SERVICES

On Mortgage

LAW OF THE REPUBLIC OF AZERBAIJAN

This Law determines the grounds for the emergence of a mortgage in connection with ensuring the performance of obligations arising from civil law contracts, the rules for its state registration, payment of secured debt and other civil law obligations at the expense of a mortgage, the rights and obligations of the parties, and also regulates other relations in this area.

Chapter
GENERAL PROVISIONS

Article 1. Basic concepts

The concepts used in this Law have the following meanings:
mortgage - a pledge of immovable property and movable property, the ownership rights of which are registered in the official register, as a method of ensuring the performance of an obligation;
mortgage paper - a registered security establishing the right to a mortgage. A mortgage paper establishing the right to a mortgage on real estate is formalized in the form of a registered security without a document;1
the owner of the mortgage paper - a person who acquires the right to ownership over the mortgage paper;2
1.0.3-1. The owner of the mortgage deed establishing the mortgage right on real estate is the person whose ownership right to the mortgage deed is formalized in the electronic system of mortgage deed (hereinafter referred to as the electronic system);3

1.0.4 the mortgagee is the person who pledges the object that is the subject of the mortgage. The mortgagee

may be both the debtor and a third party;

the mortgagee is the person who has the mortgage right and has the right to demand the execution of the main obligation at the expense of the mortgage object in a preferential manner compared to other creditors of the mortgagee, including the owner of the mortgage deed;4

the mortgage right is the right of the mortgagee to direct the seizure of the mortgage object in cases where the grounds provided for in Article 34 of this Law are present; 5

the mortgage agreement is a transaction concluded between the mortgagee and the mortgagee to ensure the execution of the main obligation;

the main obligation is the debt and other obligations arising from the main agreement and the execution of which is fully or partially secured by a mortgage;

initial sale price - the selling (liquid) price of the mortgaged object in accordance with the requirements of this Law, subject to the limitation of the time for conducting appropriate marketing to determine the market value of the mortgaged object.

Article 2. Legislation on mortgage

Relations related to mortgages are regulated by this Law, the Civil

Code of the Republic of Azerbaijan and other normative legal acts, as well as international treaties to which the Republic of Azerbaijan is a party.

Relations in the field of mortgages in the Alat free economic zone are regulated in accordance with the requirements of the Law of the Republic of Azerbaijan “On the Alat free economic zone”.6

Article 3. Scope of application of mortgage

Real claims arising from debt, purchase and sale, contracts and other civil-legal agreements can be secured by mortgage.
A mortgage can also be established for the execution of claims that may arise in the future. In this case, the conditions stipulated in Article 10.5 of this Law must be observed.
Article 4. The amount of the claim secured by the mortgage

Unless otherwise provided by the mortgage agreement, the mortgagee's claim shall be secured in full, including:
principal debt;
interest;
reimbursement of fines and (or) damages incurred as a result of non-performance or improper performance of the obligation, including delay;
making an enforcement record in connection with the imposition of a lien on the mortgaged object,
payment of court costs and other expenses. 7

With the exception of the requirements provided for in Articles 4.1.4 or 5 of this Law, if the mortgage agreement specifies a specific amount of the principal obligation (requirements provided for in Articles 4.1.1‒4.1.3 of this Law), that obligation shall be deemed secured only in this amount. 8

Article 5. Securing additional expenses of the mortgagee by mortgage

In case the mortgagee is obliged to ensure the maintenance and safety of the mortgaged object under the terms of the mortgage agreement or in accordance with this Law, the reasonable expenses incurred by the mortgagee for the maintenance and safety of that object, including taxes and utility costs, shall be paid from the value of the mortgaged object.

Article 6. Mortgaged object

The mortgaged object may be an immovable property owned by the mortgagor in accordance with the law, including an immovable property whose construction is not completed and a movable property on which ownership rights are registered in the official register.
Mortgage of an object that has been withdrawn from civil circulation, as well as one that cannot be claimed and alienated according to the law, is not allowed.
Indivisible objects cannot be mortgaged in parts.
Mortgage may be general. A general mortgage is a mortgage whose subject is several objects and each of the objects is used to satisfy the general claim.

