1) Purpose, Characteristics, Establishment and Termination of Mortgage
Provisions on Mortgages are regulated in Article 881 of Turkish Civil Code (TCC) and its following articles. Pursuant to Article 881 of TCC, mortgage is a security of a receivable which is determined or possible to arise in the future or certain to arise in the future. The mortgager does not need to have a personal debtor of the debt provided; it is possible to demand a mortgage on an immovable property for the third party’s debt.
The establishment of the mortgage rights is regulated in article 882 of TCC. The right to pledge will only arise from the registration made to the land registry. The land registry officer may issue a mortgage certificate to prove the mortgage at the request of the creditor. This document is not considered a negotiable paper under any circumstance.
Mortgage is not a separate right from a receivable; it is a right that depends on the secured receivable. Mortgage is terminated in cases where the main receivable is concluded, such as the payment of the receivable by the debtor, in the event of the expiration of the temporary mortgage period, the waiver of the debt by the creditor etc. The mortgage on the immovable property will end if it’s revoked, and as long as there is a registration in the land registry, the rights on the registered mortgage shall exist.
Pursuant to Article 148 of the Enforcement and Bankruptcy Law (EBL) the creditor will be able to demand enforcement proceedings on the foreclosure of the mortgage if the debtor fails to pay the receivables secured by mortgage to the creditor at the due date. If its determined by the enforcement office that the receivables are due and mortgage contract table contains an unconditional offer of pecuniary debt after the requested enforcement proceedings (in cases where a final debt mortgage was established by the debtor in favor of the creditor), the enforcement office will send an enforcement order to the debtor and/or third party-pledger.
The creditor will be able to request the sale of the immovable property pledged from the enforcement office, and in the event of the sale of the immovable, the creditor will be able to collect the amount of the secured receivable over the sale price of the mortgaged immovable if a decision is not made by the enforcement court about the release of the enforcement to the pledger who received the enforcement order or the debt is not paid within thirty days.
2) Final Debt (Principle) Mortgage and Scope
Principle Mortgage is established to secure an existing debt. A limit mortgage can be established for the receivables which are possible to arise in the future. Principal mortgage will be established for certain receivables whose amount is determined at the time of the mortgage and a limit mortgage will be established for the receivables which is possible or certain to arise in the future and which has not determined. However, this rule is not mandatory. Principal mortgage can also be established for an unknown receivable. In other words, a principle mortgage can be established for a certain amount of the receivable even if the total amount of the receivable is unknown at the time of establishment.
It is accepted that there are items related to the assurance of the immovable pledge regulated in the TCC in terms of the principle mortgage. Pursuant to article 875 of TCC, under the scope of the assurance provided by the real estate pledge to the creditor, includes:
- Principle,
- Enforcement expenses and interest of default,
- Three-year interest until the date of bankruptcy or foreclosure of the pledge and
- interest starting from the termination date
In addition, according to article 876 of TCC “If the creditor has made mandatory expenses to secure pledged immovable and especially if the insurance premiums indebted by the owner had been paid, the receivables arising therefrom” are secured with the pledged receivable.
The precedents of the Appeals Court Assembly of Civil Chambers on the scope of the primary mortgage states that;
“Principle mortgage is established for existing and certain receivables. The real amount of the secured receivable is registered in the land register if a primary mortgage is established for these receivables. The record in the title deed represents only the actual amount of the borrowed capital (Oğuzman/Seliçi/Oktay-Özdemir, p. 720). The scope of the pledge in terms of the established mortgage is not limited to the amount that is registered to the land register. The secondary receivables indicated in articles 875 and 876 of the Civil Code are also under the scope of the pledge.”
In cases where the creditor has secured receivables with a principle mortgage,
after the explanations about the secured items, a brief explanation on the collection of receivables through enforcement by the creditor is needed. If the creditor does not receive the debt from the debtor in time, can request the foreclosure of mortgage by enforcement and if it is concluded that the mortgage contract table on which the execution proceeding is based on includes unconditional debt, the creditor will be able to sell the immovable.
For such cases, the Court of Appeals states that;
“If the enforcement on the foreclosure of the mortgage is based on the primary mortgage; foreclosure by an enforcement proceeding with judgment is required if the mortgage contract table prepared for the existing receivable includes an unconditional money debt and an enforcement order is sent to the debtor and the third-party who owns the immovable according to article 49 of the EBL No.2004. According to article 149(a) of the same law, the immovable is sold if the decision on suspending enforcement is not made according to the articles 33/1 ,2, 3 regarding the enforcement of decisions.
The enforcement process of the principle mortgage is summarized as indicated above.
Conclusion
Mortgage is a collateral security for real estate pledges; if the debt that is secured with principle mortgage is not paid on time, the creditor can request a foreclosure of the mortgage by an enforcement proceeding with judgment. The expenses for enforcement proceedings, interest for default etc. can be collected from the money acquired from the sale of the immovable more quickly, effectively and preferably.
