The recent Resolution of the General Directorate of Legal Certainty and Public Faith (DGSJFP) dated 15 January 2025 has reaffirmed the prohibition of the Forfeiture Covenant in transactions which, under the guise of a purchase option contract, conceal a guarantee purpose incompatible with Spanish law. This confirms the negative registry qualification of a purchase option deed on the grounds that the legal transaction analysed violates articles 1859 and 1884 of the Civil Code, which expressly prohibit this type of agreement.
The ‘Pactum Commisorium’ (Forfeiture Agreement) is an agreement whereby a creditor, in the event of non-payment of the debt, acquires direct ownership of the asset given as collateral, without the need to resort to the enforcement procedures provided by law. This practice has been repeatedly rejected by the jurisprudence of the Supreme Court and by the registration doctrine, given that it generates a contractual imbalance between the parties and violates the principles of legal certainty and debtor protection.
Legal doctrine has emphasised that the basis for this prohibition lies in the need to avoid the misappropriation of the debtor’s assets, the imposition of abusive conditions and the circumvention of the procedural mechanisms established for the execution of guarantees. In this sense, the Supreme Court has emphasised on multiple occasions that the forfeiture clause is null and void, as it prevents the debtor from benefitting from the protection mechanisms granted by legal executions.
The case analysed by the DGSJFP centres on a purchase option on two properties in which, according to the registrar, underlay a financing deal with a guarantee purpose. According to the negative qualification, the deal presented a series of indications that allowed for the conclusion that the purchase option had been instrumentalised with the purpose of ensuring the payment of a debt, in contravention of the prohibition of the forfeiture agreement. The aforementioned resolution is complemented by another resolution dated 16 February 2025 that summarises the administrative doctrine on the Pactum Commisorium.
Among the elements highlighted in the resolution, it is pointed out that the optionee had advanced significant amounts as an option premium and as an advance on the purchase price. It was also established that the grantor of the option could render it null and void by returning the amounts received plus an additional sum, which distorted the typical function of the purchase option and turned it into a disguised guarantee mechanism.
Another key factor in the assessment of the cancellation agreement was the establishment of a unilateral procedure for the exercise of the option without prior notification to the grantor. According to the doctrine of the DGSJFP, these types of agreements, when they do not guarantee an objective procedure for the valuation of the property and allow the creditor to take possession of the property under conditions that are disadvantageous for the debtor, violate the principles that govern the law of guarantees and foreclosure.
The DGSJFP bases its decision on extensive previous doctrine on the subject. Among other criteria, it reiterates that the purchase option is a preparatory contract that confers on the optant a potestative right of acquisition, but that it cannot be used as a formula to cover up a forced transfer derived from the breach of a financial obligation.
The ruling analyses the existence of a possible indirect business and concludes that the contract analysed deviated from the proper function of the purchase option to act as a guarantee mechanism. In this sense, it is emphasised that the agreed contractual structure allowed the optante to acquire the property without the need to submit to an execution procedure, which led to an obvious circumvention of the requirements demanded by the legal system for the execution of real guarantees.
To avoid the nullity of this type of operation, it is essential that call option contracts are structured with a clear differentiation from guarantee contracts, ensuring that their purpose is not to conceal a cancellation agreement. In this sense, case law and registry doctrine insist on the need to establish objective valuation mechanisms and adequate notification procedures that guarantee fairness and legal certainty in contracting.
Epilogue: The Ex-Intervallo Agreement and the Datio Pro-Soluto.
Although the cancellation agreement is prohibited, the Spanish legal system does allow alternative mechanisms that can fulfil a similar function without infringing the regulations. One of these is the Datio Pro SOluto, recognised in article 1175 of the Civil Code, which allows an obligation to be extinguished by the delivery of a different asset to the one initially agreed. Unlike the pactum commisu, Datio Pro Solulto is based on a subsequent and voluntary agreement between the parties when the debt is already due, thus guaranteeing that the debtor is not forced to relinquish his property under unfair terms.
Likewise, the pactum ex intervallo is another relevant mechanism in this context. This is an agreement made after the debt has arisen by virtue of which the debtor freely and voluntarily transfers ownership of an asset to extinguish the debt. Case law has stated that this concept – similar to a Martian pact ex post – is valid provided that it has been negotiated autonomously and without coercion, which differentiates it from the penalty clause, which operates from the beginning of the obligational relationship and automatically in the event of non-compliance.
The distinction between these mechanisms and the forfeiture agreement lies in the timing and the voluntariness of the agreement. While the Pactum Commisorium involves the immediate and automatic appropriation of the asset provided as collateral, Datio Pro Soluto and the Pactum Ex Intervallo allow for subsequent negotiation that respects the balance between the parties and avoids abuse of the debtor.