In the case of the purchase or construction of a building, future purchasers will generally have to take out a loan. In principle, the lender requires the borrower to provide repayment guarantees and in the case of mortgages, that guarantee usually takes the form of a mortgage.
This type of guarantee usually accompanies credits for the purchase, construction or renovation of a home. But they can also guarantee the repayment of consumer credit. The mortgage can guarantee debts other than those arising from a credit. Under certain conditions, it can also guarantee not only existing debts but also future debts.
The mortgage usually relates to the property that the borrower buys or builds using the credit requested.
The building remains in the borrower’s possession. If the lender does not repay its loan, then the lender has the right to sell the property through the real estate foreclosure procedure and the price of the sale of the property will normally be given priority to repay the defaulted loan of Payment. With the creation of the mortgage, the lender is certain to be repaid because it has a right of priority over other creditors.
The mortgage must be the subject of a mortgage deed. This is an authentic act written by the notary. The notary does the necessary research to ensure that the person who gives the property a mortgage is the owner, that the owner can mortgage it and that there are no other mortgages that the lender would not know about.
The notary drafts the deed presents it to the parties concerned, verify the payment of the tax duties and takes care of the formalities for the registration of the mortgage constitution deed at the relevant mortgage office.
The mortgage deed must be registered with the appropriate mortgage office. The date of registration is very important because if there are several mortgages built on a building, the lender whose mortgage is listed first will be able to use before all other creditors on the sale price of the property.
Mortgage building enacts a number of costs to the borrower: a 1% registration tax fee, a mortgage tax fee, mortgage office fees, research costs, and the notary’s fee.
Mortgage registration is valid for 30 years, regardless of the length of the mortgage. If the end of the credit occurs before the 30-year term, the mortgage is maintained. To put an end to this, the lender’s agreement to waive its mortgage right must be recorded in an act called the act of release. The release deed is a notarized deed signed by the parties concerned and the copy of which will be sent to the mortgage office that will carry out the write-off. In the absence of agreement from the lender, the release may be ordered by the judge if the mortgage is no longer justified (if no more money is due to the lender).
Mortgage release encased a number of costs: a registration fee, write-off fees due to the mortgage office and the notary’s fees. These fees depend on the amount of the mortgage.
It should be noted that release is only necessary if the owner of the building wishes to sell it or to build up a new mortgage on that building.
At the end of the 30th anniversary, the mortgage will automatically be extinguished at no cost.
We also talk about the “mortgage mandate” technique. This is the right that is left to the lender for the duration of the loan to be able at any time to apply for a mortgage on a building. In this case, the lender accepts that the mortgage is not incorporated at the time of the loan but is authorized by the borrower to have the mortgage built on the building it designates at any time during the term of the loan. If no problems arise during the execution of the contract, there may never be the creation of this mortgage which allows the borrower to avoid the significant costs of building a mortgage.
The mortgage can also be built on a property owned by someone other than the borrower. This person is referred to as the “affecting third party.” Nevertheless, it enjoys the protections afforded to personal security (persons who have committed to pay the creditor on all their assets if the debtor does not honor his commitments).