Provision of mortgage of porverty.
Provision of mortgage of porverty includes basic contents of mortgage, mortgage, forms of property mortgage, duration of mortgage, obligations and rights of the property mortgagor and mortgagee, cancellation and termination of mortgage and other related contents.
Common provision of mortgage of property
1. The mortgage of property means the use by a party (hereinafter referred to as the mortgagor) of his/her/its own property to secure the performance of a civil obligation toward the other party (hereinafter referred to as the mortgagee) without transferring such property to the mortgagee.
In cases where an entire immovable or movable property containing an auxiliary object is mortgaged, the auxiliary object of such immovable or immovable property shall also belong to the mortgaged property.
In cases where only part of the immovable or movable property containing an auxiliary object is mortgaged, the auxiliary object shall belong to the mortgaged property, unless otherwise agreed upon by the parties.
The mortgaged property can also be the property to be formed in the future.
2. The mortgaged property shall be held by the mortgagor. The parties may agree to let a third party keep the mortgaged property.
3. The mortgage of land use rights shall comply with the provisions of Articles 715 thru 721 of this Code and other relevant provisions of law.
Forms of property mortgage
The mortgage of property must be made in writing, either in a separate document or incorporated in a principal contract. Mortgage documents must be notarized, authenticated or registered, if so provided for by law.
Duration of mortgage
The parties shall agree on the duration of a mortgage of property; in the absence of such agreement, the mortgage shall last until the termination of the obligation secured by the mortgage.
Obligations of the property mortgagor
The property mortgagor shall have the following obligations:
1. To preserve and maintain the mortgaged property;
2. To apply necessary remedial measures, including the cessation of the exploitation of the utility of the mortgaged property, if due to such exploitation the mortgaged property is in the danger of loss or depreciation of its value;
3. To notify the mortgagee of a third party’s rights to the mortgaged property, if any; in case of non-notification, the mortgagee may cancel the property mortgage contract and demand compensation for damage or maintain the contract and accept the third party’s rights to the mortgaged property;
4. Not to sell, exchange or donate the mortgaged property, except for the cases specified in Clauses 3 and 4, Article 349 of this Code.
Rights of the property mortgagor
The property mortgagor shall have the following rights:
1. To exploit the utility of, and enjoy the yields and profits from, the property, except in cases where the yields and profits also belong to the mortgaged property as agreed upon;
2. To invest so as to increase the value of the mortgaged property;
3. To sell, replace the mortgaged property if such property is a commodity circulated in the process of production and/or business;
In case of sale of the mortgaged property being a commodity circulated in the process of production and/or business, the right to demand the purchaser pay the money, the sale proceeds or the property formed from the sale proceeds shall become the mortgaged property in replacement of the sold property;
4. To sell, exchange or donate the mortgaged property other than a commodity circulated in the process of production and/or business, if so agreed by the mortgagee;
5. To lease, lend the mortgaged property but with the notification to the lessee or the borrower that the leased or lent property is being mortgaged, and to have to notify such to the mortgagee;
6. To reclaim the mortgaged property held by a third party, when the obligation secured by the mortgage is terminated or secured by another measure.
Obligations of the property mortgagee
The property mortgagee shall have the following obligations:
1. To return to the mortgagor the papers on the mortgaged property upon termination of the mortgage in cases where the parties agree that the mortgagee keeps the papers on the mortgaged property;
2. To request a state agency competent to register secured transactions to delete the registration in the cases specified in Articles 355, 356 and 357 of this Code.
Rights of the property mortgagee
The property mortgagee shall have the following rights:
1. To demand that the lessee or the borrower of the mortgaged property in the case specified in Clause 5, Article 349 of this Code terminate the use of the mortgaged property, if such use causes the loss or decrease of the value of such property;
2. To directly check and inspect the mortgaged property but not to hinder or cause difficulty to the use or exploitation of the mortgaged property;
3. To demand that the mortgagor supply information on the actual conditions of the mortgaged property;
4. To demand that the mortgagor apply necessary measures to preserve the property, the property value in cases where exists the danger of causing the loss or decrease of value of the property due to the exploitation and use thereof;
5. To demand that the mortgagor or a third party that keeps the mortgaged property return such property for disposal in cases where the time for fulfillment of the obligation becomes due while the obligator fails to perform or improperly performs the obligation;
6. To supervise and inspect the process of property formation in case of mortgaging the property to be formed in the future;
7. To request the disposal of the mortgaged property in accordance with the provisions of Article 355 or Clause 3 of Article 324 of this Code and to be given priority in the settlement of payments.
Obligations of a third party holding mortgaged property
A third party holding the mortgaged property shall have the following obligations:
1. To maintain and preserve the mortgaged property; if causing loss of the mortgaged property, the loss or decrease of the value of the mortgaged property, to pay compensation therefor;
2. To discontinue the exploitation of the utility of the mortgaged property, in the case specified in Clause 1, Article 353 of this Code, if the continued exploitation thereof may put the mortgaged property in the danger of losing or decreasing its value;
3. To hand back the mortgaged property to the mortgagee or the mortgagor as agreed upon.
Rights of the third party holding mortgaged property
The third party holding the mortgaged property shall have the following rights:
1. To exploit the utility of, and enjoy the yields and profits from, the mort-gaged property, if it is so agreed upon;
2. To be paid the remuneration and the expenses for maintenance and preservation of the mortgaged property, unless otherwise agreed upon.
Cancellation of property mortgage
A property mortgage may be cancelled if the mortgagee so consents, unless otherwise provided for by law.
Termination of property mortgage
A property mortgage shall terminate in the following cases:
1. The obligation secured by the mortgage has been terminated;
2. The property mortgage is cancelled or replaced with another security measure;
3. The mortgaged property has been disposed of;
4. It is so agreed upon by the parties.
