The official mortgage is an agreement whereby the creditor gets a residential or commercial property devoted to the fulfillment of his/her debt in kind, whereby she or he might use to regular lenders and the following lenders in order to acquire the right of the cost of that residential or commercial property in any hand.
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The home mortgage is a contract concluded between the mortgagor and the mortgagee creditor which approves the mortgagee right in rapid eye movement in the residential or commercial property, with all advantages and genuine security over the home mortgage product. Additionally, the mortgagor deserves to follow the mortgaged residential or commercial property if it is moved to a 3rd celebration. The mortgagor keeps ownership and possession of the mortgaged residential or commercial property however is limited in their disposal rights to guarantee the mortgagee's interests are safeguarded.

The distinction between the main home mortgage and the possessory home loan

The main mortgage is created through a main agreement, that must be notarized in a notary public workplace.

While the right of possessory mortgage is developed through unofficial agreement. Whereas the ownership and belongings of the mortgaged residential or commercial property in the official home mortgage right remains in the hand of the owner (debtor), and the ownership in the possessory home loan is transferred to the lender.

The main home mortgage is restricted to property, while the possessory mortgage can cover both real estates and movable residential or commercial properties.

The commitments of the mortgagor and the mortgagee lender in the main home mortgage

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

The Mortgager's responsibilities:

The mortgagor is obliged to deliver the mortgaged residential or commercial property to the financial institution or to a designated agent chosen by both Parties in the contract.

The legal requirement for a seller to deliver a sold item will be used to the mortgagor's duty to deliver the home loan item to the mortgagee. If the mortgaged residential or commercial property is gone back to the mortgager's ownership, the home mortgage will be ended, unless the mortgagee proves that the residential or commercial property has actually been returned for a factor not planned to end the home mortgage.

The mortgagor guarantees the integrity and enforceability of the home loan, and the mortgagor will not take any action that decreases the value of the mortgage or impedes the financial institution's workout of his rights under the agreement. In case of seriousness, the mortgagee lender may take all necessary procedures at the mortgager's cost, to maintain the home mortgage product. The mortgagor will be liable for the loss or damage of the home loan item if such loss or damage is due to his fault or arises 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 home mortgage, and the transfer of the creditor's right from the home loan item to any substituted rights shall apply to the possessory home mortgage.

The Mortgagee's commitment:

Upon getting the mortgaged residential or commercial property, the mortgagee is obligated to exercise the same level of care and maintenance in its conservation as would a prudent individual. and he is responsible for the loss or damage of the home loan item unless it is proven that such loss or damage was triggered by an external aspect beyond his control.

The mortgagee is not allowed to obtain any advantage from the home mortgage product without settlement, he must invest it completely unless otherwise concurred Any net revenue or advantage derived by the lender from making use of the home loan product shall be deducted from the amount secured by the home loan, even if the due date has not yet come, supplied that the reduction will be made from the cost of preserving and the residential or commercial property and its repairs, then from expenses and interest, and after that from the principal of the financial obligation.

If the mortgage product produces earnings and the celebrations agree that all or part of the profits will be utilized to balance out the interest, in, this contract shall stand within the maximum limitations of legally permissible contractual interest.

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

If the mortgagee abuses this right, mis-manages the residential or commercial property, or devotes gross carelessness, the mortgagor has the right to demand that the item be placed under custody or to recover it upon payment of the exceptional debt. if the quantity secured by the home mortgage does not bear interest and has not yet become due, the mortgagee is entitled only to remaining quantity after deducting the value of interest determined at the legal rate for the duration in between the day of payment and the due date of the financial obligation.

The mortgagee will return the mortgaged product to the mortgagor after the mortgagor has actually totally discharged their obligation including all expenditures and compensation related to the right.

Effects of the official home mortgage in the Egyptian law

The impact of the home mortgage between the contracting parties:

Firstly: The mortgager:

The mortgagor might get rid of the mortgaged residential or commercial property as long as such actions do not impair the mortgagee's right.

The mortgagor retains the right to manage the mortgaged residential or commercial property and to collect its returns and leases approved by the mortgagor are not enforceable versus the mortgagee unless it was notarized before the registration of the expropriation notice.

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 be efficient unless it can be considered part of the excellent management work. If the lease term prior to notarizing the home mortgage notification exceeds nine years, it will not be reliable against the mortgagee lender other than for a duration of nine years only unless it was registered before the home mortgage was registered.

The mortgagor is accountable for ensuring the safety of the home mortgage residential or commercial property. The mortgagee financial institution deserves to challenge any actions or negligence by the mortgagor that might considerably diminish the worth or security of the residential or commercial property, and in urgent cases the mortgagee may take necessary protective measures 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 choice to demand sufficient insurance to cover the loss or to right away gather the complete impressive debt.

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 option to supply sufficient insurance coverage or settle the financial obligation immediately before the due date. If the debt has no interest, the mortgagee is just entitled to the principal amount without legal interest for the period in between the real payment date and the original due date.

Secondly: The mortgagee lender:

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

Upon alerting the debtor of the outstanding debt, the mortgagee can foreclose on the mortgaged residential or commercial property and demands its sale in accordance with the treatments and timelines stated in code of Civil Procedures. If the mortgagor is a 3rd party aside from the debtor, he can avoid any foreclosure proceedings by willingly giving up the mortgaged residential or commercial property according to the procedures and guidelines governing residential or commercial property surrender.

Any arrangement that gives the mortgagee the right to take ownership of the mortgaged residential or commercial property at a fixed price upon financial obligation default or to offer it without following the legally mandated procedures is invalid, even if gotten in into after the home loan agreement. However, after the financial obligation or a portion of it has grown, the debtor and mortgagee can agree that the debtor will transfer the mortgaged residential or commercial property to the mortgagee in fulfillment of his financial obligation.

The main home loan and its effect to the 3rd party:

A main mortgage is only enforceable against 3rd parties if the home loan agreement or judgment establishing the home loan is registered before the 3rd party obtains a right in rapid eye movement in the residential or commercial property. This is without bias to the arrangements of bankruptcy laws.

Additionally, 3rd celebrations can not assert claims based upon an unregistered secured right, the alternative of one lender for another in this right, or the task of registration top priority to another financial institution unless such actions are kept in mind in the margin of the original registration.

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

The termination of the official home loan:

An official home mortgage terminates upon the satisfaction of the secured financial obligation or the nullification of the underlying cause for the debt. However, any bona fide rights gotten by 3rd parties throughout the period in between the home loan's expiration and its potential reinstatement stay untouched.

If foreclosure procedures are completed, the official home mortgage is definitively snuffed out, 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 expire upon the deposit of the auction proceeds or their payment to qualified authorized financial institutions.
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