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Viewpoint... Mortgage has not been established, the developer's phased guarantee liability exemption.

Published:

2024-07-01

Phased guarantee is a common risk prevention and control measure in real estate transactions and financing models, and its original intention is to deal with the legal risks and economic losses that may arise during the period when the formal property registration procedures are not yet complete. In the process of buying and selling commercial housing, because the conditions for mortgage registration are not available, the parties may apply for advance registration with the registration agency in order to prevent others from setting other rights burdens for the property. At the same time, developers provide phased guarantees to ensure the security of bank claims.

Case Introduction

On September 11, 2019, a bank (lender) signed a "personal house purchase loan and guarantee contract" with Zhang (borrower, mortgagor) and a real estate company (guarantor), stating that the lender agreed to grant him a personal house purchase loan in an amount of 570000 yuan only according to the borrower's application; the loan was used to purchase a real estate developed by a real estate company; the term of the loan under this contract is 360 months; the loan interest rate shall be increased by 10% on the basis of the RMB benchmark interest rate of the same grade for the same period announced by the People's Bank of China; if the borrower fails to repay the principal and interest of the loan as agreed, the lender shall have the right to declare the loan due in advance, and shall have the right to require the borrower to repay all or part of the loan in advance, as well as the interest, penalty, compound interest; the Mortgager shall complete the registration procedures or mortgage registration procedures within 90 days after the signing of the Contract; the Guarantor shall provide periodic joint and several liability guarantee, and the Guarantor shall assume joint and several liability for all the principal, interest, penalty interest, compound interest, liquidated damages of the loan under the Contract. However, if the formal mortgage registration procedures stipulated in the Contract have been completed, the Guarantor shall be relieved of the guarantee liability for the debts of the Borrower due date of the Borrower; the mortgagor voluntarily provides the lender with a mortgage guarantee on the purchased property. On the same day, a bank issued a loan of 570000 yuan to Zhang Moumou according to the agreement. Zhang Moumou has been overdue since September 2022. The mortgaged property involved in the case has been registered for the first time, but the real estate right certificate has not yet been processed, nor has the mortgage advance notice registration and mortgage registration been processed. The bank sued the court and asked Zhang to repay the principal and interest of the loan, and a real estate company assumed the responsibility of guarantee.

Referee dispute points

The main point of the dispute in this case is whether the real estate company can be exempted from the stage guarantee liability. The real estate company said that the real estate involved in the case now has the conditions to handle the real estate right certificate. It has sent a mortgage registration notification letter and a pre-mortgage registration application form stamped with the company's official seal to the bank and Zhang Moumou, urging a bank to handle the relevant registration procedures in a timely manner. The fault party who has not handled the mortgage advance notice registration and mortgage registration is in Zhang Moumou and the bank. The real estate company has no fault in this process and should be exempted from its guarantee liability. A bank denied receiving the above notification letter and application form, and said that the relevant registration requires a real estate company to deliver the registration and filing procedures of the house purchase contract to the bank, but it did not submit the materials.

The law of our country stipulates that the mortgage of real estate is established from the time of registration. The court held that although Zhang provided mortgage for the loan in question with the property in his name, the property had neither registered the mortgage nor registered the advance notice of the mortgage, and its mortgage had not yet been established. The contract clearly stipulates that when "the formal mortgage registration procedures agreed in this contract have been completed", a real estate company is exempted from the stage guarantee responsibility for the loan involved. The mortgaged property involved has not yet been formally registered as a mortgage, the conditions for a real estate company to waive the guarantee liability have not yet been met, and a real estate company has failed to prove that a bank is negligent in handling and maliciously obstructing the achievement of its guarantee liability conditions, and finally the court ordered a real estate company to assume the guarantee liability for the loan involved.

case analysis

If the bank and the mortgagor have registered the mortgage advance notice and comply with the provisions of Article 52 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System of the Civil Code of the the People's Republic of China, the bank shall have the priority right of mortgage payment for the property involved in the case, and the developer shall be exempted from the phased guarantee liability.

If the bank fails to strictly control the risk in the loan process and ignores the importance of mortgage registration, its fault is obvious. When the conditions for (pre-) mortgage registration are met but not handled, the bank allows the mortgage risk to occur, and the bank's negligence may cause the mortgage to face the risk of seizure or other coercive measures, and extend the period for the developer to assume the phased guarantee. Or increase the risk of the borrower and other guarantors, in violation of the principle of good faith. In the guarantee contract, it is usually agreed that the developer's phased guarantee liability shall be terminated until the borrower obtains the real estate ownership certificate and complete the mortgage registration procedure with the lender as the mortgagee. However, the developer is not the party obligated to handle the mortgage registration, if the developer submits the property certificate of the house involved in the case to the bank or promptly notifies and informs the bank that the conditions for handling the mortgage registration have been met, it shall be regarded as the achievement of the developer's stage guarantee liability exemption conditions, and its stage guarantee liability shall be exempted. (Reference Cases: 2022 Lu 06 Min Zhong No. 2566, (2017) Supreme Famin Shen No. 3474)

In summary, whether the bank is at fault when it has the conditions to handle the (pre) mortgage is an important factor affecting the developer's responsibility for the stage guarantee. The bank's prudential obligations are so strict that if the loan risk is allowed to occur, the bank should bear the primary responsibility for the obvious fault of not registering the (pre) mortgage. If the developer fails to register the mortgage, it shall continue to bear the periodic guarantee responsibility.

Relevant Articles

Civil Code

Article 221 If the parties sign an agreement to buy and sell a house or sign an agreement on other real property rights, in order to ensure the realization of real rights in the future, they may apply to the registration agency for advance registration in accordance with the agreement. After the advance notice is registered, if the real property is disposed of without the consent of the right holder of the advance notice registration, the effect of the real property shall not occur.

After the advance notice registration, if the creditor's rights are extinguished or the registration is not applied for within 90 days from the date when the real estate registration can be carried out, the advance notice registration shall be invalid.

Article 403 Where a mortgage is placed on the property specified in Items 1 to 3 of the first paragraph of Article 395 of this Law or on a building under construction specified in Item 5, the mortgage shall be registered. The mortgage is created from the time of registration.

Article 509 The parties shall fully perform their obligations in accordance with the agreement. The parties shall follow the principle of good faith and perform the obligations of notice, assistance and confidentiality in accordance with the nature, purpose and trading habits of the contract.

Article 577 If one of the parties fails to perform its contractual obligations or the performance of its contractual obligations is not in accordance with the agreement, it shall bear the liability for breach of contract such as continuing to perform, taking remedial measures or compensating for losses.

The Supreme People's Court on the application<中华人民共和国民法典>Interpretation of the Guarantee System

Article 52 After the parties go through the mortgage advance notice registration, the advance notice registration obligee requests priority compensation for the mortgaged property. After examination, the property that has not been registered for the first time, the advance notice registration is inconsistent with the property when the building ownership is registered for the first time, and the mortgage advance notice registration has expired, etc., resulting in failure to meet the conditions for mortgage registration, the people's court will not support it. After examination, and if there are no circumstances such as the failure of the advance notice registration, the people's court shall support it and shall determine that the mortgage right is established from the date of the advance notice registration.

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