What is a commission agreement, How to carry it out and what is it For?

Commission agreement: Understanding how real estate investing works is one of the best ways to invest smartly. Knowing the guarantees, for example, and other ways to protect the creditor and debtor is essential when signing the contract. In this post, you will learn what a commission pact is and what it is for.

The doubt that often arises in people who request financing is about the delivery of a good as a guarantee of the contract. That is if they will need to leave the car as a bonus if they cannot meet the requirements of what was agreed between the parties. Continue reading and understand this subject better.

What is a commission agreement?

To understand what a commission agreement is, we need to keep in mind two important terms: creditor and debtor. Basically, the lender is the institution that grants credit to a particular customer. The debtor is the person responsible for obtaining this credit and who necessarily bears some duties.

Specific subject of this post, the contractual commissary agreement is a contractual condition that provides for some responsibilities for the holder of the agreement (also called the debtor).

In other words, this clause conditions the loss of contractual rights if the requirements described in the contract are not met. In addition, other characteristics of the commission agreement must be taken into account.

When it comes to a type of agreement related to a property given as a guarantee of the agreement, the commission modality refers to the authorization for the creditor to gain the rights over the property.

How does the commission pact work?

When agreed between the parties, the commission agreement works as an automatic transfer of ownership of an asset to the creditor. This refers to both the transfer of a property and the transfer of another good delivered as collateral for the financing.

But, as we have already mentioned, the commission agreement only occurs if the default factor is confirmed; that is, if the debtor does not actually fulfill the obligations set out in the contract.

What are the advantages of the commission pact?

The advantages of the commission pact are numerous. The first one is creditor protection, as it makes it impossible for other institutions to interfere in the asset offered as collateral. In addition, it removes all risks related to the possibility of the debtor not paying or not complying with the clauses of the contract.

Therefore, the commission agreement works as a method capable of generating one more type of attention to the debtor, with regard to debt settlement. He understands that it is preferable to pay what has been lawfully stipulated than to lose the declared good.

What other types of pacts exist?

There are different pacts that can be confused with the commission pact, so it is very important to understand the characteristics of each of them. Next, you can see what differentiates the Martian pact and the fiduciary relationship of the commission pact.

Commissary pact and fiduciary relationship

In cases of real estate purchase and sale , many people can still confuse the commission agreement with the fiduciary alienation. In general, fiduciary alienation works as a form of guarantee that enables the transfer of possession of a certain asset to the creditor. But that only happens until the debt is paid off.

In this situation, the debtor retains the rights to the asset during the entire process. As a rule, this type of guarantee is normally applied in real estate financing operations and mortgages.
Therefore, the big difference is that, in cases where the commission agreement occurs, it happens through the total transfer of the property to the creditor. On the other hand, when it comes to fiduciary alienation, the debtor still retains ownership of the asset.

This can happen, for example, with the ownership of a car or a house made available as collateral until the debt is paid. Generally, fiduciary alienation is preferred by creditors as it allows for quick action to settle debts.

Commissary Pact and Martian Pact

Another modality that generates confusion is the Martian pact , which is very close to fiduciary alienation. Unlike the commission pact, the Martian model also makes it possible for the creditor to appropriate the property given as collateral.

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However, it normally requires a fair valuation of the property. In addition, the amount in excess of the debt must be returned to the debtor. For this reason, every agreement needs to be reviewed and agreed between the parties.

Why is it important to understand the commission pact?

Understanding what the commission pact is is one of the best ways to prepare for a real estate financing process. Discovering the advantages of the commission pact, fiduciary alienation and the martian pact also serves to correctly handle the process of loans or other investments.

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