Puerto Rico Foreclosure Laws

Questions

Answers

How are mortgage liens treated in Puerto Rico?

Puerto Rico is known as a lien theory state where the property acts as security for the underlying loan. The document that places the lien on the property is called a mortgage. Puerto Rico is a U.S. Commonwealth where U.S. Bankruptcy law applies.

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How are Puerto Rico deeds foreclosed?

In Puerto Rico, lenders go to court in what is known as a judicial foreclosure proceeding in an equity court where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. There are both statutory and judicial notice requirements prior to sale.

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What are the legal instruments that establish a Puerto Rico mortgage?

The documents are known as the mortgage, note, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

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How long does it take to foreclose a property in Puerto Rico?

Depending on the court schedule, it usually takes approximately 60-90 days to effectuate an uncontested foreclosure. This process may be delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy.

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Is there a right of redemption in Puerto Rico?

Puerto Rico has no statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. There is a time limit to undertake such redemption.

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Are deficiency judgments permitted in Puerto Rico?

Yes, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount, which the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan. There are no deficiency judgments for non-recourse mortgages in Puerto Rico.

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What statutes govern Puerto Rico foreclosures?

The laws that govern Puerto Rico foreclosures are found in the Puerto Rico Civil Code, Title 31 §1291h. To view these statutes on the Web, you can visit:


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