A notarial mortgage is a legal instrument in property law designed to guarantee that the creditor receives payment for their claim. The creditor and debtor (borrower) enter into a contract before a notary in a special form (notarial deed), which serves as an enforcement title. To take effect, a notarial mortgage must be registered in the land property register. Its main advantage is in the execution process, as the creditor can directly approach the enforcement court to request repayment of the claim. Compared to a regular mortgage, a notarial mortgage offers financial and procedural efficiency because the creditor does not need to file a mortgage suit in the first-instance court to obtain an enforceable judgment. This legal instrument is most commonly used when banks grant loans to borrowers. Depending on the type of co-contractors, there are two methods of enforcement: one before the enforcement court and the other before a notary. The notarial mortgage is regulated by the General Property Law Code (SPZ), while its execution follows the rules set by the General Execution Code (ZIZ). Meanwhile, the Financial Collateral Act (ZFZ) contains specific provisions for executing a notarial mortgage before a notary. This institute reduces the creditor’s risk of non-repayment, encouraging legal entities to enter into loan agreements. The more loans granted to the economy, the more investments are made, fostering economic growth. For creditors, it ensures repayment on time, preventing insolvency issues and contributing to financial stability. For debtors, it provides the opportunity to get better interest rates while also ensuring they fulfill their obligations on time. Additionally, notarial mortgages help reduce court caseloads, leading to faster judicial processes. While notaries benefit from increased work, the involved parties face higher notarial service costs. Furthermore, the property owner cannot easily sell the real estate, its market value is lower, and modifying loan agreements becomes more challenging.
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