Peculiarities of mortgage foreclosure during martial law (for the debtor)

30/ 03/ 2023

Author: Victoria Doskovska, attorney at Dynasty Law & Investment A mortgage is a type of guaranteeing the fulfillment of an obligation, along with other methods, such as penalty, deposit, surety, guarantee, etc. Meanwhile, in society, mortgages are most often associated with lending for the purchase of housing. In fact, a mortgage is a security for the performance of, as a rule, a monetary obligation with immovable property, which remains in the possession of the owner during the period of the mortgage, however, in case of non-fulfillment (delay in the performance) of the secured obligation, it can be fulfilled at the expense of this immovable property by applying to his recovery mainly before other creditors. Foreclosure on immovable property, which is the subject of a mortgage, can be filed on the basis of a court decision or extrajudicially (on the basis of an executive inscription of a notary public or in accordance with the relevant contract/stipulation) in the ways provided for by law. Meanwhile, during the period of martial law in Ukraine, the process of foreclosure on the subject of a mortgage suffered significant restrictions. In particular, during the entire period of martial law and for another thirty days after its termination, it is impossible to foreclose on immovable property of individuals mortgaged under consumer loans (the majority of which) and to evict persons from residential premises for which there is already a court decision to foreclose . Also, during this period, it is impossible to foreclose on property on the basis of a notarys executive inscription, regardless of who owns this property and what it provides. Thus, during the period of martial law, taking into account also the exemption from payment of fines and from liability in the form of annual interest and inflationary losses for late repayment of the loan, the legal leverage of the creditor regarding the repayment of the debt at the expense of collateral property is extremely limited. However, it should be remembered that the mentioned restrictions were not removed from the law, but were only stopped for a certain period, and therefore, after the end of such period, they are automatically canceled. It is necessary to take into account the specified circumstances and make maximum use of the specified grace period to improve your credit situation. As always, the Dynasty Law & Investment team of professionals will be happy to help you choose the best solution to the current situation.

Author: Victoria Doskovska, attorney at Dynasty Law & Investment

A mortgage is a type of guaranteeing the fulfillment of an obligation, along with other methods, such as penalty, deposit, surety, guarantee, etc. Meanwhile, in society, mortgages are most often associated with lending for the purchase of housing.

In fact, a mortgage is a security for the performance of, as a rule, a monetary obligation with immovable property, which remains in the possession of the owner during the period of the mortgage, however, in case of non-fulfillment (delay in the performance) of the secured obligation, it can be fulfilled at the expense of this immovable property by applying to his recovery mainly before other creditors.

Foreclosure on immovable property, which is the subject of a mortgage, can be filed on the basis of a court decision or extrajudicially (on the basis of an executive inscription of a notary public or in accordance with the relevant contract/stipulation) in the ways provided for by law. Meanwhile, during the period of martial law in Ukraine, the process of foreclosure on the subject of a mortgage suffered significant restrictions.

In particular, during the entire period of martial law and for another thirty days after its termination, it is impossible to foreclose on immovable property of individuals mortgaged under consumer loans (the majority of which) and to evict persons from residential premises for which there is already a court decision to foreclose . Also, during this period, it is impossible to foreclose on property on the basis of a notary’s executive inscription, regardless of who owns this property and what it provides.

Thus, during the period of martial law, taking into account also the exemption from payment of fines and from liability in the form of annual interest and inflationary losses for late repayment of the loan, the legal leverage of the creditor regarding the repayment of the debt at the expense of collateral property is extremely limited.

However, it should be remembered that the mentioned restrictions were not removed from the law, but were only stopped for a certain period, and therefore, after the end of such period, they are automatically canceled.

It is necessary to take into account the specified circumstances and make maximum use of the specified “grace” period to improve your credit situation.

As always, the Dynasty Law & Investment team of professionals will be happy to help you choose the best solution to the current situation.