Novation

A novation is an agreement made between the parties that have signed a contract to modify part of its contents. It applies, for example, to modification of the terms and conditions of a mortgage.

It is a way of terminating an obligation by creating a new obligation that replaces it. Through this agreement, one or more elements of the legal relationship are changed, such as the subject, object, or essential conditions, and a new obligation that replaces the previous one is created during the same act.

A novation can take place without the consent of the primary debtor, but it always requires the creditor's approval. The novation will be considered as null and void if the initial obligation also becomes so.

A mortgage novation is a change made to a mortgage loan after it has been contracted, and which implies a new agreement where, for example, the amount of the loan is increased to access new funds, the term of the loan is changed, or new guarantees are added.