Mortgage considerations

A mortgage in the Lithuanian Republic is defined by the civil code as the pledge of an immovable object, or property, to secure the performance of a present or future debt obligation, and when the mortgaged object is not transferred to the creditor. The mortgage does not deprive the owner of the object the right to possess, use and dispose of the mortgaged object, with due consideration of the rights of the mortgagee. A subsequent pledge of the mortgaged object is allowed if the mortgage bond does not provide otherwise.

The object of a mortgage may be individual immovable items, registered in the public register and not withdrawn from the civil turnover that may be submitted for a public forced auction. The mortgage of an immovable object does not cover the proceedings received from it. When a principal object is mortgaged, it shall be deemed that all present and future accessories added to the principle object by the will of the owner or due to natural events are mortgaged.

When an immovable object is pledged for the use of which in accordance with its destination movable objects are necessary, it shall be deemed that movable items necessary for the use of such an object, in accordance with its destination, are the object of the mortgage, including those that will come into the ownership of the mortgagor in the future, unless otherwise provided in the mortgage contract on the pledge (non-pledge) of movable items or in the unilateral mortgage declaration of the owner of an immovable object.

In order to mortgage a part of the object owned by the same owner, the part thereof must be accurately defined and registered in the public register as a separate entity. For the mortgage of construction works, the plot of land on which construction works are standing is to be mortgaged or the mortgage shall include the right of lease (right of use) in respect to the plot of land thereof. An object belonging by the right of common ownership may be mortgaged only on the consent of all co-owners.

When a part of common divided ownership is mortgaged, the consent of the other co-owners is not necessary; however, the mortgaged part must be accurately defined in the contract on the manner of the use of the object concluded among co-owners and certified by the notary. The mortgage of the object does not prevent from the transfer of the object to the ownership of another. With the transfer of the mortgaged object for the ownership of another person, the mortgage follows the object.

The owner of the mortgaged object has no right to destroy, damage or reduce the value of the object, except for normal depreciation or the decrease of the value pertaining to its use for the purpose of essential necessity. When the requirements thereof are violated, the mortgagee may demand the commencement of the execution against the mortgaged object before the expiration of the term.

To be continued.