Mortgage Feature

mortgage securities

(1) The mortgagor and the mortgagee shall conclude a mortgage contract in writing. Article 38 of the Guarantee Law: “The mortgagor and the mortgagee shall enter into a mortgage contract in writing.”

(2) Mortgage does not transfer the possession of the mortgaged property. Article 33 of the ” Guarantee Law “: “The term “mortgage” as used in this Law means that the debtor or a third party does not transfer the possession of the property listed in Article 34 of this Law, and the property is used as a guarantee for the creditor’s right. When the debtor fails to perform the debt, the creditor shall have the right to receive preferential compensation at the price of the property or the price of auction or sale of the property by the provisions of this Law.”

(3) When the debtor fails to perform the debt, the creditor shall have the right to repay the property by the law or with the price of auction or sale of the property in priority.

Property concept

Mortgage and non-mortgage properties

Property that can be mortgaged:

The Guarantee Law The following properties may be mortgaged:

(1) The houses and other ground fixtures owned by the mortgagor;

(2) The machines, means of transportation, and other properties owned by the mortgagor;

(3) State-owned land use rights, houses, and other fixed objects on the ground that the mortgagor has the right to dispose of according to law;

(4) State-owned machinery, means of transportation, and other properties that the mortgagor has the right to dispose of according to law;

(5) The land use rights of the barren hills, barren ditch, barren hills, barren beaches, and other barren lands contracted by the mortgagor by the law and mortgaged with the consent of the contract-issuing party;

(6) Other properties that can be mortgaged according to law.

The mortgagor may mortgage the properties listed in the preceding paragraph together.

Property that cannot be mortgaged:

Guarantee Law shall not mortgage the following properties

(1) Land ownership;

(2) collectively-owned land use rights such as cultivated land, homestead, private land, private hills, etc.

(3) Educational facilities, medical and health facilities, and other public welfare facilities of public institutions and social groups such as schools, kindergartens, hospitals, etc.;

(4) Property whose ownership and right of use are unclear or in dispute;

(5) Property that has been sealed up, detained, or supervised following the law;

(6) Other properties that cannot be mortgaged according to law. [1]  

Types of Mortgage

(1) Mortgage of real estate

It refers to the mortgage set up with real estate as collateral. The so-called real estate refers to the property that cannot be moved or will lose its original value or use value after being moved, such as land (in China, it is limited to the right to use construction land and the right to contract and manage land that can be mortgaged), buildings and other land attachments. items (such as houses, etc.), etc.

(2) Mortgage of chattels

It refers to the mortgage set up with movable property as collateral. Movable property refers to the property that can be moved and will not affect its use-value or reduce its value after moving (limited to special movable property such as vehicles in China).

(3) Mortgage of rights

It refers to the mortgage of various property rights stipulated by law as the object of the mortgage. According to the current Chinese law, the rights can only be used for the pledge.

(IV) Consortium mortgage

Also known as enterprise mortgage, it refers to the mortgage made by the mortgagor (enterprise) with the aggregate of all movables, immovables, and rights as the object of a mortgage; this type is a collection of various types of security, not a statutory mortgage method.

(5) Co-mortgage

Also known as a blanket mortgage, it refers to the mortgage on several different properties for the security of the same creditor’s right. This type is a collection of various types of security, not a statutory mortgage method.

(6) Maximum mortgage

It refers to the agreement between the mortgagor and the mortgagee that, within the maximum limit, the mortgage is used to guarantee the continuous occurrence of the creditor’s rights within a certain period.

By aamritri

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