Setting up a mortgage can seem like a journey fraught with administrative and legal pitfalls. However, although it requires rigour and precision, setting up and registering a mortgage follows a well-defined logic and stages. Understanding immovable property mortgages, their basic principles and the importance of publicising them is essential for any creditor wishing to ensure that its guarantee will be solid and effective, and just as much for the owner of the property concerned. How do you go from an agreement in principle to a mortgage that is duly registered and enforceable against everyone?
In this article, we'll look at the practical steps involved in creating and registering a mortgage. We'll look at who can apply to register a mortgage, when it's preferable or necessary to do so, the formalities that must be completed, including the famous "bordereau", and how long a mortgage registration lasts.
Who can apply to register a mortgage?
Logically, it is above all the creditorThe person in whose favour the security interest has been created has the right to request registration. He is the first party to ensure that his right is published and protected.
This can also be done by the person's representatives. These may be legal representatives (such as a guardian for a minor creditor) or appointed agents (an asset manager, a lawyer, or very often the notary who draws up the deed). The heirs or successors of the original creditor may also, of course, register the mortgage they have inherited.
A less well-known situation, but provided for in article 1341-1 of the Civil Code, is that of theoblique action. It allows a negligent creditor's own creditors to act in his place to register a mortgage owed to him. Imagine that A owes you money and that A is itself a creditor of B, with a mortgage on B's property. If A neglects to register his mortgage (which would jeopardise his ability to repay you), you could, under certain conditions, act on A's behalf to have the mortgage registered. This is an indirect protection mechanism.
Concerning the notary who receives the loan deed or mortgage deed, he is not automatically required by law to register it. However, his professional duty to advise and ensure the effectiveness of the deeds he draws up very generally leads him to do so, often acting on the basis of a tacit mandate from the creditor. He could be held liable if he fails to exercise this diligence when the circumstances so require. Article 2428 of the Civil Code sets out the terms and conditions of this request for registration.
When should the mortgage be registered?
Unlike other legal formalities, there is no no strict legal deadline to register a mortgage after it has been set up. However, this lack of a legal deadline should not encourage procrastination. As we saw in our previous article, the ranking of a mortgage, i.e. its priority over any other guarantees on the same property, is determined by the date of registration. The later the date of registration, the greater the risk that another mortgage or other right will come along and take priority, jeopardising the creditor's preferential and resale rights. Registering quickly is therefore an elementary measure of prudence for the creditor.
However, there is a minimum time limit: a mortgage cannot be registered before it legally exists. Registration can only take place once the deed or judgment on which it is based has become effective. For example, in the case of a conventional mortgage linked to a loan, registration cannot be required until after the loan deed and the mortgage assignment deed have been signed.
In addition, you need to be aware that certain events can occur in the course of a year. "stop the registration processThis is provided for in article 2422 of the Civil Code. This means that from a certain point onwards, it becomes impossible to take out new registrations on a debtor's assets. This is the case, for example, when collective proceedings are opened (safeguard, receivership or liquidation proceedings) or as soon as a summons to pay is published for the property in question to be seized. If you wait too long to register, you run the risk of not being able to register at all if the debtor's situation deteriorates.
How registration works: the essential formalities
Registering a mortgage is not a simple declaration. It is subject to precise formalities designed to ensure the reliability and clarity of the information recorded. At the heart of this process is the registration form.
What is a slip and what does it contain?
The registration form is the official document, the model of which is regulated, that must be completed and filed with the Service de la Publicité Foncière (SPF) in order to register the mortgage. Article 2423 of the Civil Code and its implementing regulations, in particular article 55 of the Decree of 14 October 1955, set out the mandatory content of the registration form. Two identical copies must be provided.
This document must contain precise and complete information, enabling all the elements of the operation to be identified without ambiguity:
- The creditor : Its full identity (surname, first names, date and place of birth, place of residence for a natural person; name, legal form, registered office, SIREN number for a legal entity). The identity must be certified as accurate by a public official (usually a notary).
- The debtor (or third party grantor) : The same precise identification information is required as for the creditor.
