Novation is a way of extinguishing obligations and requires the pre-existence of a legal relationship and the unequivocal will of the parties to terminate it and replace it with a new obligation. The unrestricted will of the parties to terminate the previous contractual relationship and replace it with a new one must be considered an essential element of the novation.
The origin of the novation is already in the Roman Empire, where it managed to acquire an important role within the law that governed it. It established that it was used clearly and precisely to proceed to modify the bond of obligation that had been established between two clearly differentiated parties.
Novation is a contract that to be valid it is necessary that both the contract and the obligation that existed before the novation are legitimate. The representative of a person cannot carry out the novation unless he is specially authorized.
Furthermore, the change of debtor does not constitute a novation, unless the creditor states that the previous debtor no longer owes him. The creditor who has given the original creditor free of charge has no action against him, even though the new debtor becomes insolvent, unless the insolvency was prior to the novation.
The novation can be divided between subjective novations (which, in turn, are subdivided into active or passive novations), objective novations or mixed novations. The so-called objective novations are understood as a contract through which the original obligation can be avoided with a replacement based on another obligation with different axes.
For there to be an objective novation, the modifications must be made according to the alliance of the parties, since, otherwise, it will be a mere recognition of the debt or a legal fixation business.
The novation of the mortgage is one of the most common and consists of modifying the conditions of a mortgage without changing the financial institution. The modifications that can be made depend on the legislation of each country.
In the case of changes that may occur when making the novation of the mortgage in Spain, it would be necessary to highlight the interest rate, the capital increases, the reference index or the term of what is the amortization in the expansion as in reduction.
