The official mortgage is an agreement whereby the financial institution acquires a residential or commercial property committed to the fulfillment of his or her debt in kind, whereby she or he may use to regular creditors and the following financial institutions in order to get the right of the rate of that residential or commercial property in any hand.

The home loan is an agreement concluded in between the mortgagor and the mortgagee creditor which gives the mortgagee right in rapid eye movement in the residential or commercial property, with all advantages and real security over the home mortgage product. Additionally, the mortgagor deserves to follow the mortgaged residential or commercial property if it is moved to a third celebration. The mortgagor retains ownership and ownership of the mortgaged residential or commercial property however is limited in their disposal rights to ensure the mortgagee's interests are safeguarded.

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

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

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

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

The commitments of the mortgagor and the mortgagee financial institution in the main mortgage

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

The Mortgager's commitments:

The mortgagor is bound to provide the mortgaged residential or commercial property to the financial institution or to a designated agent picked by both Parties in the contract.

The legal requirement for a seller to deliver a sold product will be applied to the mortgagor's duty to deliver the home loan item to the mortgagee.
If the mortgaged residential or commercial property is returned to the mortgager's ownership, the home mortgage will be expired, unless the mortgagee proves that the residential or commercial property has been returned for a reason not planned to expire the home mortgage.

The mortgagor ensures the integrity and enforceability of the home mortgage, and the mortgagor will not take any action that lessens the worth of the home mortgage or restrains the lender's exercise of his rights under the agreement. In case of seriousness, the mortgagee financial institution might take all required measures at the mortgager's cost, to preserve the home loan item. The mortgagor shall be liable for the loss or damage of the home mortgage product if such loss or damage is because of his fault or develops from force majeure act.

The provisions of Articles No. 1048 and No. 1049 regarding the loss or damage of the mortgaged residential or commercial property under an official home loan, and the transfer of the lender's right from the mortgage item to any replaced rights will use to the possessory home mortgage.

The Mortgagee's responsibility:

Upon receiving the mortgaged residential or commercial property, the mortgagee is obliged to work out the exact same level of care and maintenance in its conservation as would a sensible individual. and he is accountable for the loss or damage of the mortgage item unless it is proven that such loss or damage was triggered by an external factor beyond his control.

The mortgagee is not permitted to obtain any take advantage of the home mortgage item without settlement, he needs to invest it totally unless otherwise concurred Any net revenue or advantage derived by the financial institution from making use of the mortgage product will be subtracted from the amount secured by the home mortgage, even if the due date has actually not yet come, supplied that the deduction shall be made from the expense of preserving and repairing 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 loan product produces revenue and the parties agree that all or part of the revenue will be used to offset the interest, in, this agreement will be valid within the optimum limits of legally allowable 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 sensible person. The mortgagee can not modify the home loan item's usage without the mortgager's approval. He must promptly notify the mortgagor of any matter requiring his intervention.

If the mortgagee abuses this right, mis-manages the residential or commercial property, or commits gross negligence, the mortgagor has the right to request that the product be positioned under custody or to recover it upon payment of the arrearage. if the amount secured by the home mortgage does not bear interest and has not yet become due, the mortgagee is entitled just to remaining amount after deducting 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 obligation including all expenses and payment related to the right.

Effects of the official mortgage in the Egyptian law

The impact of the home mortgage in 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 hinder the mortgagee's right.

The mortgagor keeps the right to manage the mortgaged residential or commercial property and to gather 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 notice and the rent was not paid ahead of time, so it will not be efficient unless it can be considered part of the great management work. If the lease term prior to notarizing the home mortgage notice surpasses nine years, it will not work versus the mortgagee financial institution other than for a duration of 9 years just unless it was signed up before the mortgage was signed up.

The mortgagor is accountable for guaranteeing the security of the mortgage residential or commercial property. The mortgagee creditor has the right to object to any actions or carelessness by the mortgagor that could significantly reduce the worth or security of the residential or commercial property, and in immediate cases the mortgagee may take necessary protective steps and look for repayment from the mortgagor, from any expenditures incurred.

If the mortgagor negligently causes the damage or damage of the mortgaged residential or commercial property, the mortgagee creditor has the alternative to demand appropriate insurance to cover the loss or to right away gather the complete outstanding debt.

When the destruction or damage to the mortgaged residential or commercial property is triggered by an external aspect and the mortgagee contradicts the financial obligation without insurance, the mortgagor has the option to supply appropriate insurance coverage or settle the financial obligation immediately before the due date. If the debt has no interest, the mortgagee is only entitled to the principal amount without legal interest for the period in between the real payment date and the initial due date.

Secondly: The mortgagee creditor:

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 informing the debtor of the arrearage, the mortgagee can foreclose on the mortgaged residential or commercial property and requests its sale in accordance with the treatments and timelines specified in code of Civil Procedures. If the mortgagor is a 3rd party other than the debtor, he can prevent any foreclosure procedures by willingly giving up the mortgaged residential or commercial property according to the procedures 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 a fixed rate upon debt default or to sell it without following the legally mandated procedures is invalid, even if gotten in into after the home loan agreement. However, after the debt or a part of it has actually grown, the debtor and mortgagee can agree that the debtor will move the mortgaged residential or commercial property to the mortgagee in fulfillment of his debt.

The official home mortgage and its result to the 3rd party:

A main mortgage is only enforceable against third celebrations if the mortgage contract or judgment establishing the home loan is registered before the 3rd party gets a right in rem in the residential or commercial property. This is without prejudice to the arrangements of insolvency laws.

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

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

The termination of the main home loan:

An official home mortgage ends upon the fulfillment of the protected debt or the nullification of the underlying cause for the debt. However, any bona fide rights gotten by third parties throughout the duration in between the home mortgage's expiration and its prospective reinstatement stay unaffected.

If foreclosure procedures are completed, the official home mortgage is definitively snuffed out, even if the residential or commercial property ownership changes 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 eligible authorized financial institutions.