Amendments to the Law on Mortgage
The amendments to the Law on Mortgage, which entered into force on 16 July 2015 (published in Official Gazette No. 60/2015), primarily seek to the reaffirm the extra-judicial settlement procedure and provide for a greater legal and economic security of the participants in the transactions relating to the establishment and enforcement of mortgage collateral, whilst also providing for protection of the debtors, the owners of the mortgaged real estate.
The reaffirmation of extra-judicial settlements has been achieved primarily by introducing the amendments relating to the termination of mortgage in the event of extra-judicial sale of mortgaged real estate, and consequently the procedure of extra-judicial sale as a way of settlement of the mortgage creditor’s claims.
Under the earlier provisions, the rights of subsequent mortgage creditors remained reserved following the extra-judicial sale of the mortgaged real estate, which at the same time implied the retention of subsequent creditors’ rights to compensation from the value of the mortgaged real estate.
Such legal solution de facto limited the scope and purpose of extra-judicial mortgage enforcement to the cases of mortgage on real estate where only one creditor was registered, which on the other hand favoured a procedure of court auction, which entailed termination of the mortgage and wiping out of all mortgage creditors based on an enforceable court decision on the satisfaction of mortgage creditors.
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