unc mortgage foreclosure

REAL ESTATE MORTGAGE & FORECLOSURE

Atty. LEO V. CAINTO

REAL ESTATE MORTGAGE

Mortum Vadium - “death pledge”

Is a real right created to secure an obligation upon real property of another or alienable property rights affecting real estate, which remains in the possession of the owner, to pay with the proceeds of the sale thereof such obligation when the same is due. (Sanchez Roman)

KINDS OF MORTGAGE

Voluntary or conventional mortgage – is one created by agreement of the parties

Legal mortgage – is one created by operation of law

Judicial mortgage – is one resulting from a judgment

Equitable mortgage – not a mortgage in form but in substance a mere security for a debt or obligation

LEGAL AND GENERAL COUNSEL GROUP

SPECIAL CHARACTERISTICS OF REAL MORTGAGE

Realty as subject matter – only real property may be the subject matter of mortgage

Real right – binding against the whole world and may be enforced by real action against all persons

Accessory obligation – a mortgage is only accessory and presupposes the existence of a principal obligation

Indivisibility – the mortgage shall remain as one Retention of possession – mortgagor generally

retains possession


REQUISITES OF A MORTGAGE

1. It must be constituted to secure a principal obligation

2. Mortgagor must be the absolute owner of the property

3. Mortgagor must have free disposal of the property

4. Mortgage must be registered in the Registry of Deeds to bind third parties

5. The foreclosed property must be sold in a public auction and may not just be appropriated


VOID STIPULATION IN MORTGAGE

PACTUM COMMISSORIUM – a stipulation which authorizes the mortgagee to APPROPRIATE the property as his own automatically upon default of the mortgagor.

The creditor cannot appropriate the things given by way of mortgage or dispose of them (Art. 2088 Civil Code)

PACTUM DE NON ALIENDO – a stipulation which PROHIBITS the mortgagor from ALIENATING or SELLING the property during the term of the mortgage.

A stipulation forbidding the owner from alienating the immovable mortgaged shall be void (Art. 2130 Civil Code)

A mortgagee may convey or assign his mortgage credit to a third person totally or partially, provided that is effected by a public instrument and that a notice is given to the debtor and that is recorded in the registry.

A mortgage of real estate includes improvements and fixtures; to exclude the improvements it is indispensable that the exclusion be stipulated between the contracting parties.

REGISTRATION OF MORTGAGES: PLACE AND EFFECT

Registered in the RD where the real property is situated

If the mortgage involves parcels of land which lie in different provinces, the instrument should be registered in each of said provinces.

Registration of the mortgage deed directly subjects the property to the fulfillment of the obligation.

To bind third parties

Buyer in a contract of sale vs buyer in foreclosure sale

Problem: The owner has already sold the property but the same was not registered. The owner eventually mortgaged the same and failed to pay the loan secured by the mortgage, hence, the mortgage was foreclosed and the properties were sold at public auction.

Dela Merced, et al vs GSIS GR 140398 Sept 1, 2002

May an alien be a mortgagee? What is the effect of a Forged Power of Attorney?

Course of action left to Mortgagee upon death of mortgagor

1. Abandon the security and file his claim with the clerk of court in the testate or intestate proceedings against the deceased’s estate and share in the general distribution of the assets thereof.

Foreclosure the mortgage by ordinary action in court, making the executor or administrator of the estate a party defendant and ask for deficiency judgment.

Rely exclusively upon his mortgage and foreclose the same.

Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent, and this specially true where the act of the agent is of an unusual nature (Veloso vs La Ubana)

Bank is not a mortgagee in good faith (DBP vs CA 331 SCRA 267)

FORECLOSURE

Remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation.

Grounds for foreclosure: 1. the principal obligation is not paid

when due. 2. any condition is violated by the

mortgagor

JUDICIAL FORECLOSURE & EXTRAJUDICIAL FORECLOSURE

Judicial Foreclosure – occurs when a court makes a judgment that a property will be foreclosed.

(Rule 68 Rules of Court)

Extrajudicial Foreclosure – one where foreclosure is effected thru a sheriff or notary public without judicial proceedings, subject only to the required publication and posting of foreclosure notice.

SPA to sell is inserted or attached to a real mortgage

(Act 3135 as amended by Act 4118)


Example of power of Attorney inserted in the mortgage contract..

… the Pag-IBIG Fund or its assignee/transferee is hereby appointed as BORROWER/BORROWER and CO-BORROWER’s Attorney-in-Fact, with full power of substitution and authority to perform such acts that may be necessary to dispose of Mortgaged Property in accordance of the provision of Act. 3135, as amended, and pending such disposition to perform all other acts of administration and management …Extrajudicial foreclosure may be undertaken by the Sheriff, Special Sheriff or by Notary Public, at the option of Pag-IBIG Fund. The latter hereby reserves its right to bid at appropriate public auction.

PROCESS OF JUDICIAL FORECLOSURE


•Mortgagee files complaint or petition for foreclosure•Where: RTC in the city or province where property is located

•RTC orders mortgagor to pay amount due•When: to pay within 90 days - 120 days

•If mortgagor fails to pay, RTC orders the sale of property •To whom: highest bidder at public auction

FLOW OF JUDICIAL FORECLOSURE


• Mortgagor may exercise equity of redemption

• How: pay the debt within 90 -120 days after the judgment becomes final, or even after foreclosure sale, but prior to its confirmation

• RTC issues confirmation of sale

• Purchaser transfers the ownership in his favor

FLOW OF EXTRAJUDICIAL FORECLOSURE


•Mortgagee files petition for extrajudicial foreclosure to the Executive Judge thru Ex-Officio Sheriff •Where: RTC which has jurisdiction over the property

•Posting of notice of sale •Where: at least 3 public places of Municipal/City

•Publication of notice of sale •Where: newspaper of general circulation in city/municipality where property is located

EXTRAJUDICIAL FORECLOSURE


•Sheriff or Notary Public to conduct public auction sale •Where: Provincial /Municipal/City Hall

•Sheriff or Notary Public to issue certificate of sale to the highest bidder

•1 year redemption period is given to the mortgagor •When: To begin after the certificate is registered with the Register of Deeds

Equity of redemption vs Right of Redemption

Judicial foreclosure Within 90 days

after the judgment becomes final or even after the foreclosure sale but prior to its confirmation.

