March 1, 2024

Mortgagee Liability for Not Registering a Real Estate Mortgage

Key Points

Breach of contract liability arises if a mortgage is not registered, allowing creditors to demand compliance.
Creditor rights include either continuation of performance or damage liability, both unrestricted in application.
Damages sought by creditors can only reflect the value of the collateral tied to the unregistered mortgage agreement, ensuring fair claims against the mortgagor's obligations with no inflation beyond value limits. According to the principle of distinction, unregistered mortgages remain valid, safeguarding creditors' interests despite registration failures.

Abstract

According to the principle of distinction, the failure of the parties to register a mortgage on immovable property does not affect the validity of the mortgage contract. The purpose of the parties' mortgage contract is to create a mortgage to secure the realization of a claim, and the mortgage contract does not have the effect of creating security other than a mortgage. Therefore, in the absence of registration, but the mortgage contract is effective, the creditor has the right to request the mortgagor to assume the liability for breach of contract due to the failure to fulfill the obligation of registration. The liability for breach of contract can be assumed in two ways: continuation of performance and liability for damages, both of which have no limitation in their application, and the creditor can choose freely. At the same time, the scope of the mortgagor's damages should be limited to the value of the collateral.

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