The Official Mortgage
The official mortgage is an agreement whereby the financial institution acquires a residential or commercial property devoted to the satisfaction of his or her financial obligation in kind, whereby he or she may apply to ordinary creditors and the following lenders in order to get the right of the rate of that residential or commercial property in any hand.
The mortgage is an agreement concluded between the mortgagor and the mortgagee creditor which grants the mortgagee right in rem in the residential or commercial property, with all benefits and genuine security over the home mortgage product. Additionally, the mortgagor can follow the mortgaged residential or commercial property if it is moved to a 3rd party. The mortgagor keeps ownership and possession of the mortgaged residential or commercial property however is limited in their disposal rights to ensure the mortgagee's interests are secured.
The difference in between the main mortgage and the possessory home mortgage
The official mortgage is produced through an official contract, that should be notarized in a notary public office.
While the right of possessory home mortgage is produced through unofficial contract. Whereas the ownership and possession of the mortgaged residential or commercial property in the main mortgage right remains in the hand of the owner (debtor), and the ownership in the possessory home mortgage is transferred to the lender.
The official home mortgage is restricted to realty, while the possessory home mortgage can cover both realties and movable residential or commercial properties.
The commitments of the mortgagor and the mortgagee lender in the main home mortgage
The Egyptian Civil Law No. 131 of 1948 and its changes manage the commitments of the mortgagor and mortgagee in Chapter Two as follows:
The Mortgager's commitments:
The mortgagor is bound to provide the mortgaged residential or commercial property to the financial institution or to a designated representative selected by both Parties in the agreement.
The legal requirement for a seller to deliver an offered item will be applied to the mortgagor's responsibility to deliver the home loan product to the mortgagee.
If the mortgaged residential or commercial property is gone back to the mortgager's belongings, the home loan will be ended, unless the mortgagee proves that the residential or commercial property has been returned for a factor not meant to end the home mortgage.
The mortgagor ensures the stability and enforceability of the home loan, and the mortgagor will not take any action that reduces the worth of the home mortgage or hampers the financial institution's exercise of his rights under the contract. In case of urgency, the mortgagee financial institution might take all necessary steps at the mortgager's expense, to maintain the mortgage item. The mortgagor shall be liable for the loss or damage of the home loan product if such loss or damage is due to his fault or occurs from force majeure act.
The arrangements of Articles No. 1048 and No. 1049 concerning the loss or damage of the mortgaged residential or commercial property under a main mortgage, and the transfer of the lender's right from the mortgage product to any substituted rights will apply to the possessory mortgage.
The Mortgagee's responsibility:
Upon getting the mortgaged residential or commercial property, the mortgagee is obliged to exercise the exact same level of care and maintenance in its conservation as would a prudent individual. and he is responsible for the loss or damage of the home mortgage item unless it is shown that such loss or damage was triggered by an external element beyond his control.
The mortgagee is not permitted to derive any gain from the mortgage item without settlement, he should invest it fully unless otherwise concurred Any net profits or benefit derived by the lender from the use of the home mortgage item shall be subtracted from the quantity protected by the home loan, even if the due date has actually not yet come, provided that the deduction will be made from the expense of preserving and fixing the residential or commercial property and its repair work, then from costs and interest, and after that from the principal of the debt.
If the mortgage product produces earnings and the parties agree that all or part of the earnings will be used to balance out the interest, in, this agreement will stand within the maximum limitations of lawfully acceptable contractual interest.
The mortgagee will assume the management of the mortgaged residential or commercial property, and he needs to work out because the care of a sensible person. The mortgagee can not modify the home loan item's usage without the mortgager's approval. He must immediately inform the mortgagor of any matter needing his intervention.
If the mortgagee abuses this right, mis-manages the residential or commercial property, or commits gross negligence, the mortgagor deserves to demand that the product be put under custody or to recover it upon payment of the exceptional debt. if the quantity protected by the mortgage does not bear interest and has actually not yet become due, the mortgagee is entitled just to remaining quantity after subtracting the value of interest determined at the legal rate for the duration in between the day of payment and the due date of the debt.
