The main mortgage is an agreement where the financial institution gets a residential or commercial property committed to the satisfaction of his/her financial obligation in kind, where she or he might use to ordinary lenders and the following creditors in order to get the right of the rate of that residential or commercial property in any hand.

The home mortgage is an agreement concluded between the mortgagor and the mortgagee financial institution which approves the mortgagee right in rapid eye movement in the residential or commercial property, with all advantages and real security over the mortgage product. Additionally, the mortgagor has the right to follow the mortgaged residential or commercial property if it is transferred to a 3rd party. The mortgagor maintains ownership and belongings of the mortgaged residential or commercial property but is limited in their disposal rights to ensure the mortgagee's interests are safeguarded.

The difference between the official mortgage and the possessory home loan

The official home mortgage is developed through a main contract, that must be notarized in a notary public office.

While the right of possessory home loan is produced through informal contract. Whereas the ownership and belongings of the mortgaged residential or commercial property in the main home mortgage right remains in the hand of the owner (debtor), and the ownership in the possessory mortgage is transferred to the creditor.

The main mortgage is restricted to realty, while the possessory mortgage can cover both genuine estates and movable residential or commercial properties.

The obligations of the mortgagor and the mortgagee lender in the main home loan

The Egyptian Civil Law No. 131 of 1948 and its amendments regulate the responsibilities of the mortgagor and mortgagee in Chapter Two as follows:

The Mortgager's commitments:

The mortgagor is bound to deliver the mortgaged residential or commercial property to the lender or to a designated agent selected by both Parties in the agreement.

The legal requirement for a seller to deliver an offered item will be used to the mortgagor's obligation to deliver the home loan item to the mortgagee.
If the mortgaged residential or commercial property is gone back to the mortgager's possession, the home loan shall be expired, unless the mortgagee proves that the residential or commercial property has been returned for a reason not meant to expire the home loan.

The mortgagor ensures the integrity and enforceability of the home loan, and the mortgagor will not take any action that decreases the value of the home mortgage or restrains the lender's exercise of his rights under the agreement. In case of urgency, the mortgagee lender may take all essential steps at the mortgager's expense, to preserve the home loan product. The mortgagor shall be accountable for the loss or damage of the home loan product if such loss or damage is because of his fault or occurs from force majeure act.

The arrangements of Articles No. 1048 and No. 1049 relating to the loss or damage of the mortgaged residential or commercial property under an official home loan, and the transfer of the lender's right from the mortgage product to any substituted rights will use to the possessory mortgage.

The Mortgagee's responsibility:

Upon receiving the mortgaged residential or commercial property, the mortgagee is bound to exercise the exact same level of care and maintenance in its preservation as would a prudent person. and he is responsible for the loss or damage of the mortgage product unless it is shown that such loss or damage was brought on by an external aspect beyond his control.

The mortgagee is not permitted to derive any take advantage of the mortgage item without compensation, he should invest it completely unless otherwise agreed Any net earnings or advantage derived by the financial institution from making use of the home loan item shall be deducted from the amount protected by the home loan, even if the due date has not yet come, supplied that the reduction shall be made from the cost of preserving and fixing the residential or commercial property and its repair work, then from costs and interest, and after that from the principal of the financial obligation.

If the home mortgage item produces revenue and the parties concur that all or part of the earnings will be used to offset the interest, in, this contract will stand within the optimum limits of lawfully acceptable legal interest.

The mortgagee shall assume the management of the mortgaged residential or commercial property, and he must work out because the care of a prudent individual. The mortgagee can not modify the home mortgage item's usage without the mortgager's approval. He needs to promptly alert the mortgagor of any matter requiring his intervention.

If the mortgagee abuses this right, mis-manages the residential or commercial property, or dedicates gross carelessness, the mortgagor can demand that the item be placed under custody or to recover it upon payment of the impressive financial obligation. if the quantity secured by the home mortgage does not bear interest and has actually not yet become due, the mortgagee is entitled just to remaining amount after subtracting the value of interest calculated at the legal rate for the duration between the day of payment and the due date of the financial obligation.

