Sale of a mortgaged building: Conditions, Procedure

If you are the owner of an apartment or a house for which you have a mortgage contract, this does not mean that you are lifelized to that building and you cannot sell it, before that debt is paid. The alienation of such a home, taken by mortgage, can be done with the help of the bank.

If you have an apartment for sale, for which there is a mortgage contract, you have several variants. In the following, I have prepared a short guide about what such a mortgage contract means, what are the differences between a real estate and a mortgage and what plan you should build when you want to sell a mortgaged home.

• What is a mortgage contract
• Real estate credit and mortgage credit
• How can you sell a mortgaged building
• Under what conditions can the real estate mortgage be extinguished

What is a mortgage contract

In order to understand exactly what a mortgage contract refers to, it is good to know what, in fact, the real estate mortgage. This is either a real guarantee for fulfilling the obligations of a debtor to his creditor, or a legal building appointed as a guarantee for the payment of the loan. Note that the mortgage does not mean the dispossession of the debtor.

According to the Civil Code (Law 287/2009 on the Civil Code, with the amendments made), the mortgage on a building is constituted at the time of registration in the land book. The mortgage can be registered on a building as a whole or only on the share of the right to the building. At the same time, there is the possibility of extending the mortgage, without other formalities, and on the constructions, improvements and accessories of the building, even if they are subsequent to the mortgage.

Can be mortgaged:

• buildings with their accessories;
• the usufruct of these buildings and accessories;
• the shares of the rights of the real estate;
• The right of surface (the right to own or build a building on someone else’s land, above or in the basement of that land, on which the superficial acquires a right of use).

The law also mentions that a mortgage on the rents or arenzi present and future products by a building, as well as on the allowances paid on the basis of insurance contracts regarding the payment of these rents or arenzi is subject to the rules of real estate advertising. Also, if it is a building to be built, the mortgage on it cannot be tabulated, but only provisionally inscribed in the land book, according to the law.

Signing and authenticating the mortgage contract

The mortgage contract is the act that establishes the conditions of a mortgage loan. It is concluded by a public notary, under the sanction of absolute nullity. Therefore, the parties of the mortgage contract are:

• the mortgage debtor;
• the mortgagee.

Any mortgage contract needs to be authenticated to an authorized notary. In this sense, certain acts must be presented in the original, at the signing of the contract. It’s about:

• identity documents (identity card, marriage certificate);
• The documents of ownership of the building that is the subject of the mortgage (sale-purchase contract, delivery-receipt process), donation contract, sentence/final and irrevocable civil decision with the expert report and the annexed sketch, the title of property, certified by heir, building permit, etc.);
• certificate of fiscal attestation – from which it follows that the owner is registered with the respective building;
• Land book extract of authentication – only the notary who instruments the act is obtained;
• the conclusion of the tabulation of the property right;
• the bank’s agreement, when the building is mortgaged;
• The grantor agreement, if the building is on a concessioned land.

Real estate credit and mortgage credit

Many times there is a confusion between real estate and mortgage, both can be contracted for the same purposes:

• buying a home;
• the construction of a building;
• renovation or modernization of a home.

The difference between the two types of credits refers to the building brought in guarantee. Specifically, the real estate credit can be guaranteed with another home, in order to ensure the obligation of payment of the loan, while the mortgage loan is compulsory only with the apartment/house for which it was contracted.

Mortgage loan allows you to buy an apartment or house. Mortgages are offered by banks, companies that build buildings and other types of creditors. Unlike a consumer loan, the mortgage has a slightly lower interest rate and a higher repayment period. If, however, you cannot pay your rates, and the mortgage has been guaranteed with the purchased property, the creditors can return the house to pay the loan. The creditors have the freedom to accept or not a mortgage request, depending on the evaluation of the bonity, that is, after ensuring that you allow yourself to pay the respective credit (you present the financial situation – assets, debts, income, the value of the property, which is the guarantee for the loan granted).

Also read: What do you need to know and what are the steps when you want to take an apartment by mortgage loan

How can you sell a mortgaged building

A mortgaged building can be sold by the creditor, when the forced execution has been imposed, under the conditions provided by law, or by the debtor, if he wants to change your mortgaged home. A house bought with mortgage should not be an obstacle to you if you want to sell it. In this sense, good information is essential, to know what plan for sale is better suited to your needs. So, here are the variants you have at hand when you want to sell a mortgaged house:

• The deck -type contract ? It is the situation in which you want to move quickly and you do not have time to sell the previous house first; In this case, you will not pay two separate rates, but one, whose value, however, will be higher than the one you already had.
• the transfer of debt to the buyer – Another variant you have at hand when you want to sell a mortgaged house is to find a buyer willing to purchase the house with the debt left to the creditor; In this way, the obligation of payment of the rest of the mortgage credit does not belong to you, but it belongs to the future owner; Such a transaction needs the bank’s agreement, because there are several operations to be done, including:
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• the anticipated repayment of the credit – is the most common way to sell a property taken with mortgage; Specifically, you will find a buyer and make the loan repayment with some of the sale price; To repay the credit in this way, there are a few stages:
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• Canceling the mortgage contract – you can request the cancellation of the mortgage contract, and after selling the building, you pay the bank the debt you have; If you fail to sell the house at a price that covers the debt to the bank, you pay the difference from your own resources or you make a new credit, but this time not a mortgage, but in the form of bank loan, with different terms and conditions; The cancellation of the mortgage contract involves, of course, costs that you will have to bear.

Under what conditions can the real estate mortgage be extinguished

Beyond knowing the possibilities you have in order to sell a mortgaged building, whether it is an apartment from a new or old block or a house under construction, it is good to know and what are the conditions in which the real estate mortgage It can be extinguished. Thus, according to the Civil Code, a real estate mortgage is extinguished by erasing from the land book or by the total disappearance of the mortgaged good. There are several causes that can lead to the cancellation of the mortgage, such as:

• extinguishing the main obligation, by any legal means;
• failure to fulfill the event on which the birth of the guaranteed obligation or mortgage depends;
• fulfilling the event on which the mortgage is extinguished;
• the acquisition by the creditor of the embarrassed good;
• the express or tacit renunciation of the creditor to the respective mortgage;
• in other situations provided by law.

In case of failure to fulfill the event on which the birth of the guaranteed obligation or the mortgage or the failure of the event depends on the extinguishing of the mortgage, the mortgage does not go out if the parties agree to be used to guarantee another determined or determinable obligation, without harm, However, the rights previously acquired by other persons.

So, even if you have a property for which you have a mortgage contract, this does not mean that you cannot sell it, under the conditions mentioned above. The recommendation of the specialists is to do very well the calculations to choose the option that suits your needs and to make sure you can sell the building at a fair price.

Last Edit: 03 July 2020