Legal Definitions - pact de non alienando

A pact de non alienando is a legal agreement, commonly found in civil law systems, where a borrower promises a lender not to transfer ownership (alienate) of property that has a debt or claim attached to it (encumbered property), especially when that property is mortgaged. Essentially, it's a promise not to sell or give away property that's being used as collateral for a loan.

While this agreement doesn't legally prevent the borrower from selling the property to someone else, it significantly strengthens the lender's position. If the borrower sells the property and then defaults on the loan, the pact de non alienando allows the lender to take direct action against the property itself to recover the debt, even if it's now owned by a new purchaser, and often without needing to notify that new owner beforehand.

Here are some examples to illustrate this concept:

• Residential Mortgage Scenario: Sarah purchases a house and secures a mortgage from "SecureBank." The mortgage agreement explicitly includes a pact de non alienando. A few years later, without informing SecureBank or paying off the loan, Sarah sells the house to Mark. Sarah then stops making her monthly mortgage payments to SecureBank.

  How it illustrates the term: Because of the pact de non alienando, SecureBank can directly initiate foreclosure proceedings against the house, even though Mark is now the owner. SecureBank doesn't need to go through the lengthy process of suing Sarah first and then involving Mark; they can proceed directly against the property itself to recover their loan, potentially without even notifying Mark initially, as the agreement was designed to protect their interest in the property regardless of a change in ownership.

• Commercial Property Loan Scenario: "TechCorp" obtains a substantial loan from "Capital Lending" to expand its operations, using its main office building as collateral. The loan documents contain a pact de non alienando. Later, TechCorp sells the office building to "New Ventures Inc." to raise cash, but continues to struggle financially and eventually defaults on its loan payments to Capital Lending.

  How it illustrates the term: Despite New Ventures Inc. now owning the building, the pact de non alienando allows Capital Lending to move swiftly to seize or force the sale of the office building to satisfy TechCorp's outstanding debt. Capital Lending's ability to act directly against the property, bypassing the need to pursue New Ventures Inc. as a party to the original loan, is a direct consequence of this agreement, simplifying the recovery process for the lender.

• Agricultural Land Mortgage Scenario: A farmer, Mr. Henderson, mortgages his entire farm to "Rural Credit Union" to finance new equipment. The mortgage agreement includes a pact de non alienando. Mr. Henderson later sells a significant portion of his farm to a housing developer, "Green Acres Development," without informing Rural Credit Union. When Mr. Henderson subsequently defaults on his loan payments, Rural Credit Union discovers the sale.

  How it illustrates the term: The pact de non alienando allows Rural Credit Union to proceed directly against the entire mortgaged property, including the portion now owned by Green Acres Development, to recover the outstanding loan. The agreement ensures that the lender's security interest in the land remains strong, even after a transfer of ownership, enabling them to enforce their rights against the property itself without needing to involve Green Acres Development in the original loan dispute.