ANTICHRESIS

(ARTICLES 2132-2139)

Art.   2132.  By  the  contract   of  antichresis  the  creditor acquires the right to receive the fruits  of an immovable of his  debtor,   with  the   obligation  to  apply  them  to  the payment  of  the  interest,  if  owing,  and  thereafter  to  the principal of his credit. (1881)

Art. 2133. The actual market value of the fruits at the time of the application thereof to the interest and principal shall be the measure of such application. (n)

Art.  2134.  The  amount  of  the  principal  and  of  the  interest shall  be  specified  in  writing;  otherwise,  the  contract  of antichresis shall be void. (n)

Art. 2135. The creditor, unless there is a stipulation to the contrary, is obliged to pay the taxes and charges upon the estate.

He  is  also bound  to  bear  the  expenses  necessary  for  its preservation and repair.

The sums spent for the purposes stated in this article shall be deducted from the fruits. (1882)

Art.  2136.  The  debtor  cannot  reacquire  the  enjoyment  of the  immovable  without  first  having  totally  paid  what  he owes the creditor.

But   the   latter,   in   order   to   exempt   himself   from   the obligations imposed upon him by the preceding article, may always   compel   the   debtor   to   enter   again   upon   the enjoyment   of   the   property,   except   when   there   is   a stipulation to the contrary. (1883)

Art.  2137.  The  creditor  does  not  acquire  the  ownership  of the  real  estate  for  non-payment  of  the  debt  within  the period agreed upon.

Every  stipulation  to  the  contrary  shall  be  void.  But  the creditor may petition the court for the payment of the debt or  the  sale  of  the  real  property.  In  this  case,  the  Rules  of Court on the foreclosure of mortgages shall apply. (1884a)

Art.  2138.  The  contracting  parties  may  stipulate  that  the interest  upon  the  debt  be  compensated  with  the  fruits  of the property which is the object of the antichresis, provided that if the value  of the fruits should exceed the amount of interest allowed by the laws against usury, the excess shall be applied to the principal. (1885a)

Art.  2139.  The  last  paragraph  of  Article  2085,  and  Articles 2089 to 2091 are applicable to this contract. (1886a)

ANTICHRESIS

> The  creditor  acquires  the  right  to  receive  the  fruits  of  an immovable of his debtor, with the obligation to apply them o the payment of the interest, if owing, and thereafter to the principal of his credit

> Arrangement  that  the  fruits  will  be  used  to  liquify  the principal obligation
> Doesn't  create  a lien  but  only the grant  of the use  of the fruits

CHARACTERISTICS OF AN ANTICHRESIS

1.   Accessory contract
2.   Formal  contract—it  must  be  in  writing;  the  principal obligation and the interest secured must be in writing

THERE  IS  NO  NEED  TO  TRANSFER  POSSESSION.    WHAT  IS ESSENTIAL IS THE GRANT OF THE USE OF THE FRUITS.

ADDITIONAL BENEFIT IN HAVING A CONTRACT OF ANTICHRESIS

> In  the  absence  of  a  contract  of  antichresis,  the  debtor could just issue a special power of attorney in favor of the creditor for the collection of the fruits of the immovable.
> The additional benefit is that at the failure of the debtor to pay  the  principal  obligation,  the  creditor  may  have  the property subject of antichresis foreclosed

MEASURE  OF  APPLICATION  OF  FRUITS  TO  INTEREST  AND PRINCIPAL

> Must be appraised at their actual market value at the time of application

FORM OF CONTRACT

> The amount of the principal and interest shall be specified in writing
> Otherwise, the contract is void

DEFAULT  RULES  TO  BE  FOLLOWED  (TAKE  NOTE  SO  THAT YOU WILL KNOW WHEN TO OPT OUT OF THE RULES)

1.   The  creditor  advances  for  the  taxes,  charges,  as  well  as the   necessary   expenses   for   the   preservation   of   the property
2.   The  law  uses  the  term  “advances”  as  the  fruits  of  the immovable  may  be  applied  to  the  expenses  and  charges.  If  the  creditor  doesn't  want  to  advance,  he  may  just surrender the immovable to the debtor
3.   The debtor may  not reacquire the enjoyment of the thing until full payment of the obligation.
4.   The  creditor  doesn't  acquire  ownership  of  the  immovable for nonpayment of the debt within the period agreed upon.  Every stipulation to the contrary is void.  The creditor may petition  the  court  to  foreclose  the  property.

THERE  IS POSSIBILITY TO HAVE ALTERNATIVE ARRANGEMENTS FOR FORECLOSURE.