Viewpoint... The legal effect of an unregistered mortgage on the intended real estate.
Published:
2022-11-09
The legal effect of 1. real estate mortgage contract. People's Court Press, December 2018, 1st edition, "Minutes of the Judges Meeting of the Second Civil Trial Division of the Supreme People's Court", page 241: "The establishment of a real estate mortgage is necessary for registration. If a mortgage contract is signed but the mortgage is not registered, the mortgage The right has not been established, and creditors who claim to enjoy the mortgage right shall not be supported. However, whether or not it is registered does not affect the validity of the mortgage contract, which, when validly established, is binding on both parties........." Article 60 of the Minutes of the National Court Conference on Civil and Commercial Trials (Law [2019] No. 254): "If a real estate mortgage contract is established in accordance with the law, but the mortgage registration procedures have not been completed, and the creditor requests the mortgagor to go through the mortgage registration procedures, the people's court shall support it in accordance with the law........." Article 46, paragraph 1, of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code (Law Interpretation No. 2020): "If the mortgage registration procedures have not been completed after the entry into force of the real estate mortgage contract, and the creditor requests the mortgagor to go through the mortgage registration procedures, the people's court shall support it." The conclusion of a real estate mortgage contract is a civil legal act of the parties to the contract, which is legally binding as long as it meets the conditions set out in Article 134 of the Civil Code. The Supreme People's Court has repeatedly stated in the above-mentioned judicial policy documents and judicial interpretations that the conclusion of a real estate mortgage contract and the registration of mortgage rights are two relatively independent civil legal acts. The former is an act of creditor's rights and the latter is an act of property rights. The act of creditor's rights is the cause of the act of real right, and the act of real right is the result of the actual performance of the act of creditor's rights. If the real estate mortgage contract is established in accordance with the law and is actually performed (mortgage registration), the real estate mortgage is established, and if the mortgage is not actually performed, the mortgage is not established but does not affect the legal effect of the mortgage contract. Whether the 2. fails to perform its registration obligations under the mortgage contract and is liable for breach of contract People's Court Press, December 2018, 1st edition, "Supreme People's Court Civil Trial Second Division Judges Meeting Minutes", page 241: "...... If the mortgagor is obliged to register the mortgage according to the contract, but cannot register the mortgage due to the loss or transfer of the mortgage, the mortgagor shall bear the corresponding liability for breach of contract and compensate the creditor for the loss of the performance of the interests to the extent of the value of the mortgage........." Article 60 of the Minutes of the National Court Conference on Civil and Commercial Trial (Law [2019] No. 254): "...... If the mortgage registration cannot be handled due to the loss of the mortgaged property and the transfer of the mortgaged property to another person, and the creditor requests the mortgagor to assume the liability within the limit of the value of the mortgaged property, the people's court shall support it in accordance with the law, but the scope shall not exceed the liability that the mortgagor" Article 46, paragraphs 2 and 3 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code (Fa Shi [2020] No. 28): "If the mortgaged property is lost or expropriated due to reasons not attributable to the mortgagor itself, and the creditor requests the mortgagor to assume responsibility within the agreed scope of the guarantee, the people's court shall not support it; however, if the mortgagor has received insurance money, compensation or compensation, etc., and the creditor requests the mortgagor to bear the liability for compensation within the amount received, the people's court shall support it in accordance with the law. If the mortgage registration cannot be processed due to the mortgagor's transfer of the mortgaged property or other reasons attributable to the mortgagor itself, the creditor requests the mortgagor to assume responsibility within the agreed scope of the security, the people's court shall support it in accordance with the law, but shall not exceed the scope of responsibility that the mortgagor should bear when the mortgage can be established." Due to the failure to fulfill the registration obligations stipulated in the mortgage contract, the real estate mortgage cannot be established, but the real estate mortgage contract is still valid. Can creditors hold the mortgagor liable for default? The minutes of the meeting of the judges of the Second Civil Division of the Supreme People's Court and the minutes of the National Court's Civil and Commercial Trial Work Conference held that: due to the loss of the mortgage and the transfer of the mortgage to another person, the creditor has the right to require the mortgagor to bear the liability for breach of contract to the extent of the value of the mortgage. The contents of paragraphs 2 and 3 of Article 46 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code (Fa Shi [2020] No. 28) respectively stipulate whether the mortgagor is at fault for failing to perform the registration obligation stipulated in the mortgage contract, and whether to bear the liability for breach of contract: if the mortgagor is not at fault for failing to register, the mortgagor shall bear the liability for breach of contract to the limit, if there is no substitute, the mortgagor shall not be liable; if the mortgagor is at fault for failure to register, the mortgagor shall be liable for breach of contract, and the scope of liability for breach of contract shall be the scope of the security agreed upon in the mortgage contract, but shall not exceed the scope of liability that the mortgagor shall bear when the mortgage can be established. The mortgagor's liability for breach of contract is limited by factors such as the value of the collateral, the agreed scope of security, and the expected benefits of the contract. The mortgagor's liability for default is reflected in the part that the principal debtor cannot pay off, I .e. the creditor has the right to require the mortgagor to be liable for the debts that the principal debtor cannot pay off, up to the value of the collateral. The mortgagor's liability for breach of contract is filled, predictable and restrictive. This liability for breach of contract can be understood as a general guarantee to the extent of the guarantee and the value of the collateral. (2019) The main points of the Supreme Court Civil Judgment No. 2025 and the 2017 Supreme Court Civil Judgment No. 2340 also hold this view.
The legal effect of 1. real estate mortgage contract.
