A mortgage is a contract by which a person, in order to guarantee a loan obtained by him or another person (the mortgage debtor/guarantor), pledges a real estate or movable property owned by him. By creating a mortgage on the property, its owner allows the mortgagee (usually a banking institution) to pursue the property regardless of the person who owns it and to be paid with priority over other creditors, from the price of the value of this property.

A mortgage does not imply the dispossession of the owner of the property.

Conditions

The mortgage contract, under penalty of absolute nullity, is concluded in authentic form (before a notary public).

The person creating the mortgage must be the current owner of the property and have full capacity to exercise (the capacity to dispose of the property).

 

Documents that must be presented to the notary public, in the case of a real estate mortgage

• The title deed to the real estate that is to be mortgaged, as well as the agreement by which the registration of its ownership right in the Land Registry was ordered, issued by the competent Real Estate Cadastre and Advertising Office.

• If the owner is a legal entity (Firm), the following documents must be presented:

  • The registration certificate issued by the Trade Registry on the date of establishment of the company, the document under which the legal entity carries out its activity;

  • The recent certificate of incorporation, issued by the Trade Registry;

  • The decision of the general meeting of the associates or, as the case may be, the decision of the sole associate, which should result in the agreement of the associates regarding the provision, as collateral, of the asset and the value of the secured credit; Authentic special power of attorney for the conventional representative of the legal entity who has the authority to sign the mortgage contract in the name and for the company.

• The land registry extract for authentication issued by the Real Estate Cadastre and Advertising Office, a document that will be obtained through the efforts of the notary public, based on a written request signed by the owner of the property. The land registry extract shows whether the property is encumbered by any other charge, who its owner is and the description of the property.

• The tax attestation certificate stating that all taxes and duties related to the property are paid up to date by the owner. The tax attestation certificate is issued by the competent Tax and Fees Department within the City Hall to which the owner pays the annual tax for the respective property. In the event of the alienation of the ownership right over a property in co-ownership, the tax authority issues tax attestation certificates to each owner, proportionally to his share of the property.

Attention!  The tax certification certificate is valid for 30 days from the date it was issued.

 

Real estate advertising

Any real estate charge must be advertised in order to become enforceable against third parties. Advertising consists of registering it in the land register kept by the Real Estate Cadastre and Advertising Office in whose jurisdiction the property is located. Only through registration does the mortgage become enforceable against third parties, and the priority rank of the mortgage is also determined.

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Effects

The owner continues to retain possession and use of the mortgaged property, having the right to reap its benefits like any other owner. The owner can even alienate the property, which will be transferred to the new owner burdened with the charges.

 

Extinguishing the mortgage

The real estate mortgage is extinguished, mainly, by the full payment of the loan. After the date on which the secured obligation has been paid, the mortgagee (the natural person/legal entity in whose favor the mortgage was established) has the duty to request the deletion of the charge encumbering the property from the land register of the real estate.

This is materialized by a declaration authenticated by the notary public, signed by the mortgagee, through which he requests the deletion of the mortgage. Based on this declaration, which the notary public will communicate to the Real Estate Cadastre and Advertising Office, the mortgage will be deleted from the land register.

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Fees

The fee charged by the Real Estate Cadastre and Advertising Office and the notary fee charged for the authentication of the mortgage contract and the subsequent registration of the mortgage, as a charge on the real estate, in the advertising register, are calculated based on the value of the loan for which the mortgage was established in favor of the mortgagee.