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The Official Mortgage

The main mortgage is an agreement whereby the lender gets a residential or commercial property devoted to the fulfillment of his or her debt in kind, whereby he or she may use to regular lenders and the following financial institutions in order to obtain the right of the price 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 rapid eye movement in the residential or commercial property, with all benefits and real security over the home mortgage product. Additionally, the mortgagor has the right to follow the mortgaged residential or commercial property if it is transferred to a 3rd party. The mortgagor maintains ownership and belongings of the mortgaged residential or commercial property but is restricted in their disposal rights to guarantee the mortgagee’s interests are secured.

The difference in between the main home loan and the possessory home loan

The official home mortgage is created through a main contract, that should be notarized in a notary public office.

While the right of possessory home loan is created through unofficial agreement. Whereas the ownership and possession of the mortgaged residential or commercial property in the official mortgage right stays in the hand of the owner (debtor), and the possession in the possessory mortgage is transferred to the creditor.

The main mortgage is restricted to realty, while the possessory mortgage can cover both realties and movable residential or commercial properties.

The obligations of the mortgagor and the mortgagee creditor in the main mortgage

The Egyptian Civil Law No. 131 of 1948 and its modifications manage the responsibilities of the mortgagor and mortgagee in Chapter Two as follows:

The Mortgager’s obligations:

The mortgagor is bound to deliver the mortgaged residential or commercial property to the creditor or to a picked by both Parties in the contract.

The legal requirement for a seller to provide a sold product will be used to the mortgagor’s obligation to deliver the mortgage product to the mortgagee.
If the mortgaged residential or commercial property is returned to the mortgager’s possession, the mortgage shall be expired, unless the mortgagee shows that the residential or commercial property has been returned for a factor not planned to expire the home mortgage.

The mortgagor ensures the integrity and enforceability of the home mortgage, and the mortgagor will not take any action that decreases the worth of the mortgage or hampers the creditor’s exercise of his rights under the contract. In case of seriousness, the mortgagee financial institution might take all necessary procedures at the mortgager’s cost, to preserve the home mortgage item. The mortgagor will be responsible for the loss or damage of the home mortgage product if such loss or damage is due to his fault or develops from force majeure act.

The provisions 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 item to any replaced rights shall apply to the possessory home loan.

The Mortgagee’s responsibility:

Upon receiving the mortgaged residential or commercial property, the mortgagee is obliged to work out the exact same level of care and upkeep in its conservation as would a sensible individual. and he is accountable for the loss or damage of the mortgage item unless it is shown that such loss or damage was triggered by an external factor beyond his control.

The mortgagee is not allowed to obtain any gain from the home loan product without compensation, he should invest it completely unless otherwise concurred Any net revenue or advantage derived by the lender from using the home mortgage item will be subtracted from the quantity secured 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 repairing the residential or commercial property and its repairs, then from costs and interest, and after that from the principal of the debt.

If the home mortgage product produces revenue and the celebrations agree that all or part of the earnings will be utilized to offset the interest, in, this contract will stand within the optimum limitations of lawfully permissible legal interest.

The mortgagee will assume the management of the mortgaged residential or commercial property, and he should exercise in that the care of a prudent individual. The mortgagee can not customize the home loan product’s usage without the mortgager’s approval. He should 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 neglect, the mortgagor can demand that the product be put under custody or to reclaim it upon payment of the exceptional debt. if the quantity secured by the mortgage does not bear interest and has actually not yet ended up being due, the mortgagee is entitled just to staying quantity after subtracting the worth of interest calculated 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 item to the mortgagor after the mortgagor has actually totally discharged their obligation including all expenditures and settlement related to the right.

Effects of the main mortgage in the Egyptian law

The result of the home loan between the contracting celebrations:

Firstly: The mortgager:

The mortgagor might deal with 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 collect its returns and leases granted by the mortgagor are not enforceable against the mortgagee unless it was notarized before the registration of the expropriation notification.

However, if the lease was not notarized in this method, or it was concluded after notarizing the notice and the rent was not paid beforehand, so it will not work unless it can be considered part of the excellent management work. If the lease term prior to notarizing the mortgage notification exceeds nine years, it will not work against the mortgagee lender except for a duration of 9 years just unless it was signed up before the home mortgage was signed up.

The mortgagor is accountable for ensuring the safety of the home mortgage residential or commercial property. The mortgagee creditor can challenge any actions or negligence by the mortgagor that could considerably reduce the value or safety of the residential or commercial property, and in urgent cases the mortgagee might take needed protective procedures and look for compensation from the mortgagor, from any costs incurred.

If the mortgagor negligently triggers the destruction or damage of the mortgaged residential or commercial property, the mortgagee creditor has the option to demand adequate insurance coverage to cover the loss or to instantly gather the full arrearage.

When the destruction or damage to the mortgaged residential or commercial property is triggered by an external factor and the mortgagee declines to accept the financial obligation without insurance, the mortgagor has the choice to supply appropriate insurance coverage or pay off the financial obligation instantly before the due date. If the debt has no interest, the mortgagee is only entitled to the principal amount without legal interest for the period between the real payment date and the initial due date.

Secondly: The mortgagee creditor:

A third-party mortgagor’s personal assets are exempt from seizure for the debtor’s financial obligation. The mortgagor can not substitute payments for the debtor unless agreed upon.

Upon alerting the debtor of the arrearage, the mortgagee deserves to foreclose on the mortgaged residential or commercial property and demands its sale in accordance with the treatments and timelines stipulated in code of Civil Procedures. If the mortgagor is a third celebration besides the debtor, he can prevent any foreclosure proceedings by voluntarily surrendering the mortgaged residential or commercial property according to the treatments and guidelines 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 debt default or to offer it without following the lawfully mandated treatments is void, even if entered into after the home loan contract. However, after the debt or a portion of it has actually developed, the debtor and mortgagee can concur that the debtor will move the mortgaged residential or commercial property to the mortgagee in fulfillment of his debt.

The official home loan and its effect to the third party:

A main home loan is only enforceable against third celebrations if the mortgage agreement or judgment developing the mortgage is signed up before the 3rd party acquires a right in rem in the residential or commercial property. This lacks prejudice to the arrangements of insolvency laws.

Additionally, 3rd parties can not assert claims based upon an unregistered guaranteed right, the replacement of one financial institution for another in this right, or the project of registration priority to another creditor unless such actions are noted in the margin of the initial registration.

The treatments for registration, renewal, cancellation, and cancellation an official home loan, in addition to the effects thereof, are governed by the arrangements of the Real Estate Registration Law. The costs of registration, renewal, and cancellation of an official home mortgage are borne by the mortgagor unless otherwise concurred upon.

The termination of the official home loan:

A main mortgage ends upon the fulfillment of the protected financial obligation or the nullification of the underlying cause for the debt. However, any authentic rights obtained by 3rd parties during the duration in between the mortgage’s expiration and its possible reinstatement stay unaffected.

If foreclosure proceedings are finished, the official home mortgage is definitively extinguished, even if the residential or commercial property ownership modifications 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 registered creditors.