, as a rule, rented, which requires the bank to have a structure dedicated to the management of these assets.
From this point of view, the law appears to be provisional as it allows the transfer of the real estate right both to the creditor and to a company controlled by the same or the same associate or even simply authorized to purchase, hold, manage and transfer real property rights. In practice, banks can choose to have specific internal functions as well as to set up ad hoc companies or even to contact external parties.
Even the value of a bare ownership varies according to the age of the usufructuary but it does not have any management cost, not even tax and there is now a sufficiently evolved market to allow its marketability.
In essence, if you can afford to wait long enough to get a good price and if the property covered by the real estate law still has a value, there do not seem to be reasons against the stipulation of a Marciano pact having as its object those assets.
To conclude, the new institute seems to offer good opportunities for credit institutions that want to grant loans secured by real estate, making it easier to sell and maximizing the possibility of credit recovery.
On the other hand, the exploitation of the Marciano pact cannot take place in the absence of structures specialized in the management of real estate and real estate rights that currently few banks have.
On the debtor side, the main advantage would seem to be to allow easier access to credit for those who own real estate, even if the impossibility of using the pact for those in their first homes could greatly limit their usability.