Article 32 Mortgagee

Chapter 1 – General Conditions

If the mortgagee creditor was a bank or a financing company or institution, they shall be licensed and duly registered with the Central Bank for the practice of real estate financing in the Country.

Article 33 Mortgagor and Mortgage

  • The assignor of the off-plan real estate unit shall be responsible for registering the assignment, otherwise, the assignee may do whatever it takes to register such assignment in the Initial Real Estate Register at the expense of the assignor. unless the Chairman decides otherwise.
  • The mortgagor shall be the owner of the mortgaged property and eligible to dispose thereof.
  • The mortgagor may be the debtor himself or an in-kind surety which offers a mortgage in favour of the debtor.
  • Taking into account the provisions of Chapter (3) of this Title concerning personal mortgages, the mortgaged property shall be an existent collateral upon conclusion of the mortgage agreement.
  • Mortgages shall only be placed on properties and rights which can be dealt with according to the provisions of this law.

Article 34 Comprehensiveness of the Mortgage

The mortgage shall include the appurtenances of the mortgaged property such as the buildings, plants and granted properties among many others as well as any constructions completed after the conclusion of the contract, unless otherwise agreed.

Article 35 Registration of Mortgage

  • The mortgage shall be recorded in the Initial Real Estate Register or the Real Estate Register as the case may be.
  • The application for the registration of the mortgage shall be submitted to the manager of the Real Estate Registration administration at the relevant Municipality, signed by the mortgagee and mortgagor or the in-kind surety and enclosed with the documents and data specified by the Department in the Executive Regulation.
  • The manager of the Real Estate Registration administration at the Municipality shall, upon registration of the mortgage, deliver to the contracting parties, a mortgage deed to be signed by the competent employee and sealed with the Municipality1s stamp. The mortgage deed may be electronic and shall be considered as having the binding force of an official document in evidence.

Article 36 Consideration for Mortgage

A mortgage shall be completed in consideration for a debt that is evidenced or promised and specified upon conclusion of the mortgage agreement. or against any of the guaranteed real properties.

Article 37 Enforcement of the Mortgage

The mortgage shall be completed only by recording it in the Real Estate Register or the Initial Real Estate Register. as the case may be. according to the controls developed by the Department. Any agreement to the contrary shall be considered null and void. The Mortgagor shall be bound to pay the expenses and fees of mortgage and its registration. unless otherwise agreed.

Article 38 Restrictions on Dispositions

Chapter 2 Legal Effect of a Mortgage

The mortgagor may not dispose of the mortgaged property through sale or donation or otherwise. nor may such property be subjected to any real or personal right without the approval of the mortgagee creditor. unless otherwise agreed.

Article 39 Ownership Clause

Should the mortgage contract stipulate that the mortgaged property shall be acquired by the mortgagee in return for his debt in the event of failure of the mortgagor to settle it within the prescribed time limit. or that such mortgaged property shall be sold without taking into account the legal procedures. the mortgage shall be considered valid while this clause shall be deemed null and void.

Article 40 Rights of the Mortgagor

  • The mortgagor shall have the right to use and manage his mortgaged property and receive the proceeds thereof up to the date of compulsorily removing his property right, depriving him from his property right, by offering it for sale in public auction in the event of failure to settle the debt.
  • The Court may order to seize the proceeds of the real estate from the date of registering the foreclosure lawsuit should it find that the mortgagor is delaying the settlement of his debt in prejudice to the mortgage.

Article 41 Loss of the Mortgaged Property

The mortgage shall be transferred, upon the loss or damage of the mortgaged property, to the money which replaces it such as the compensation, the amount of insurance or the consideration for expropriation for public benefit. The mortgage may in this case fulfil his right from such money as per his rank in debt priority.

Article 42 Claiming the Debt

Should the mortgagor be an in-kind surety, claim of debt shall be made only from the mortgaged property and he may not have recourse against the money of the debtor before foreclosure of the mortgaged property.

Article 43 Assignment of rights and Ranks

  • The mortgagee creditor may assign his right to another mortgagee creditor subject to the approval of the latter.
  • The mortgagee may assign the rank of the mortgage on the same mortgaged property to another creditor within the amount of the debt and such rank may be pleaded against such creditor by all aspects of defence that may be pleaded against the first creditor. except for what is related to the forfeiture of the right of the first creditor. should such forfeiture be subsequent to the assignment of the rank.
  • In all cases. the assignment of the mortgage or its rank shall not be executed until said assignment is registered on the deed of the original real right and in the Real Estate Register or the Initial Real Estate Register.

Article 44 Secured Amount

The effect of the mortgage shall be limited to the amount determined in the mortgage deed and evidenced in the Real Estate Register or the Initial Real Estate Register, unless the law or the agreement stipulates otherwise.

