In today's article from the series entitled "Tuesday Mornings for Construction Workers," we continue the topic of mortgages and try to characterize the institution of a mortgage administrator.
The term "mortgage administrator" is used when a single mortgage secures several claims held by several different entities , but these claims are related to the implementation of a single project . The mortgage administrator serves as an proxy for the creditors using the mortgage as collateral.
As an example, we can point to a consortium of several different banks that jointly provide financing in the form of a loan to a developer who is implementing a specific investment project.
A situation in which a single mortgage secures multiple claims requires the mortgage creditors to appoint an entity to represent their common interests. The Act of 6 July 1982 on Land and Mortgage Registers (" UKWiH "), in Article 68 § 2 of the UKWiH, actually requires mortgage creditors to appoint a mortgage administrator in such a situation.
It should be noted that a mortgage administrator acts in its own name, but on behalf of all mortgagees whose receivables are secured by the mortgage. An exception, however, is the situation in which the mortgage administrator is also one of the mortgagees, as in such a situation, the mortgage administrator will act in its own name and on its own account with respect to the receivables to which it is entitled as a mortgagee, and on behalf of another person with respect to the receivables of other mortgagees.
It's worth noting that in the land and mortgage register maintained for a property encumbered with such a mortgage, the mortgage will be entered in the name of the mortgage administrator , not the mortgage creditors. In this respect, the mortgage administrator serves as a fiduciary for the mortgage creditors , which entails a duty of increased loyalty to the creditors. However, mortgage creditors have certain rights, including the right to change the mortgage administrator and to request a division of the mortgage if the agreement appointing the mortgage administrator expires and a new mortgage administrator is not appointed.
The duties of a mortgage administrator include:
- taking care of the interests of all mortgage creditors of a given mortgage,
- exercising the rights arising from the mortgage, as mortgage creditors are not entitled to exercise such rights,
- contractual liability of the administrator towards mortgage creditors in the event of non-performance or improper performance of the contract.
The mortgage administrator therefore has the appropriate powers , including:
- the right to act on behalf of mortgage creditors of a given mortgage without the need to obtain additional and separate authorizations from creditors in this respect in order to take specific actions in their interest,
- is a participant in land and mortgage register proceedings concerning a given mortgage,
- is entitled to take enforcement actions to collect receivables secured by mortgage,
- the right to receive remuneration for their activities and reimbursement of expenses (although the agreement to appoint a mortgage administrator may also be free of charge).
To appoint a mortgage administrator, the mortgage creditors must enter into an agreement appointing a mortgage administrator . Appointment of a mortgage administrator is not possible through a unilateral act by the creditor. It is worth noting that the legislature does not specifically prohibit the entities that can act as a mortgage administrator. Therefore, such an administrator can be one of the mortgage creditors or another entity, including a natural person, a legal entity, or even a limited legal entity, regardless of whether it is based in Poland or abroad. Creditors can appoint more than one mortgage administrator, but in such a case, they should specify which receivables are to be secured by the mortgage registered in the name of a given administrator. A mortgage administrator can be appointed either before the mortgage is established (primary appointment of a mortgage administrator) or after it has arisen (secondary appointment of a mortgage administrator).
An agreement appointing a mortgage administrator writing, at a minimum, . Although the regulations do not specify the content of such an agreement in detail, it is crucial that such an agreement contains a detailed definition of the mortgage administrator's rights and obligations towards mortgage creditors, as well as specific scope of security for each mortgage claim. It is also essential that such an agreement include, above all, authorization for the administrator to accept a mortgage on their own assets and enforce it in their own name but on behalf of the mortgage creditors. The agreement should describe in detail the mortgage to be established in favor of the administrator, and if the administrator is appointed after its creation, specify the mortgage to be enforced by the administrator. It is also worth clarifying what the parties consider to be the "financed undertaking" for which the mortgage-secured claims are to be used.
However, the institution of a mortgage administrator discussed above should be distinguished from the similarly structured institution of a mortgage administrator contained in the Act on Bonds . Despite the significant similarities between the two regulations, it should be noted that the Act on Bonds provides for certain restrictions on the entities that may act as mortgage administrators, and also excludes the application of the provisions of the Act on Land and Mortgage Registers to mortgage administrators regulated by the Act on Bonds.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of May 13, 2025
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