Extra-judicial foreclosure

1 year from the date of registration of cert of sale with ROD

Exception – Free patent & Homestead

EQUITY OF REDEMPTION RIGHT OF REDEMPTION

PERIOD OF REDEMPTION

Right of redemption 1 year Equity of redemption 90-120

days General Banking Act RA 8791 (mortgagee is an individual) 1 year (mortgagee is a juridical person) 3 months Rural Bank Act (RA 720) property is covered by TCT 1year

homestead/free patent 2 years Public Land Act (CA 141) 5 years


THANK YOU!

SOURCES:LAND TITLES AND DEEDS-Pena & Pena

Land Titles – Noblejas The law on ejectment and lease-Manalastas

LEGAL FORUM/Atty. Biron NEW CIVIL CODE

Wikipedia

Real Estate Brokers & Sales Persons are Trusted Advisors

THANK YOU!




Wikipedia


WHAT IS LEASE?

LEASE is a contract whereby a person, for consideration, gives to another the possession, use and enjoyment of a property for a period which may be fixed or not fixed.

Period of lease:

The lease period depends on the agreement of the lessor and the lessee which in no case shall exceed:

99 years, if the lessee is a Filipino citizen (Civil Code)

25 years renewable to another 25 years, if the lessee is a foreigner but not considered a foreign investor (P.D. 471)

50 years renewable to 25 years, if the lessee is a foreign investor and the leased area shall be used solely for investment (RA 7652)


LEASE INTEREST TERMINOLOGIES Leased fee estate – interest of the owner-lessor Leasehold estate – interest of the lessee Sandwich lease estate – interest of the lessee Market rent – probable rent in an open market; “passing

rent” Contract rent – rental amount as appearing in the lease

contract Turn-over rent – rent based on earnings of the lease Positive leasehold – if market rent is higher than contract

rent Negative leasehold – if market rent is lower than contract

rent Freehold interest – fee simple estate

LEASE


RENT CONTROL ACT OF 2009

RA 9653 Extended until December 31, 2015 Limits the rent increase on any

residential property to no more than 7% annually while occupied by the same tenant

NCR – up to P10,000; other areas – up to P 5,000

The HUDCC has the authority to continue regulating the rent, to determine the period of rent and to extend rent regulation

What is the limit on the increase in rent?

7% annually

From Aug. 2009 until Dec 2015 the rent of a residential unit shall not be increased by more than 7% annually, as long as the unit is occupied by the same lessee.

PRE-TEST: WHAT DO YOU KNOW ABOUT RENT CONTROL ACT OF 2009?


Sir Chief leased a commercial unit starting from June 2014 at P10,000 per month, can Sany the lessor increase the rent by P 5,000 for a total of P 15,000 on June 2015?

YES.

The law covers only residential units. Commercial units are not covered by RA 9653.



Sir Chief leased a residential unit starting 01 June 2014 at the rate of P 10,000 per month, can Sany the lessor increase the rent by P 700 on June 1, 2015?

YES. Because the increase does not exceed the

7% annual increase limit.



May Sany the lessor increase the rent by April 2015? NO.

Because he must wait for one year from the time of the effectivity of the lease contract before he could increase the rent.



May the lessor demand 2-months advance? NO.

The lessor cannot demand more than one (1) month advance rent.

May the lessor demand 3-months deposit?

NO. Neither can she/he demand more than

two (2) months deposit



EJECTMENT

GROUNDS FOR JUDICIAL EJECTMENT OF LESSEE (Art. 1673, NCC)

1. Expiration of stipulated period of lease;

2. Lack of payment of the rent stipulated;

3. Violation of any of the conditions agreed upon in the contract; or

4. Misuse of leased property which has resulted in its deterioration.


GROUNDS FOR EVICTION(Rent Control Act of 2009)

Subletting occurs without the owner’s consent

Tenant fails to pay rent for a total of 3 months

The owner wishes to repossess the property for personal use or use by his/her immediate family

repairs of property subject of condemnation

Expiration of lease

PURCHASER OF LEASED PROPERTY BOUND TO RESPECT THE LEASE

(Art. 1676, NCC)

1. When the lease is indicated in the deed of sale;

2. When the lease is registered in the Registry of Property; and/or

3. When the buyer has knowledge of the existence of the lease even if the same is not duly registered in the Registry of Property.


UNLAWFUL DETAINER – where one unlawfully withholds possession there after the expiration or termination of his right to hold possession under any contract, express or implied.

Where to file complaint: Municipal/Metropolitan Trial Court

TACITA RECONDUCCION – A legal principle that if the lessee continues his occupancy for at least 15 days from expiration of the lease with the acquiescence of the lessor and without notice to vacate, it is understood that there is an implied new lease.

Rent agreed is annual: from month to month monthly: week to week

weekly: day to day


THANK YOU!




Wikipedia


unc mortgage foreclosure

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void mortgage

judgmentequitable mortgage

parties legal mortgage

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obligation legal

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