Mortgage considerations

  • 2010-07-21
  • By Marius Matiukas, Associate lawyer

ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora

(Continued from last issue)

The mortgage of land extends to construction works as appurtenances, unless the mortgage contract provides for otherwise. If the mortgage of land does not extend to construction works, after the foreclosure sale of the mortgaged land the owner of the construction works shall acquire the right of servitude of the land. When the mortgaged plot of land with construction works on it belonging to another person (not the owner of the land) by right of ownership is sold in a foreclosure sale, the rights and duties of the former owner of the land, possessed by the owner of construction works, are passed to the person who acquires the land in a foreclosure sale.

The mortgage contract, a unilateral declaration of the owner of the mortgaged property thereof, as well as the application to register the compulsory mortgage, shall be executed as a mortgage bond. When the mortgage is contractual, the mortgage bond shall be certified by a notary. The mortgage contract (bond) is signed by a debtor, creditor and the owner of the mortgaged property (when the debtor and the owner of the property is not the same person). When the property is mortgaged upon a unilateral declaration of its owner, the mortgage bond is signed by the owner of the mortgaged property only. If the mortgage is compulsory, the mortgage bond is signed by the creditor. The mortgage is registered in the Register of Mortgages upon the decision of the mortgage judge and upon the submission of the mortgage bond to the Mortgage Office of the locality wherein the mortgaged property is located.

Extinction of the mortgage. The forced sale of the mortgaged property, on the request of the mortgagee, shall disencumber it from all mortgages. The owner of the mortgaged property, or the debtor, may demand the termination of mortgage if: 1) the debt obligation has been performed; 2) the mortgage in respect of the property has been cancelled; 3) the mortgagee or his whereabouts have been unknown for ten years at maturity.

The mortgage may extinguish upon the agreement of the mortgagee and the debtor or when the mortgagee relinquishes the mortgage. If at maturity the mortgagee refuses to accept the property secured by mortgage obligation, the debtor may pay the respective amount into the deposit account of the mortgage office. The mortgage extinguishes when the total amount has been paid into the deposit account. The time of the extinction of the mortgage is the moment of its de-registration from the Register of Mortgages.