Ministry of National Planning, Housing, and Infrastructure has published new land and building mortgage regulations.
The Ministry stated that its aim is to specify the conditions in which land plots and buildings on land plots can be mortgaged and the guidelines parties need to follow to formulate mortgage agreements and maintain registries of the mortgaged property.
The regulation dictates that parties are only allowed to sign a mortgage agreement with a commercial bank or financial institution recognised by the government and that the institution needs to clearly define the terms of the agreement in the presence of two witnesses. It also states that a building will be mortgaged with the land plot it is established on, even if the agreement only specifies the building. Land plots registered under different names can only be mortgaged with the approval of all the owners unless the land plot has been split and registered separately from the main plot. It also states that parties are required to register the mortgage at the local councils.
Furthermore, the regulation includes conditions in which mortgage properties can be sold as well as the prioritisation given to the expenditure of the proceeds received from the sale of the mortgaged property. As such, the highest priority will be given to using the proceeds to pay the cost of the bidding process and paying loans. It also states that the party which purchases the mortgaged property will become its owner and that any indebted party that sells the mortgage is required to use the proceeds to pay the loan.
