Sergey Nikitenko has told the Legal Information Agency about the peculiarities of granting loans between individuals on the security of real estate

Specially for the Legal Information Agency, Sergey Nikitenko, Associate of the Private Wealth practice at Maxima Legal, told whether a flat can be pledged as collateral for a loan between private individuals and how such an encumbrance is removed:

‘The legislation does not prohibit loans between individuals, including loans secured by real estate. In the case of loan repayment, in order to cancel the registration record of such an encumbrance (mortgage), it is sufficient to send to the Rosreestr an application of the lender or a joint application of the two parties. This can be done through the Multifunctional Centre for the Provision of State and Municipal Services, as well as electronically through the Gosusgoservices portal or the Rosreestr website. The encumbrance is lifted within three working days.

If, after the debt has been repaid, the pledgee fails to act or refuses to apply, the borrower has the right to sue for the termination of the pledge in a court.

Upon expiry of the limitation period, the pledge loses its ‘security’ property and must be terminated. However, if the pledgee refuses to sign the relevant statement, the encumbrance can only be lifted through a court.

The death of the lender does not lead to the termination of obligations under the mortgage agreement. Its rights and obligations are transferred to the heirs, who have the right to sign an application for the repayment of the mortgage. In a situation where the inheritance is not accepted or the heirs refuse to voluntarily submit an application, the mortgagor will again have to file a lawsuit in court.

An additional mechanism for lifting the encumbrance is provided for notarised mortgage agreements. In this case, the borrower can submit an application to the notary, who notifies the mortgagee and in the absence of objections within 14 days – himself sends to the Rosreestr application for the repayment of the mortgage’.

To read the article (in Russian), please see the Legal Information Agency website >>>