Little known in France, themortgage is practiced for guarantee reimbursement of a sum of money.
Reminder: what is a mortgage?
The mortgage is a real security to guarantee the payment of a sum to a creditor. This is an entry made by a notary and entered in the land registration service (eg conservation of mortgages). The mortgage means that the value of the mortgaged property is allocated in priority to the repayment of the debt.
“The mortgage is a real right on the buildings assigned to the discharge of an obligation.” Source: extract from article 2393 of the Civil Code
In case of debtor default in its obligations, a judge is likely to order the sale of the mortgaged property in order to reimburse the sums due with the funds resulting from the sale.
The mortgage intervenes on specific real estate, for the payment of a specific sum.
If the Civil Code recognizes three types of mortgage, we come back to all the arrangements that are commonly called “mortgage” in France:
- Conventional mortgage
- Legal mortgage
- Judicial mortgage
- Lender Privilege (PPD)
- Commercial mortgage
- The mortgage promise
- The rechargeable mortgage (now prohibited in France)
The conventional mortgage
L’conventional mortgage results from an agreement between the two parties: the debtor and the creditor.
The debtor provides a mortgage guarantee Property that he already has and that is already reimbursed.
The conventional mortgage makes it possible to obtain a mortgage credit, a credit whose funds can be free of allocation.
Cabinet Bougardier obtains loans guaranteed by conventional mortgage. These mortgage loans are aimed at multi-owners wishing to mobilize their assets to obtain a tailor-made loan.
–
The legal mortgage
L’legal mortgage is taken under the law. It makes it possible to guarantee the payment of sums within the framework of a marriage, a tutorship or curatorship, or with a public administration.
A legal mortgage is likely to be taken in particular in the event of tax, social or family debt. With some exceptions, it is the result of a judicial decision.
Judicial mortgage
L’judicial mortgage is taken pursuant to a judgment. It results from a civil lawsuit between a debtor and his creditor.
In most cases, a judicial mortgage is taken when the debtor has failed in his repayment obligations and the creditor sues him to obtain payment of the amounts owed.
The Privilege of Money Lender
Commonly considered to be a mortgage, the Lender of Money lien (PPD) is a guarantee taken as part of a mortgage.
It is about a real right taken on the object of the acquisition and being used to guarantee the real estate loan having financed this acquisition.
This guarantee is offered less and less by French banks, which prefer the system of insurance guarantees to the taking of rights in rem.
Commercial mortgage
The commercial mortgage is a specific conventional mortgage in which theborrower is a legal person and the mortgaged property belongs to this legal person. This type of mortgage occurs within the framework of a professional credit.
The commercial mortgage is relatively little practiced in France because of the legislation on the liquidation of companies which does not place the bank creditor first in the event of financial difficulties in the company.
The mortgage promise
The mortgage promise, also called promise of mortgage allocation, is a contract most often backed by credit. It provides that the borrower must apply for a conventional mortgage to guarantee the repayment of a loan at the request of the lending bank.
The mortgage promise occurs when the sums borrowed are relatively derisory compared to the value of the property: the mortgage costs are only due if the conventional mortgage is actually taken.
The rechargeable mortgage
L’rechargeable mortgage was legal between 2007 and 2014, it has since been prohibited by the Hamon Law. However, contracts signed between 2007 and 2014 remain valid.
It is about a mortgage allowing to guarantee a mortgage loan and consumer credits. This type of mortgage is similar to “themortgage for any sum“practiced in Belgium: the bank can guarantee several loans, even for a small amount, with the mortgage on the property.
–