The mortgagee will return the mortgaged product to the mortgagor after the mortgagor has actually completely discharged their obligation including all expenses and settlement associated to the right.
Effects of the main home loan in the Egyptian law
The impact of the home mortgage in between the contracting celebrations:
Firstly: The mortgager:
The mortgagor may dispose of the mortgaged residential or commercial property as long as such actions do not hinder the mortgagee's right.
The mortgagor keeps the right to manage the mortgaged residential or commercial property and to gather its returns and leases granted by the mortgagor are not enforceable against the mortgagee unless it was notarized before the registration of the expropriation notice.
However, if the lease was not notarized in this method, or it was concluded after notarizing the notice and the lease was not paid beforehand, so it will not work unless it can be considered part of the good management work. If the lease term prior to notarizing the mortgage notice goes beyond nine years, it will not be effective against the mortgagee lender other than for a duration of nine years just unless it was signed up before the home mortgage was registered.
The mortgagor is accountable for guaranteeing the safety of the mortgage residential or commercial property. The mortgagee lender has the right to challenge any actions or negligence by the mortgagor that could significantly decrease the value or security of the residential or commercial property, and in immediate cases the mortgagee might take required protective procedures and seek reimbursement from the mortgagor, from any expenses incurred.
If the mortgagor negligently causes the damage or damage of the mortgaged residential or commercial property, the mortgagee creditor has the alternative to require adequate insurance to cover the loss or to right away gather the full outstanding debt.
When the destruction or damage to the mortgaged residential or commercial property is triggered by an external aspect and the mortgagee contradicts the debt without insurance coverage, the mortgagor has the alternative to provide adequate insurance coverage or settle the debt instantly before the due date. If the financial obligation has no interest, the mortgagee is only entitled to the principal quantity without legal interest for the duration in between the real payment date and the original due date.
Secondly: The mortgagee creditor:
A third-party mortgagor's individual possessions are exempt from seizure for the debtor's debt. The mortgagor can not substitute payments for the debtor unless concurred upon.
Upon the debtor of the arrearage, the mortgagee can foreclose on the mortgaged residential or commercial property and requests its sale in accordance with the procedures and timelines specified in code of Civil Procedures. If the mortgagor is a third celebration other than the debtor, he can prevent any foreclosure proceedings by willingly giving up the mortgaged residential or commercial property according to the procedures and rules governing residential or commercial property surrender.
Any contract that gives the mortgagee the right to take ownership of the mortgaged residential or commercial property at a fixed price upon financial obligation default or to offer it without following the lawfully mandated procedures is void, even if participated in after the home loan arrangement. However, after the financial obligation or a portion of it has actually grown, the debtor and mortgagee can concur that the debtor will move the mortgaged residential or commercial property to the mortgagee in satisfaction of his debt.
The official home loan and its impact to the 3rd celebration:
An official home loan is only enforceable versus 3rd parties if the home loan contract or judgment establishing the home mortgage is signed up before the 3rd party obtains a right in rapid eye movement in the residential or commercial property. This is without bias to the provisions of personal bankruptcy laws.
Additionally, 3rd parties can not assert claims based upon an unregistered safe right, the substitution of one lender for another in this right, or the project of registration priority to another financial institution unless such actions are noted in the margin of the initial registration.
The treatments for registration, renewal, cancellation, and cancellation an official home mortgage, as well as the impacts thereof, are governed by the arrangements of the Real Estate Registration Law. The expenses of registration, renewal, and cancellation of an official mortgage are borne by the mortgagor unless otherwise agreed upon.
The termination of the official mortgage:
An official home loan terminates upon the satisfaction of the secured debt or the nullification of the underlying cause for the financial obligation. However, any bona fide rights acquired by 3rd parties throughout the period in between the home mortgage's expiration and its possible reinstatement remain unaffected.
If foreclosure procedures are finished, the main home loan is definitively extinguished, even if the residential or commercial property ownership changes hands. When the mortgaged residential or commercial property is offered through a forced auction, the mortgage rights end upon the deposit of the auction continues or their payment to eligible authorized financial institutions.