- The title giving rise to the mortgage : Date and type of deed (notarised loan agreement, court judgment, etc.) and, where applicable, the name and place of residence of the notary who drafted it. The cause of the secured obligation must also be indicated.
- The secured claim : The exact principal amount of the debt. If the debt is indeterminate, contingent or conditional, the creditor must provide a valuation. Interest (rate, starting point) and the normal due date must be specified.
- The encumbered property(ies) : Each property must be individually and precisely described, including the municipality in which it is located, the address and the cadastral designation (section, plot number, surface area). Any general description is excluded.
These precision requirements stem directly from the speciality principle of the mortgage.
The principle of speciality
This principle means that the mortgage must relate to clearly defined items. It is special in respect of the claim It can only guarantee one or more debts specifically identified in the deed and the schedule, for a specific or assessable amount. A mortgage cannot be created "for all present and future debts". It is also special basis of assessment It can only be applied to individually designated properties. A mortgage on "all present and future immovable property" is not possible as such at the time of registration; each property must be specifically mentioned in the slip. This is a guarantee against the former general and hidden mortgages.
The role of the notary and the Service de la Publicité Foncière (SPF)
In practice, it is most often the notary who draws up the mortgage deed (obligatory for a conventional mortgage) and prepares the registration forms, ensuring that all the legal details are complied with.
The slips are then deposited at the SPF (the one in the place where the property is located). The FPS then carries out an inspection, but this is mainly a formal control. The department checks that the slip is correctly completed, that all the compulsory information is included, that there is no obvious discrepancy with information already published about the property or the parties, and that the identity of the parties is certified. The FPS does not judge the validity of the mortgage itself (for example, if the debtor's consent was vitiated). If the formal requirements are not met, the FPS may refuse the deposit or, after accepting the deposit, reject the formality (after giving notice of the irregularities and allowing time for rectification). These decisions may be appealed to the judicial court, as provided for in article 26 of the decree of 4 January 1955.
How long is registration valid?
A mortgage registration does not have an unlimited lifespan. It is subject to what is known as the expiry. This means that after a certain period, if it has not been renewed, the registration ceases to have effect, as if it had never existed. It disappears from the public register of encumbrances on the property.
Why this limited duration? The aim is to avoid cluttering up the registers with old guarantees that may no longer correspond to existing debts. This ensures that third parties (potential buyers, other creditors) have a clearer and more reliable picture of the mortgage status of the property.
The maximum period of validity of a registration is set by Article 2429 of the Civil Code and depends on the nature of the secured claim:
- If the debt has a a fixed term (or final term)registration is effective until one year after this deadlinebut may not exceed a total duration of 50 years old from the date of registration. For example, for a loan repayable over 20 years, the initial registration could be for a 21-year term.
- If the due date is indeterminate (this is rare for traditional receivables, but possible for certain complex guarantees) or if it concerns a rechargeable mortgageThe maximum duration of registration is 50 years old from its date.
- If the debt is already expired at the time the registration is madeThe maximum duration of registration is 10 years.
These terms are maximums. The creditor may choose a shorter term.
When the registration expires, if the debt is not fully extinguished (to find out more about causes of extinction and discharge of the mortgage), the creditor must request the renewal of its registration before the expiry date. This renewal, which also requires specific forms to be filed, enables the mortgage to retain its initial rank and continue to produce its effects for a new period. If the registration is not renewed in good time, it lapses, and if the creditor takes out a new registration, it will only rank on its new date, potentially after other creditors.
The process of registering and renewing a mortgage requires constant vigilance and compliance with precise rules. An error or oversight can have a significant impact on the security of the secured debt. If you are considering taking out a mortgage, or if you have any questions about an existing registration, it is advisable to seek legal advice. Our can help you with these procedures to guarantee your best interests.
Sources
- Civil Code (in particular articles 1341-1, 2421, 2422, 2423, 2428, 2429)
- Decree no. 55-22 of 4 January 1955 reforming land registration (in particular articles 5, 6, 7 and 26)
- Decree no. 55-1350 of 14 October 1955 for the application of the decree of 4 January 1955 (in particular article 55)
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