Compulsory mortgage, or how to successfully recover a debt
The payment order against the debtor only states his obligation to pay. In the course of enforcement, it may turn out that the debtor does not have sufficient assets to satisfy the creditor's claims, and it often happens that he has borrowed many other people. What can the creditor do in such a situation? Will a compulsory mortgage solve the situation?
Compulsory mortgage - improvement of the creditor's situation
A compulsory mortgage is a type of creditor's security against the debtor's property. At the same time, it is the most reliable form of securing receivables, because it is usually the most valuable asset that the person incurring the debt has. The condition for effective security through a compulsory mortgage is ownership of the real estate by the debtor, or possession as a co-owner or holder of perpetual usufruct.
Art. 109 sec. 1 Act on land and mortgage registers and mortgage
A creditor whose claim is confirmed by an enforceable title, specified in the provisions on enforcement proceedings, may, on the basis of this title, obtain a mortgage on all real estate of the debtor (compulsory mortgage).
Importantly, unlike the main principle of the mortgage, a compulsory mortgage does not occur through an agreement between the owner of the property and the creditor. It can be established without the consent or even knowledge of the debtor.
Being able to obtain a mortgage on all of the debtor's properties does not mean that several properties can be seized at the same time. It is effective when the given real estate is previously encumbered with a joint mortgage or is owned by several joint debtors.
Joint mortgage - a type of ordinary mortgage, which is created by dividing one real estate into several separate ones. In other words, the mortgage that previously encumbered one real estate additionally encumber all those created as a result of the division. A joint mortgage secures one specific claim.
Joint debtors - debtors obliged in the same way that the creditor may demand all or part of the performance from all debtors jointly, from several of them or from each of them separately, and the satisfaction of the creditor by any of the debtors releases the others. [Art. 366 of the Civil Code], e.g. a surety agreement.
The entire sum of the compulsory mortgage, together with interest and litigation costs, results from the writ of execution and, as a result, the creditor cannot demand a higher amount.
Enforcement title as the basis for obtaining a compulsory mortgage
According to Art. 109 of the Act on Land and Mortgage Registers and Mortgage, the basis for obtaining a compulsory mortgage is an enforcement title, i.e. an enforcement title provided by the court with an enforcement clause.
In practice, along with the enforcement title, the formal requirement for entry of a compulsory mortgage is the submission of an application on an appropriate form and payment of a fixed fee of PLN 200. The application should be accompanied by the original of the writ obtained by way of an application to the court with a request for its issuance in order to make an entry. It is marked on the performance title which may only be used for this purpose.
During foreclosure, the mortgagee will be satisfied even if he or she has not applied for enforcement. The bailiff is required to inform all creditors of the commencement of enforcement when describing and appraising the property for the purposes of the auction. At the same time, he calls on them to declare their rights to the property.
The mortgage claim is the fifth claim to be settled with the funds obtained from auctions. The following are repaid: costs of proceedings, maintenance payments, employee claims (salaries, pensions) and claims secured by a maritime mortgage.
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