The mortgagee will return the mortgaged product to the mortgagor after the mortgagor has actually completely discharged their commitment including all expenses and settlement related to the right.

Effects of the official home mortgage in the Egyptian law

The effect of the mortgage between the contracting celebrations:

Firstly: The mortgager:

The mortgagor may get rid of the mortgaged residential or commercial property as long as such actions do not hinder the mortgagee's right.

The mortgagor maintains the right to manage the mortgaged residential or commercial property and to gather its returns and leases given by the mortgagor are not enforceable against the mortgagee unless it was notarized before the registration of the expropriation notice.

However, if the lease was not notarized in this way, or it was concluded after notarizing the notice and the rent was not paid beforehand, so it will not work unless it can be thought about part of the great management work. If the lease term prior to notarizing the home loan notice goes beyond nine years, it will not be efficient versus the mortgagee creditor except for a duration of nine years only unless it was registered before the home loan was registered.

The mortgagor is accountable for guaranteeing the safety of the home mortgage residential or commercial property. The mortgagee financial institution can challenge any actions or negligence by the mortgagor that might substantially diminish the value or safety of the residential or commercial property, and in urgent cases the mortgagee might take required protective steps and seek repayment from the mortgagor, from any costs sustained.

If the mortgagor negligently causes the destruction or damage of the mortgaged residential or commercial property, the mortgagee lender has the option to require sufficient insurance coverage to cover the loss or to instantly gather the complete outstanding debt.

When the destruction or damage to the mortgaged residential or commercial property is triggered by an external aspect and the mortgagee refuses to accept the debt without insurance, the mortgagor has the alternative to offer appropriate insurance or settle the debt instantly before the due date. If the financial obligation has no interest, the mortgagee is only entitled to the principal amount without legal interest for the period in between the real payment date and the original due date.

Secondly: The mortgagee financial institution:

A third-party mortgagor's individual assets are exempt from seizure for the debtor's debt. The mortgagor can not substitute payments for the debtor unless concurred upon.

Upon alerting the debtor of the exceptional financial obligation, the mortgagee can foreclose on the mortgaged residential or commercial property and demands its sale in accordance with the treatments and timelines specified in code of Civil Procedures. If the mortgagor is a 3rd party aside from the debtor, he can avoid any foreclosure proceedings by voluntarily surrendering the mortgaged residential or commercial property according to the procedures and guidelines governing residential or commercial property surrender.

Any agreement that approves the mortgagee the right to take ownership of the mortgaged residential or commercial property at a predetermined rate upon debt default or to offer it without following the lawfully mandated procedures is void, even if entered into after the home mortgage contract. However, after the financial obligation or a portion of it has actually grown, the debtor and mortgagee can concur that the debtor will transfer the mortgaged residential or commercial property to the mortgagee in fulfillment of his financial obligation.

The official home loan and its impact to the 3rd party:

A main mortgage is only enforceable against 3rd parties if the mortgage contract or judgment establishing the mortgage is signed up before the 3rd party gets a right in rem in the residential or commercial property. This is without bias to the provisions of bankruptcy laws.

Additionally, 3rd parties can not assert claims based upon an unregistered protected right, the replacement of one lender for another in this right, or the task of registration concern to another creditor unless such actions are kept in mind in the margin of the original registration.

The procedures for registration, renewal, cancellation, and cancellation an official home loan, as well as the impacts thereof, are governed by the arrangements of the Real Estate Registration Law. The costs of registration, renewal, and cancellation of a main home mortgage are borne by the mortgagor unless otherwise concurred upon.

The termination of the official home mortgage:

An official mortgage ends upon the fulfillment of the secured financial obligation or the nullification of the underlying cause for the debt. However, any bona fide rights acquired by third parties throughout the period between the home mortgage's expiration and its potential reinstatement remain untouched.

If foreclosure procedures are finished, the main mortgage is definitively extinguished, even if the residential or commercial property ownership changes hands. When the mortgaged residential or commercial property is offered through a forced auction, the mortgage rights end upon the deposit of the auction continues or their payment to eligible registered creditors.