The official mortgage is a contract whereby the creditor gets a residential or commercial property dedicated to the fulfillment of his or her debt in kind, whereby she or he might use to ordinary creditors and the following financial institutions in order to get the right of the price of that residential or commercial property in any hand.

The home loan is a contract concluded between the mortgagor and the mortgagee creditor which grants 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 deserves to follow the mortgaged residential or commercial property if it is transferred to a 3rd party. The mortgagor maintains ownership and ownership of the mortgaged residential or commercial property however is restricted in their disposal rights to make sure the mortgagee's interests are protected.

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

The main home loan is produced through a main contract, that should be notarized in a notary public office.

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

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

The obligations of the mortgagor and the mortgagee financial institution in the main home loan

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

The Mortgager's obligations:

The mortgagor is bound to deliver the mortgaged residential or to the financial institution or to a designated representative picked by both Parties in the contract.

The legal requirement for a seller to provide a sold item will be applied to the mortgagor's responsibility to deliver the mortgage item to the mortgagee. If the mortgaged residential or commercial property is returned to the mortgager's belongings, the home mortgage will be ended, unless the mortgagee shows that the residential or commercial property has been returned for a reason not intended to end the mortgage.

The mortgagor ensures the integrity and enforceability of the home loan, and the mortgagor shall not take any action that diminishes the worth of the home mortgage or impedes the creditor's workout of his rights under the contract. In case of seriousness, the mortgagee financial institution might take all required measures at the mortgager's cost, to protect the home loan item. The mortgagor shall be responsible for the loss or damage of the mortgage item if such loss or damage is due to his fault or develops from force majeure act.

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

The Mortgagee's commitment:

Upon receiving the mortgaged residential or commercial property, the mortgagee is obligated to work out the very same level of care and maintenance in its preservation as would a sensible individual. and he is accountable for the loss or damage of the home loan product unless it is shown that such loss or damage was brought on by an external aspect beyond his control.

The mortgagee is not allowed to derive any take advantage of the home mortgage product without payment, he should invest it totally unless otherwise agreed Any net earnings or advantage obtained by the creditor from using the mortgage item shall be deducted from the quantity protected by the home mortgage, even if the due date has not yet come, offered that the deduction shall be made from the cost of preserving and fixing the residential or commercial property and its repairs, then from expenses and interest, and after that from the principal of the debt.

If the home loan item produces earnings and the parties concur that all or part of the profits will be utilized to balance out the interest, in, this agreement shall stand within the maximum limits of legally allowable contractual interest.

The mortgagee will presume the management of the mortgaged residential or commercial property, and he must work out in that the care of a sensible individual. The mortgagee can not customize the mortgage product's use without the mortgager's approval. He should without delay alert the mortgagor of any matter requiring his intervention.

If the mortgagee abuses this right, mis-manages the residential or commercial property, or commits gross neglect, the mortgagor deserves to demand that the item be placed under custody or to reclaim it upon payment of the impressive financial obligation. if the amount secured by the home mortgage does not bear interest and has actually not yet ended up being due, the mortgagee is entitled only to staying quantity after subtracting the value of interest computed at the legal rate for the duration between the day of payment and the due date of the debt.

The mortgagee will return the mortgaged product to the mortgagor after the mortgagor has actually completely discharged their obligation consisting of all expenditures and settlement associated to the right.

Effects of the main mortgage in the Egyptian law

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

Firstly: The mortgager:

The mortgagor might 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 handle the mortgaged residential or commercial property and to gather its returns and leases given by the mortgagor are not enforceable against 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 rent was not paid beforehand, so it will not be effective unless it can be considered part of the good management work. If the lease term prior to notarizing the home mortgage notice exceeds nine years, it will not be efficient versus the mortgagee creditor except for a duration of nine years just unless it was registered 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 lender can challenge any actions or neglect by the mortgagor that might substantially decrease the worth or safety of the residential or commercial property, and in urgent cases the mortgagee may take essential protective procedures and look for compensation from the mortgagor, from any expenditures sustained.

If the mortgagor negligently causes the damage or damage of the mortgaged residential or commercial property, the mortgagee creditor has the alternative to require adequate insurance coverage to cover the loss or to right away collect the full arrearage.

When the destruction or damage to the mortgaged residential or commercial property is caused by an external factor and the mortgagee contradicts the financial obligation without insurance coverage, the mortgagor has the option to supply adequate insurance coverage or settle the debt instantly before the due date. If the debt has no interest, the mortgagee is just entitled to the principal amount without legal interest for the duration between the real payment date and the initial due date.

Secondly: The mortgagee lender:

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

Upon notifying the debtor of the arrearage, the mortgagee has the right to foreclose on the mortgaged residential or commercial property and demands its sale in accordance with the procedures and timelines stated in code of Civil Procedures. If the mortgagor is a 3rd celebration other than the debtor, he can avoid any foreclosure proceedings by voluntarily surrendering the mortgaged residential or commercial property according to the treatments and rules governing residential or commercial property surrender.

Any agreement that gives the mortgagee the right to take ownership of the mortgaged residential or commercial property at a fixed cost upon debt default or to offer it without following the lawfully mandated procedures is invalid, even if participated in after the home loan contract. However, after the financial obligation or a part 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 satisfaction of his financial obligation.

The main mortgage and its effect to the third party:

A main home loan is just enforceable versus third celebrations if the mortgage agreement or judgment establishing the home mortgage is registered before the third party acquires a right in rapid eye movement in the residential or commercial property. This lacks prejudice to the arrangements of personal bankruptcy laws.

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

The procedures for registration, renewal, cancellation, and cancellation an official home loan, along with the results thereof, are governed by the arrangements of the Real Estate Registration Law. The costs of registration, renewal, and cancellation of a main mortgage are borne by the mortgagor unless otherwise agreed upon.

The termination of the official home mortgage:

A main home loan ends upon the fulfillment of the secured financial obligation or the nullification of the underlying cause for the debt. However, any authentic rights gotten by third celebrations during the duration in between the mortgage's expiration and its potential reinstatement stay untouched.

If foreclosure procedures are completed, the main home loan 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 continues or their payment to qualified authorized financial institutions.