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The official mortgage is a contract where the financial institution gets a residential or commercial property devoted to the satisfaction of his/her financial obligation in kind, where he or she may use to regular creditors and the following lenders in order to get the right of the price of that residential or commercial property in any hand.
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The mortgage is a contract concluded in between the mortgagor and the mortgagee creditor which gives the mortgagee right in rem in the residential or commercial property, with all advantages and genuine security over the home loan 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 limited in their disposal rights to make sure the mortgagee's interests are safeguarded.

The difference in between the official mortgage and the possessory home loan

The main home loan is created through an official agreement, that should be notarized in a notary public workplace.

While the right of possessory home loan is produced through informal contract. Whereas the ownership and belongings of the mortgaged residential or commercial property in the official home mortgage right stays in the hand of the owner (debtor), and the possession in the possessory mortgage is moved to the lender.

The official mortgage is restricted to genuine estate, while the possessory mortgage can cover both properties and movable residential or commercial properties.

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

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

The Mortgager's responsibilities:

The mortgagor is obligated to deliver the mortgaged residential or commercial property to the financial institution or to a designated agent selected by both Parties in the agreement.

The legal requirement for a seller to provide a sold item will be used to the mortgagor's obligation to deliver the home loan product to the mortgagee. If the mortgaged residential or commercial property is returned to the mortgager's belongings, the mortgage shall be ended, unless the mortgagee proves that the residential or commercial property has actually been returned for a reason not planned to expire the home mortgage.

The mortgagor guarantees the stability and enforceability of the mortgage, and the mortgagor will not take any action that reduces the worth of the home mortgage or hinders the lender's workout of his rights under the contract. In case of urgency, the mortgagee financial institution may take all essential measures at the mortgager's cost, to protect the home mortgage item. The mortgagor will be liable for the loss or damage of the mortgage product if such loss or damage is because of his fault or arises from force majeure act.

The arrangements of Articles No. 1048 and No. 1049 relating to the loss or damage of the mortgaged residential or commercial property under a main home loan, and the transfer of the creditor's right from the mortgage item to any replaced rights will apply to the possessory home loan.

The Mortgagee's obligation:

Upon getting the mortgaged residential or commercial property, the mortgagee is obligated to work out the very same level of care and upkeep in its preservation as would a sensible person. and he is responsible 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 derive any take advantage of the home mortgage item without settlement, he should invest it completely unless otherwise agreed Any net profits or advantage derived by the creditor from the use of the home mortgage item shall be subtracted from the quantity protected by the home loan, even if the due date has not yet come, provided that the deduction shall be made from the expense of preserving and fixing the residential or commercial property and its repair work, then from expenditures and interest, and after that from the principal of the debt.

If the home mortgage item produces profits and the celebrations agree that all or part of the income will be used to offset the interest, in, this contract will be legitimate within the optimum limitations of lawfully allowable legal interest.

The mortgagee shall presume the management of the mortgaged residential or commercial property, and he must work out because the care of a sensible person. The mortgagee can not modify the home mortgage item's usage without the mortgager's approval. He must quickly alert the mortgagor of any matter requiring his intervention.

If the mortgagee abuses this right, mis-manages the residential or commercial property, or dedicates gross negligence, the mortgagor deserves to request that the product be positioned under custody or to recover it upon payment of the arrearage. if the quantity secured by the home loan does not bear interest and has not yet ended up being due, the mortgagee is entitled just to staying amount after subtracting the worth of interest computed at the legal rate for the duration in between the day of payment and the due date of the debt.

The mortgagee shall return the mortgaged item to the mortgagor after the mortgagor has actually totally discharged their responsibility including all expenses and compensation associated to the right.

Effects of the main home mortgage in the Egyptian law

The result of the home mortgage in between the contracting celebrations:

Firstly: The mortgager:

The mortgagor may dispose of 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 versus 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 notification and the lease was not paid beforehand, so it will not work unless it can be thought about part of the great management work. If the lease term prior to notarizing the home mortgage notice surpasses nine years, it will not work against the mortgagee financial institution other than for a duration of nine years just unless it was signed up before the mortgage was signed up.

The mortgagor is responsible for making sure the security of the mortgage residential or commercial property. The mortgagee creditor deserves to object to any actions or carelessness by the mortgagor that could substantially the value or safety of the residential or commercial property, and in immediate cases the mortgagee may take required protective steps and look for compensation from the mortgagor, from any expenditures 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 sufficient insurance coverage to cover the loss or to right away gather the full impressive debt.

When the destruction or damage to the mortgaged residential or commercial property is brought on by an external element and the mortgagee contradicts the debt without insurance coverage, the mortgagor has the choice to supply sufficient insurance coverage or settle the financial obligation right away before the due date. If the financial obligation has no interest, the mortgagee is just entitled to the primary amount without legal interest for the period between the actual payment date and the original due date.

Secondly: The mortgagee lender:

A third-party mortgagor's personal properties are exempt from seizure for the debtor's debt. The mortgagor can not substitute payments for the debtor unless agreed upon.

Upon alerting the debtor of the outstanding debt, the mortgagee deserves to foreclose on the mortgaged residential or commercial property and requests its sale in accordance with the treatments and timelines stipulated in code of Civil Procedures. If the mortgagor is a third party besides the debtor, he can prevent any foreclosure procedures by willingly 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 an established price upon financial obligation default or to sell it without following the lawfully mandated procedures is void, even if gotten in into after the home loan contract. However, after the financial obligation or a part of it has developed, the debtor and mortgagee can concur that the debtor will move the mortgaged residential or commercial property to the mortgagee in satisfaction of his debt.

The main home mortgage and its impact to the third celebration:

A main mortgage is just enforceable against 3rd parties if the mortgage contract or judgment establishing the mortgage is registered before the 3rd party obtains a right in rem in the residential or commercial property. This lacks prejudice to the provisions of personal bankruptcy 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 task of registration priority to another financial institution unless such actions are kept in mind in the margin of the original registration.

The procedures for registration, renewal, cancellation, and cancellation an official mortgage, in addition to the impacts thereof, are governed by the arrangements of the Real Estate Registration Law. The expenses of registration, renewal, and cancellation of a main home mortgage are borne by the mortgagor unless otherwise agreed upon.

The termination of the official home mortgage:

An official home loan ends upon the satisfaction of the protected debt or the nullification of the underlying cause for the financial obligation. However, any bona fide rights gotten by third celebrations during the duration in between the mortgage's expiration and its prospective reinstatement remain unaffected.

If foreclosure procedures are completed, the main home mortgage is definitively snuffed out, even if the residential or commercial property ownership modifications hands. When the mortgaged residential or commercial property is sold through a forced auction, the mortgage rights expire upon the deposit of the auction proceeds or their payment to eligible registered lenders.