Today's article marks the beginning of a new series in our series, "Tuesday Mornings for Construction Professionals," introducing you to the legal institution of a mortgage. In the coming weeks, we'll take a closer look at the regulations governing mortgages, as we know that many of you find these issues difficult to understand.
What regulations govern mortgages?
References to mortgages can be found in numerous acts. However, the most important basic provisions regulating mortgages are set forth in the Act of 6 July 1982 on Land and Mortgage Registers and Mortgages (hereinafter referred to as the " UKWiH "). The Civil Code only specifies that a mortgage is classified as a limited property right.
Additional regulations regarding mortgages can be found in the Act of 29 August 1997 on Mortgage Bonds and Mortgage Banks. Issues related to mortgages established in favor of banks are also regulated by Article 95 of the Act of 29 August 1997 – Banking Law.
What is a mortgage?
A mortgage is a limited property right, i.e., a right that restricts the owner from exercising ownership rights in relation to real estate. Pursuant to Article 65 of the Mortgage and Mortgage Act, it is a creditor's security established over real estate, under which the creditor may seek satisfaction from the real estate regardless of whose ownership it has become, and with priority over the personal creditors of the real estate owner.
A mortgage is established to secure receivables, including future receivables.
The mortgage therefore follows the property, not the debtor. It is ancillary to the claim itself, and a change of mortgagee will occur if the creditor of the claim it secures changes.
In order to establish a mortgage, an entry in the land and mortgage register is necessary.
What can be mortgaged?
The subject of a mortgage, apart from the obvious right of ownership to real estate , may also be:
- perpetual usufruct together with buildings and facilities on the used land that are the property of the perpetual usufructuary,
- cooperative ownership right to the premises,
- receivable secured by a mortgage.
It is worth remembering that in the case of real estate ownership, any right to real estate, i.e. land, building or premises, may be encumbered with a mortgage.
Moreover, a fractional share of such a property can be mortgaged if it constitutes a co-owner's share. In practice, this means that if someone owns a half-share in a given plot of land, they can mortgage that half-share without requiring the consent of the other co-owners.
The subject of a mortgage may also be: (i) a receivable secured by a mortgage, the so-called subintabulate, and (ii) rights, but we will devote a separate article to these issues, and in our articles we focus on mortgages established on real estate.
What types of mortgages are there?
Of course, legal doctrine divides mortgages into, among other things, contractual, compulsory, and statutory. In our experience, the first two appear most frequently.
A contractual mortgage, as the name suggests, is a mortgage established based on an agreement between the parties that the establishment of a mortgage will secure a claim, such as a loan or credit. Such an agreement does not require a specific form, although the declaration establishing the mortgage must generally be submitted in the form of a notarial deed.
A compulsory mortgage, on the other hand, is established without the consent of the property owner. Pursuant to Article 109 of the UKWiH, a creditor whose claim is confirmed by an enforceable title, specified in the regulations on enforcement proceedings, may, based on this title, obtain a mortgage on all of the debtor's real estate. In practice, compulsory mortgages are most often established by tax offices or the Social Insurance Institution (ZUS). However, sometimes the creditors are individuals whose claim was not secured by a mortgage, but during enforcement proceedings, such an application was filed and the mortgage was entered in the land and mortgage register.
In practice, we also often encounter joint mortgages . This means that a mortgage is established on more than one property. It may be established this way from the outset (e.g., because the loan amount exceeds the value of one property individually) or it may arise subsequently (e.g., through the division of the property or the establishment of separate ownership of the premises).
We will write about how a mortgage is created and when it encumbers the property next week.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of March 11, 2025
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