What is subrogation interest?

Surrogacy Interests: Are They Really Interests?

Since I had the opportunity to learn about the figure of the so-called "subrogation interests", even more so after experiencing it for my cause, a series of concerns about their use in Colombian practice continue to haunt my head, which is not resolved. easily given the absence of regulation and jurisprudential treatment.

Since I had the opportunity to learn about the figure of the so-called "subrogation interests", even more so after experiencing it for my cause, a series of concerns about their use in Colombian practice continue to haunt my head, which is not resolved. easily given the absence of regulation and jurisprudential treatment.

Although I believe that this topic deserves a much broader development, as this is a comment I will limit myself to presenting a few brief reflections.

For those who do not know this figure, it is the payment of a sum of money that the buyer of property must make to the seller with whom he entered into the said contract (currently it is very common for the seller to be an autonomous estate constituted through a commercial trust ), while the payment of the balance of the price takes place, which, in general, depends on the disbursement made by the entity to which the buyer has requested the home loan.

Said interest is equivalent to the current bank rate, and its payment must be made, a part in advance since the seller requires that at the time of executing the contract of sale the buyer pays the interest that may accrue during a month (under the assumption that the payment of the balance of the price will be made no later than one month after the conclusion of the contract). The other interests that may be caused, that is, when one month has elapsed since the conclusion of the purchase contract the buyer does not pay the balance of the price, or the entity to which he requested the loan does not, will continue to accrue and Therefore, they will be payable to the buyer.

Under the previous description, it seems to us that the problems raised by this figure, as well as their possible solutions, can be addressed from two distinguishable fronts.

The first has to do with its origin. In this order, we would have to inquire about the cause or reason that justifies its existence, since it seems that this is not the result of a spontaneous generation.

Googling a bit, I found that a frequent complaint addressed to some entities that offer housing loans in Colombia is the delay of these in making the disbursement of the approved loans, which surely has repercussions to the detriment of the subjects involved in the development of a housing project.

This seems to be one of the reasons that have led to the emergence of "subrogation interests", so to eliminate them, because as we will see these are not justified as interests in charge of the buyer, we would have to attack the cause, but this implies, in turn, identifying what generates the delay in disbursements.

Several answers could be suggested as the cause of the delay in disbursement, although we have the impression that basically, it is more than anything an administrative problem of the respective lender, either because the review of the deed was delayed, or signatures thereof, etc.

However, it is worth asking if the cause of this situation is also legal, and the only reason that comes to mind could be related to the real nature of the mutual agreement in Colombian law.

Thus, since the loan is a real contract that is perfected with the delivery of the thing, in this case with the delivery of the money (loan) that must be applied to the balance of the purchase price, the borrower cannot demand compliance with the obligation to the borrower, nor request its resolution, which instead it could do, being the mutual a consensual contract.

What benefit would that bring to our question? And to resolve this question, we would have to recognize the undoubted link between the mutual contract and the purchase and sale contract, in this case of real estate, in such a way that seeing in the two associated contracts, the spread of the resolving effect of the first on the other could be suggested. second, thus preventing surrogacy interests from continuing to accrue.