A mortgage right is a limited security right over registered property, created to secure recovery of a claim. The mortgagee ranks ahead of other creditors and may, on default, have the property sold without first obtaining a court order.
Legal basis
Article 3:227 of the Dutch Civil Code describes pledge and mortgage; Article 3:260 requires a notarial deed and registration in the public registers. Article 3:268 confers the power of immediate execution: on default the mortgagee may sell the property publicly. A private sale in execution is possible with the approval of the provisional relief judge. Article 3:264 governs the lease clause, allowing letting without consent to be set aside, and Article 3:267 the management clause. For dwellings there is additional protection: on a forced sale the court examines whether the occupier’s interests were adequately weighed.
How it works in practice
Almost all property finance rests on a mortgage, usually a bank mortgage securing everything the bank is or will be owed. That means the right survives repayment of the original loan and also covers new debts. On refinancing or sale a release is required, for which the bank issues a redemption statement.
Where it goes wrong
Sellers discover at completion that an old bank mortgage has never been struck off. A second problem is the lease clause: letting without the bank’s consent can be invoked on enforcement, resulting in eviction of the tenant. Third, a residual debt often remains after a forced sale, which is independently enforceable.
Related terms
The mortgage connects to transfer of title, to joint and several liability of co-debtors and to the right of superficies.
Facing enforcement, or stuck over a release? Our real estate lawyers assess the deed and the options.
