Transfer of Ownership Through Tradition in Civil Code
Existence of a Title Transferring Ownership
A) If No Title Transferring Ownership, No Tradition (Art. 675)
Transferring ownership titles, by their nature, serve as background for acquiring ownership. However, they do not transfer ownership by themselves; that role belongs to the means of acquisition. Transferring ownership of securities includes trading, exchange, donation, contribution to a company, mutual funds, quasi-usufruct, and irregular deposit.
B) The Title of Tradition Must Also Be Valid
The invalidity of the title prevents the tradition from operating, as any defect in one affects the other. The invalidity of tradition usually results from the nullity of the contract serving as the title transferring ownership. This is called the influence of title in tradition. The same applies if there is an absence of a title involving transfer.
From this perspective, the law views tradition as an act caused by a title, not as an abstract or independent act. However, the extent of invalidity due to lack of title or an invalid title is not precisely defined. It can be seen in relation to the possessor effect of tradition.
Article 675, by stating that the lack of title or its invalidity overrides tradition, does not clarify whether this invalidity renders it redundant to the point that not only is the domain not transferred, but the buyer also never receives the thing with the owner’s intention and never enters into possession. Alternatively, it could be void as a mechanism that transfers the domain, but in fact, it does leave the purchaser in possession.
The first solution can be supported by the categorical retroactive annulment, which eliminates any effect or consequence of the act declared invalid. The second solution seems more consistent with the Civil Code’s general system for the following reasons:
- The final part of Article 675 suggests that the rule is directed more towards the transfer of domain, without reference to possession.
- Article 704, points 3 and 4, considers unfair titles to hold as null and void, respectively. Thus, a null or putative title, though unjust, allows possession, albeit uneven, which may lead to ownership by extraordinary prescription.
- The Civil Code considers occupation as a title of ownership, equivalent to admitting possession without title. Since someone who enters by occupation has no justification for their possession, if possession by occupation or without a title is allowed, it would be inconsistent to prevent possession if there is a title, even if it is null.
Delivery of the Thing with Intent to Transfer Domain
In any method of acquisition, there is a material fact: tradition, the handing over of the thing. The form it takes differs depending on whether it involves buildings, furniture, or personal rights.
Effects of Tradition
A distinction must be made between whether the assignor is the owner of the delivered thing or delivers it in their name, or if they are not.
Effects of Tradition When the Assignor Is the Owner
The normal effect of tradition is to transfer the domain from the assignor to the purchaser (Articles 670, 671, and 1575). As a derivative mode of acquiring domain, what the assignor had passes to the purchaser under the same conditions. For example, if a lien existed or the property was subject to resolution, it is transferred with this burden and possibility.
Effects of Tradition When the Assignor Does Not Own the Thing Delivered
Tradition is valid. This is consistent with Article 1815, which establishes the validity of the sale of another’s property. There are three possible situations:
A) The Assignor Is the Regular Keeper of the Thing Delivered
If the acquirer is in good faith and has just title, they also acquire regular possession of the delivered thing. However, this does not mean that the assignor’s possession has been transferred to the purchaser, because possession is not transferable. The just contract preceding the tradition plays the role of title and allows the purchaser to start regular possession. Moreover, Article 717 allows the successor to add the possession of their ancestors, with its qualities and defects.
B) The Assignor Is an Irregular Holder
If the acquirer is in good faith and has just title, the title improves upon the assignor’s, and the title and tradition serve to regulate possession. In this case, it is not appropriate for the current holder to add the possession of their predecessor, because if they do, the regular holding of the first would become irregular, as the aggregation of possessions operates with its qualities and defects.
C) The Assignor Is a Mere Holder
Since the assignor is only a mere holder, the buyer can never acquire the thing by prescription, because mere holding excludes possession, with the exception of Article 2510, point 3. However, even in this case, if the acquirer is in good faith (unaware that the assignor is only a mere holder) and has just title, they become a regular holder and may acquire the thing by ordinary prescription.
In any of these cases, the assignor may acquire the domain after the tradition. Pursuant to Article 682, paragraph 2, and 1819, the transfer of title is understood to have operated from the moment tradition occurred.
When Tradition Can Be Requested
Typically, tradition is carried out immediately after the contract is concluded (Article 681). There are three cases in which tradition cannot be requested:
- When the title is conditional. The condition suspends the right.
- If there is a pending term for payment of the thing. The effect of the term is to suspend the enforceability of the right (Article 681).
- When a judicial decree has been issued retaining or seizing the thing to be delivered, the creditor has no right to demand delivery, and the assignor should not make it (Article 1578, point 2, and Article 1464, point 3). In these cases, tradition would have an illegal object and be sanctioned by absolute nullity.
Tradition Subject to Conditions
According to Article 680, paragraph 1, tradition can transfer domain under a precedent or subsequent condition, provided it is expressed. The form must be agreed upon in the title preceding the tradition. Tradition is subject to conditions if, for example, a property is donated, and the contract stipulates that the donee must return the property if they marry before a certain age. For example, in an inter vivos trust, the trustee has control, but subject to precedent conditions.
Normally, the condition should be expressed. However, there are exceptions where the condition is implied, as in the tacit subsequent condition of Article 1489. This raises the question of whether this condition affects tradition. Ruperto Bahamondes argues that it does not apply because Article 680 requires the condition to be expressed, thus excluding any implied condition. Most authors, including Peñailillo Alessandri, contend that the domain can be transferred under both express and implied conditions. If tradition requires a title transferring ownership, and the title is resolved, ceasing to exist, fulfilling the implied precedent conditions, it would be logical for tradition to survive.
If recourse is made to Article 1489 and a court terminates the contract, the tradition would also terminate by applying the principles of resolution. The property would be returned as received under the resolved title, making it irrelevant whether Article 680 applies.
Tradition Under a Suspensive Condition
The law addresses the scenario where the thing is delivered before the fulfillment of the condition. In this case, the acquirer effectively acquires the domain without a new tradition, as it was done earlier. Claro Solar stated that tradition made under a suspensive condition “naturally does not transfer ownership because the owner has not detached from it in favor of the purchaser, but in case the uncertain future event occurs, the transfer is made. The transfer of domain will take place fully at the moment of the realization of the condition without any act or subsequent expression of will.”
Tradition Subject to a Term
Although Article 680 does not address it, tradition, or rather, the title transferring ownership, can also be subject to a term. If there is a suspensive term, the obligation to carry out the tradition is not postponed, but rather, the tradition is carried out now, and its effects will begin from a future date. This is an early tradition, similar to one made under a suspensive condition, and the retention of title applies in the same way. A resolutory tradition would also occur if it is agreed that the domain will cease to be acquired on a specific date. This is the case with a trust, where the refund should be made upon the owner-trustee’s death.