Contents and procedure for transferring a mortgage

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Ланткевич Кирило

Lawyer

Ukraine / Dnepropetrovsk region

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Publication date: 10.08.2024

I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.

Contents and procedure for transferring a mortgage

A lien is a mortgage security that confirms the owner's unconditional right to receive performance under the principal obligation or to foreclose on the subject of the mortgage in the event of non-fulfillment of the principal obligation.

The main characteristics of the mortgage:

• The pledge certifies the right of its owner to receive from the debtor the performance of the main obligation, which is in monetary form.
   
• If the debtor does not fulfill the main obligation, the owner of the mortgage has the right to foreclose on the subject of the mortgage.
   
• The pledge is drawn up only if its issuance is provided for in the mortgage agreement.
   
• After the state registration of the mortgage, the original of the mortgage is transferred to the mortgagee. If the mortgage contract does not establish another procedure for transferring the mortgage, the original is transferred to the mortgagee.
   
• The collateral is not an issue security, which means that it does not have the properties of securities that can be traded on stock markets.
   
• The first owner of the mortgage is the person who, according to the terms of the mortgage agreement, has the status of a mortgagee at the time of issuing the mortgage.
   
• If the mortgage agreement does not provide for another procedure, the original of the mortgage is transferred to the mortgagee.

Transfer of collateral by endorsement

The pledge can be transferred by its owner to another person by making an endorsement. An endorsement is a written transfer of rights executed on the security itself or on an additional document. The endorsement must be signed by the previous owner of the lien and may contain instructions for the new owner.

Rights of the new owner:

The next owner of the mortgage acquires all the rights of the mortgagee under the main obligation and under the mortgage agreement, on the basis of which the mortgage was issued.
Termination of the rights of the previous owner: The rights of the previous owner of the mortgage as mortgagee are terminated after the transfer of the mortgage to the new owner.

Responsibilities of the previous owner:

The previous owner of the mortgage is obliged, at the request of the new owner, to transfer all documents and information that are important for the realization of the rights arising from the mortgage. This may include copies of the mortgage agreement, foreclosure documents, and other relevant materials.

The procedure for transferring the  mortgage

1. Issuing an endorsement: The previous owner writes an endorsement on the mortgage, which confirms the transfer of rights to the new owner. The endorsement must be signed by the previous owner and its form must meet the requirements of the law.
    
2. Transfer of documents: The previous owner transfers to the new owner all the necessary documents that confirm the rights to the mortgage and are related to the main obligation.
    
3. If there is additional information or specific details that may be useful to the new owner, these should also be forwarded.

Mandatory mortgage details

• Name and description of the obligation: The term "Collateral" must appear in the title of the document as a constituent part. Indication of the obligation of the debtor to fulfill the main obligation to the mortgagee within the prescribed period.
• Links to contracts: Details of the mortgage contract, details of the contract that determines the primary obligation.
• Description of the subject of the mortgage: A detailed description of the subject of the mortgage, sufficient for its identification. Registration data of the subject of the mortgage (if any).
• Content and size of the main obligation: The amount of the main obligation.  Expiration date and method of performance of the obligation.
• The method of collection: If the mortgage agreement provides, describes the method of foreclosure on the subject of the mortgage.
• Mortgage registration number: Indication of the registration number, date and place of state registration of encumbering real estate with a mortgage.

Realization of rights under the pledge

Written demand to the debtor:

The owner of the mortgage can submit a written demand to the debtor for the performance of the main obligation in his favor. The request indicates the bank account for the transfer of the amount of money.

Presentation of the  mortgage:

The debtor may require the owner of the pledge to present the original without transfer.

Transfer of collateral to the debtor:

The collateral shall be transferred to the debtor after the full performance of the main obligation. The finding of collateral in the debtor's possession indicates the performance of the main obligation, unless the contrary is proven.

Cancellation of mortgage:

After the principal obligation has been fulfilled, the collateral held by the debtor is cancelled. If the collateral is in the possession of another person, this is evidence of non-performance of the obligation, unless proven otherwise.

Partial fulfillment of the obligation:

If the obligation is fulfilled in parts, the holder of the pledge is obliged to issue documents confirming the receipt of payments. The owner also keeps a register of payments for the mortgage, which is provided to the debtor upon request. In case of discrepancies between the documents confirming the payments and the register, the documents confirming the receipt of payments take precedence.

Legal services when issuing a mortgage:

Here are the types of legal services that can help in issuing a bond:

Lawyer consultation and legal analysis of the situation:The lawyer analyzes the terms of the mortgage agreement and the security deposit to ensure their compliance with current legislation. The lawyer drafts or checks the wording of the lien to make sure that all required details are included and properly executed.

 

Review of legal risks: The lawyer services online checks the legal status and powers of all parties (mortgagor, debtor, mortgagee). Lawyers online perform a mortgage due diligence to ensure its clean legal status and no encumbrances.

Checkout and registration: The lawyer ensures the correct filing of the pledge, including all the necessary details and legal formalities. The lawyer prepares documents for the state registration of the mortgage (if this is provided for by law) and accompanies the registration process.

Lawyer services during the settlement of disputes: Conflict resolution: In the event of disputes or misunderstandings regarding the collateral, the lawyer helps in conflict resolution and represents the client's interests in judicial or administrative bodies.