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Antichresis
Antichresis is a contract that must be made in writing between parties, giving the creditor the right to the fruits (such as rents) of a debtor’s possession of immovable property to pay off the interest and/or principal of the debt. Instead of making monthly payments to the creditor, the debtor forfeits the right to his or her income made through immovable or real property such as land or homes so that the creditor will directly reap this benefits until the interest and, sometimes, the mortgage are paid.
Historically, the Romans first coined the term antichresis, which means mutual use. Roman debtors were allowed to pledge their immovable property as a way to pay off their monthly interests to the creditor. The pledge must be made in writing otherwise it was considered void and the creditor would have no legal right to the property whatsoever. If the creditor decides to sell the property, under antichresis, the creditor will still have the rights to the fruits of that property and the sale must not be made without acknowledging the creditor; otherwise, the debtor was guilty by law.
It is given that the person making the pledge of antichresis must be the owner of the property or has the full power to expose it. But even if the person is a part owner, he or she can pledge his or her share. Moreover, according to laws in certain countries, you can pledge another person’s property if he or she consents to it at the time of the pledge, meaning that the person will be held liable if you, somehow, do not follow through with the pledge.
In addition, the creditor who received the pledge of antichresis has the right to transfer the profits of the debtor’s immovable property at his or her wish. In case the creditor is, in turn, a debtor to someone else, he or she may sell the right of antichresis to another creditor. In essence, once the pledge is made, the creditor has the right of ownership to the profits of the property and may transfer the right.
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