The official mortgage is a contract whereby the creditor obtains a residential or commercial property devoted to the satisfaction of his/her debt in kind, whereby she or he may use to common creditors and the following financial institutions in order to acquire the right of the price of that residential or commercial property in any hand.

The home loan is a contract concluded in between the mortgagor and the mortgagee lender which gives the mortgagee right in rem in the residential or commercial property, with all benefits and real security over the home mortgage item. 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 possession of the mortgaged residential or commercial property however is restricted in their disposal rights to ensure the mortgagee's interests are safeguarded.

The distinction between the official mortgage and the possessory home mortgage

The main mortgage is developed through an official contract, that must be notarized in a notary public office.

While the right of possessory home mortgage is developed through unofficial agreement. Whereas the ownership and possession of the mortgaged residential or commercial property in the main mortgage right remains in the hand of the owner (debtor), and the ownership in the possessory mortgage is transferred to the financial institution.

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

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

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

The Mortgager's obligations:

The mortgagor is obliged to provide the mortgaged residential or commercial property to the creditor 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 duty to provide the home loan item to the mortgagee. If the mortgaged residential or commercial property is returned to the mortgager's possession, the home loan will be ended, unless the mortgagee shows that the residential or commercial property has actually been returned for a reason not intended to end the home mortgage.

The mortgagor guarantees the integrity and enforceability of the mortgage, and the mortgagor shall not take any action that decreases the value of the mortgage or hampers the financial institution's workout of his rights under the agreement. In case of seriousness, the mortgagee creditor might take all essential procedures at the mortgager's expense, to maintain the mortgage item. The mortgagor shall be responsible for the loss or damage of the mortgage product if such loss or damage is due to his fault or emerges 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 an official mortgage, and the transfer of the creditor's right from the home loan item to any substituted rights will use to the possessory mortgage.

The Mortgagee's obligation:

Upon getting the mortgaged residential or commercial property, the mortgagee is obliged to exercise the very same level of care and maintenance in its conservation as would a sensible individual. and he is responsible 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 factor beyond his control.

The is not allowed to derive any advantage from the mortgage product without payment, he needs to invest it fully unless otherwise concurred Any net profits or advantage derived by the lender from using the home loan product will be deducted from the quantity protected by the mortgage, even if the due date has actually not yet come, offered that the reduction shall be made from the expense of preserving and fixing the residential or commercial property and its repair work, then from costs and interest, and then from the principal of the debt.

If the home mortgage item produces earnings and the parties agree that all or part of the profits will be used to balance out the interest, in, this arrangement shall be valid within the optimum limitations of legally permissible contractual interest.

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

If the mortgagee abuses this right, mis-manages the residential or commercial property, or dedicates gross neglect, the mortgagor has the right to request that the item be put under custody or to recover it upon payment of the exceptional debt. if the quantity protected by the home mortgage does not bear interest and has actually not yet become due, the mortgagee is entitled only to staying amount after deducting the worth 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 fully discharged their responsibility including all expenses and settlement related to the right.

Effects of the main home loan in the Egyptian law

The result of the home loan 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 retains the right to handle the mortgaged residential or commercial property and to collect its returns and leases given 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 notice and the lease was not paid beforehand, so it will not be efficient unless it can be thought about part of the excellent management work. If the lease term prior to notarizing the mortgage notice goes beyond 9 years, it will not work against the mortgagee financial institution except for a duration of 9 years only unless it was registered before the home mortgage was registered.

The mortgagor is accountable for guaranteeing the security of the home mortgage residential or commercial property. The mortgagee creditor has the right to challenge any actions or negligence by the mortgagor that might substantially lessen the value or safety of the residential or commercial property, and in urgent cases the mortgagee may take necessary protective procedures and seek compensation from the mortgagor, from any costs incurred.

If the mortgagor negligently triggers the damage or damage of the mortgaged residential or commercial property, the mortgagee financial institution has the choice to demand adequate insurance to cover the loss or to immediately collect the complete exceptional debt.

When the damage or damage to the mortgaged residential or commercial property is triggered by an external element and the mortgagee refuses to accept the financial obligation without insurance, the mortgagor has the choice to provide appropriate insurance coverage or settle the debt instantly before the due date. If the debt has no interest, the mortgagee is only entitled to the primary quantity without legal interest for the period between the real payment date and the initial due date.

Secondly: The mortgagee lender:

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

Upon alerting the debtor of the outstanding debt, the mortgagee can foreclose on the mortgaged residential or commercial property and requests its sale in accordance with the procedures 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 treatments and rules governing residential or commercial property surrender.

Any arrangement that grants the mortgagee the right to take ownership of the mortgaged residential or commercial property at a fixed price upon debt default or to sell it without following the legally mandated procedures is void, even if entered into after the home mortgage contract. However, after the debt or a portion of it has actually developed, the debtor and mortgagee can concur that the debtor will transfer the mortgaged residential or commercial property to the mortgagee in fulfillment of his financial obligation.

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

A main home loan is just enforceable versus 3rd parties if the home mortgage contract or judgment establishing the home loan is signed up before the 3rd party obtains a right in rem in the residential or commercial property. This lacks bias to the arrangements of personal bankruptcy laws.

Additionally, third celebrations can not assert claims based on an unregistered guaranteed right, the alternative of one financial institution for another in this right, or the assignment of registration top priority to another lender unless such actions are noted in the margin of the initial registration.

The procedures for registration, renewal, cancellation, and cancellation an official home mortgage, along with the effects thereof, are governed by the provisions of the Real Estate Registration Law. The expenses of registration, renewal, and cancellation of an official home loan are borne by the mortgagor unless otherwise concurred upon.

The termination of the main home mortgage:

A main home loan ends upon the fulfillment of the protected financial obligation or the nullification of the underlying cause for the debt. However, any bona fide rights gotten by third celebrations throughout the period between the home loan's expiration and its potential reinstatement remain unaffected.

If foreclosure proceedings are completed, the main 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 end upon the deposit of the auction continues or their payment to eligible authorized financial institutions.
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