Article 45 Rank of the Mortgage

  • The debts of the mortgage creditors shall be paid from the price of the mortgaged property or the property which replaces it as per the rank of each of them, even if registration was completed on the same day.
  • The rank of mortgage shall be determined according to the date of registration and the serial number allocated thereto by the manager of the Real Estate Registration administration in the concerned Municipality. In the event of multiple persons applying at the same time for the registration of their mortgages against one mortgagor and one specific property, the registration of such mortgages shall be made under one number and such creditors shall be considered at the same rank when distributing the amount received from the public auction. Should the sale price be not sufficient to settle the debt of any of the mortgagees, the mortgage may claim, in the capacity of creditor, for the remaining debt from the mortgagor debtors 1 properties.

Article 46 The Right to Trace

  • The mortgagee creditor shall have the right to trace the mortgaged property in the possession of any holder thereof, in order to satisfy his debt on its due date according to his rank.
  • The holder of the relevant property shall mean whoever the ownership of the property was transferred to or any of the pertaining property rights are acquired thereby.

Article 47 Insurance of the Mortgaged property

The mortgagor shall protect the mortgaged property with an insurance and he shall be fully responsible for its integrity until the date of the debt settlement. The mortgagee may object to any shortage in the property insurance and may take any of the legal procedures which preserve its right, provided that he claims the expenses from the mortgagor.

Article 48 Termination of Mortgage

The mortgage shall be terminated by the expiry of the whole mortgage-secured debt and by all other ways of the mortgage termination stipulated in the legislations in force. Should the reason of the debt expiry exist no more, the mortgage shall be valid again as it was without prejudice to the rights of other bona fide parties who acquired such rights between the termination and return of the mortgage.

Article 49 Musataha and Usufruct Rights

Chapter 3 – Special Mortgages

The holder of the usufruct or Musataha right, for a period of more than 10 years and without the permission of the owner, may dispose the property thereof, inter alia placing it under mortgage. However, the owner of such property may not place it under a new mortgage without the approval of the holder of the usufruct or Musataha right. In all cases, an agreement may be made otherwise.

Article 50 Long-Term Lease

The holder of the long-term lease right may place his right under mortgage for the duration of the long-term lease.

Article 51 Termination of Special Mortgages

The mortgage of the Musataha, usufruct or long-term lease right shall be terminated and all related entries shall be deleted from the Initial Real Estate Register or the Real Estate Register, as the case may be, by the expiry of the mortgage-secured debt or the expiry of the Musataha, usufruct or long-term lease period.

Article 52 Mortgage of Contractual Rights

The buyer of the property right may place his contractual right to the real estate unit sold off-plan under mortgage in order to settle the sale price of the real estate unit, provided that such unit is registered in the Initial Real Estate Register and that the mortgagee creditor pays the debt amount directly in the project escrow account.

Article 53 Notifications of Violation

Chapter 4 – Foreclosure Procedures

  • The mortgagee creditor or his designated or non-designated successors may initiate the procedures of foreclosure of the mortgaged property and offer it for sale in public auction in the event of failure to settle the debt on the fixed date, or if a clause stipulating the maturity of debt before the expiry of such date is fulfilled.
  • The mortgagee shall, prior to the initiation of the procedures of foreclosure of the mortgaged property and submission of a request before the judge of urgent matters to attach the mortgaged property and offer it for sale in public auction, send a written notification to the mortgagor and guarantor, if any, by registered mail with acknowledgment of receipt to inform the latter of the occurrence of violation and claim the settlement of the debt and other dues within a period of no less than (30) days from the date of notification.

Article 54 Violation of the Mortgagor

Taking into account the provisions of Clause (2) of the previous Article of this Law, should the mortgagor or his guarantor or their designated or non- designated successors fail to settle the debt, the judge of urgent matters shall issue, at the request of the mortgagee creditor, a decision to sell the mortgaged property in public auction according to the procedures applicable at the competent court.

Article 55 Postponing the Sale in Public Auction

Taking into account the provisions of the previous Article, should the mortgagor or his guarantor request from the judge of urgent matters to postpone the sale in public auction, the latter may accept such request by postponing the sale for one time only and for a period not exceeding ( 60) days if he finds that the mortgagor or his guarantor or their successors may be able to settle the debt within said period or that the sale of the mortgaged property may cause serious damage to the debtor.

Article 56 Early Settlement and Repayment

  • The mortgagor or his guarantor may settle the mortgage-secured debt and other related charges before its maturity date.
  • The mortgage may impose early repayment fees or penalty provided that such fees or penalty reflect the real estimation of the additional expenses incurred by the mortgagee as a result of the early repayment and do not exceed the rates specified in the regulations of the Central Bank.
  • Except for what was provided for in Clause (2) of this Article, the mortgage may not conduct or omit an act to prevent or hinder the early repayment of the mortgage-secured debt and its charges.

Article 57 Binding Force of Mortgage

The mortgage registered according to the provisions of this Law shall have a binding force upon others concerning what was provided for therein and shall be considered a writ of execution to be executed before the competent execution judge.

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