What does it mean to cancel a legal mortgage?
First of all, to answer the question properly, it is essential to define what is meant by “writing off a legal mortgage”. To cancel a legal mortgage means to cancel or remove the legal mortgage that has been put in place. When a person has a legal mortgage on a property, this means that he or she has a legal right to the property in question as a creditor. This right can prevent the owner of the property from selling or transferring title without the creditor’s authorization.
However, if the outstanding debt is repaid, or if the parties concerned agree on another way of resolving the problem, the legal mortgage can be lifted or cancelled. Once the legal mortgage has been cancelled, title to the property is released. The owner of the property can therefore sell or transfer it without restriction. There are several ways to lift a legal mortgage. These will be set out and explained below.
Why create a legal mortgage and what to do when the conditions are met?
- Why create such mortgages?
When a building is constructed, legal mortgages resulting from the work can be created to guarantee payments to construction professionals such as: material suppliers, contractors, sub-contractors and other parties involved in the construction. These legal hypothecs can also be created by syndicate officials to guarantee payment of contingency fund contributions, common charges and other costs associated with syndicates of co-owners.
- When obligations have been fulfilled :
You must send a written request to your creditor asking for the legal mortgage to be lifted. This request must explain the reasons why the mortgage can be written off, and be accompanied by any necessary supporting documentation. Once the creditor has received your application, they can verify that the mortgage obligations have been met. If this is the case, he must cancel the mortgage and provide you with a document certifying that the mortgage has been cancelled.
The procedure for cancelling a legal mortgage
To deregister a legal mortgage, you will need to prepare the necessary documents for cancellation and submit them to the Land Registry Office. The types of legal mortgages and the procedures for raising them may vary according to local laws and regulations. Consult our experts for more information on legal mortgages.
If a legal hypothec resulting from a judgment has been registered on your property, you will need to follow the mortgage recourse procedures for cancellation. Construction-related legal mortgages under public law can also be more difficult to lift than other types of legal mortgage.
General steps for cancelling a legal mortgage
The procedure for removing a legal mortgage begins with checking the status of the mortgage. You must obtain a copy of the registered legal mortgage from the Land Registry Office or Land Register in order to determine the amount to be paid to cancel a legal mortgage. You’ll also need to confirm whether payments are up to date and whether you need to provide proof of payment to lift the mortgage.
Next, you’ll need to prepare a legal mortgage waiver request, which must include information on the property, the creditor and the amount owed. The request must be served on the creditor who registered the legal mortgage, and must be accompanied by proof of payment where applicable.
If the creditor agrees to lift the legal hypothec, he or she must provide a legal hypothec lifting document that you can submit to the Land Registry Office or Land Register to update the title of ownership. If the creditor refuses to release your property from the legal mortgage, you may wish to consider taking legal action to have the legal mortgage cancelled. If you have any questions about Hypotek’s services, check out our FAQ.