People's Court Publishing House, December 2018, 1st Edition, Minutes of Judges Meeting of the Second Civil Trial Division of the Supreme People's Court, p. 241:"The establishment of a mortgage on immovable property is necessary for registration, and if a mortgage contract is signed but the mortgage is not registered, the mortgage has not been established, and creditors who claim to enjoy the mortgage shall not be supported. However, whether or not it is registered does not affect the validity of the mortgage contract, and after the mortgage contract is validly established, it is binding on both parties........."
Article 60 of the Minutes of the National Court Conference on Civil and Commercial Trials (Law [2019] No. 254):"If a real estate mortgage contract is established in accordance with the law, but the mortgage registration procedures have not been completed, and the creditor requests the mortgagor to go through the mortgage registration procedures, the people's court shall support it in accordance with the law........."
Article 46, paragraph 1, of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code (Law Interpretation [2020] No. 28):"If the real estate mortgage contract has not gone through the mortgage registration procedures after the entry into force of the real estate mortgage contract, and the creditor requests the mortgagor to go through the mortgage registration procedures, the people's court shall support it."
The conclusion of a real estate mortgage contract is a civil legal act of the parties to the contract, which is legally binding as long as it meets the conditions set out in Article 134 of the Civil Code.
The Supreme People's Court has repeatedly stated in the above-mentioned judicial policy documents and judicial interpretations that the conclusion of a real estate mortgage contract and the registration of mortgage rights are two relatively independent civil legal acts. The former is an act of creditor's rights and the latter is an act of property rights. The act of creditor's rights is the cause of the act of real right, and the act of real right is the result of the actual performance of the act of creditor's rights. If the real estate mortgage contract is established in accordance with the law and is actually performed (mortgage registration), the real estate mortgage is established, and if the mortgage is not actually performed, the mortgage is not established but does not affect the legal effect of the mortgage contract.
Whether the 2. fails to perform its registration obligations under the mortgage contract and is liable for breach of contract
People's Court Publishing House, December 2018, 1st Edition, Minutes of Judges Meeting of the Second Civil Trial Division of the Supreme People's Court, p. 241:"...... If the mortgagor is obliged to register the mortgage in accordance with the contract, but cannot register the mortgage due to the loss or transfer of the mortgage, the mortgagor shall bear the corresponding liability for breach of contract and compensate the creditor for the loss of performance of the interest to the extent of the value of the mortgage........."
Article 60 of the Minutes of the National Court Conference on Civil and Commercial Trials (Law [2019] No. 254):"...... If the mortgage cannot be registered due to the loss of the mortgage and the transfer of the mortgage to another person, and the creditor requests the mortgagor to be liable to the extent of the value of the mortgage, the people's court shall support it in accordance with the law, but the scope shall not exceed the liability of the mortgagor at the time of the effective establishment of the mortgage"
Paragraphs 2 and 3 of Article 46 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code (Law Interpretation [2020] No. 28):"If the mortgaged property is lost or expropriated due to reasons not attributable to the mortgagor itself, and the creditor requests the mortgagor to bear the responsibility within the agreed scope of guarantee, the people's court shall not support it; however, if the mortgagor has received insurance money, compensation or compensation, and the creditor requests the mortgagor to bear the liability for compensation within the amount obtained, The people's court shall support it according to law.
If the mortgage registration cannot be processed due to the mortgagor's transfer of the mortgaged property or other reasons attributable to the mortgagor itself, the creditor requests the mortgagor to assume responsibility within the agreed scope of the security, the people's court shall support it in accordance with the law, but shall not exceed the scope of responsibility that the mortgagor should bear when the mortgage can be established."
Due to the failure to fulfill the registration obligations stipulated in the mortgage contract, the real estate mortgage cannot be established, but the real estate mortgage contract is still valid. Can creditors hold the mortgagor liable for default?
The minutes of the meeting of the judges of the Second Civil Division of the Supreme People's Court and the minutes of the National Court's Civil and Commercial Trial Work Conference held that: due to the loss of the mortgage and the transfer of the mortgage to another person, the creditor has the right to require the mortgagor to bear the liability for breach of contract to the extent of the value of the mortgage.
The contents of paragraphs 2 and 3 of Article 46 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the the People's Republic of China Civil Code (Fa Shi [2020] No. 28) respectively stipulate whether the mortgagor is at fault for failing to perform the registration obligation stipulated in the mortgage contract, and whether to bear the liability for breach of contract: if the mortgagor is not at fault for failing to register, the mortgagor shall bear the liability for breach of contract to the limit, if there is no substitute, the mortgagor shall not be liable; if the mortgagor is at fault for failure to register, the mortgagor shall be liable for breach of contract, and the scope of liability for breach of contract shall be the scope of the security agreed upon in the mortgage contract, but shall not exceed the scope of liability that the mortgagor shall bear when the mortgage can be established.
The mortgagor's liability for breach of contract is limited by factors such as the value of the collateral, the agreed scope of security, and the expected benefits of the contract. The mortgagor's liability for default is reflected in the part that the principal debtor cannot pay off, I .e. the creditor has the right to require the mortgagor to be liable for the debts that the principal debtor cannot pay off, up to the value of the collateral. The mortgagor's liability for breach of contract is filled, predictable and restrictive. This liability for breach of contract can be understood as a general guarantee to the extent of the guarantee and the value of the collateral. (2019) The main points of the Supreme Court Civil Judgment No. 2025 and the 2017 Supreme Court Civil Judgment No. 2340 also hold this view.
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