Payments in kind are similar to enforcements regarding the termination of lease agreements

The recent Judgment of the Supreme Court (Chamber 1) No. 1374/2024 of 21 October considers that a payment in kind (dación en pago) in an insolvency proceedings is similar to a mortgage enforcement for the purposes of Article 13(1) of Law 29/1994 of 24 November on Urban Leases (Ley de Arrendamientos Urbanos) (“LAU”). The Court found that a valid lease over the transferred properties is terminated unless it is registered with preference over the right of the lender.

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