The creditor's claim may be satisfied at the expense of any object at his/her request.

Unless otherwise provided in the mortgage agreement, the subject of the mortgage may be changed with the consent of the mortgagee.

In this case, amendments shall be made to the mortgage agreement.9

Article 7. Features of Mortgage

The mortgagee's right to the mortgaged object shall also apply to its accessories, unless otherwise provided for in the mortgage agreement. The mortgage right to the fruits, products and income obtained as a result of the use of the mortgaged object shall apply in cases provided for in the mortgage agreement.
A building, structure, facility or other immovable property shall be mortgaged only together with the land plot on which they are located or on which they provide their activities. When a seizure is directed to an immovable property, the person acquiring it shall acquire the right belonging to the previous owner of that immovable property over the land plot on which the property is located.
If the mortgagor's other property is insufficient to fulfill his obligations to third parties, a third party's claim to the mortgaged object may be directed in accordance with the procedure established by this Law after the mortgagee's claims have been satisfied.
The satisfaction of the claims of the mortgagee of the immovable property and the encumbrance holder of the movable property regarding the movable property that is an accessory to the immovable property shall be carried out taking into account the priority right established by the Law of the Republic of Azerbaijan “On Encumbrance of Movable Property”. 10
Article 8. Mortgage of an item in common ownership

An item in common joint ownership may be mortgaged with the consent of all owners certified by a notary.
Each of the participants in the common shared property may mortgage their shares without the consent of the other owners. If the mortgagee requests seizure of that share and it is sold, the rules of the Civil Code of the Republic of Azerbaijan on the right of preemption in purchase shall apply.

Article 9. Subsequent mortgage

Unless otherwise provided by law or a previous mortgage agreement, the mortgagor may re-mortgage the previously mortgaged item to secure his other obligations (subsequent mortgage). 11
The mortgagor shall provide all information provided for in Article 10.8 of this Law regarding the mortgage subject to each subsequent mortgagee.
The claims of the subsequent mortgagee shall be paid in full from the value of the mortgage subject, regardless of the period of their execution, in the order of priority.
The priority of the right of the previous mortgagee shall be determined by the moment of state registration of the mortgage.
The priority right in the payment of claims on the mortgage may be changed at any time by agreement between the mortgagees

. If the number of mortgagees exceeds two, the change of the priority right shall be carried out with the consent of the mortgagees whose interests are affected.

In the event that the mortgage is formalized with a mortgage deed, the subsequent mortgage shall not be allowed

Violation of the rules provided for in this Article regarding the subsequent mortgage shall entitle the mortgagee to demand the early execution of the main obligation, and if the demand is not fulfilled, to direct the seizure to the mortgage subject.

Chapter

CREATION OF MORTGAGE AND STATE REGISTRATION
Article 10. Mortgage Agreement

A mortgage agreement is not independent in nature and is concluded in order to ensure the performance of the main obligations. A mortgage agreement may be concluded at any time during the period of validity of the main obligation. The invalidity of the mortgage agreement does not entail the invalidity of the main obligation. The invalidity of the main obligation entails the invalidity of the mortgage agreement.
A mortgage agreement is concluded in writing by drawing up a document signed by the mortgagor and the mortgagor, as well as by the debtor if the mortgagor is not a debtor. The mortgage agreement must be notarized. 12
In the event of a discrepancy between the mortgage agreement and the agreement creating the main obligation, the terms of the agreement creating the main obligation shall prevail if the mortgagor is a debtor, and the terms of the mortgage agreement shall prevail if the mortgagor is not a debtor.
A mortgage agreement shall be subject to state registration. A mortgage agreement shall enter into force from the moment of state registration.
The mortgage agreement must indicate the names and places of residence (location) of the parties, the subject of the mortgage, its name, location and other description sufficient for identification, the essence, size (amount), grounds for formation and term of performance of the main obligation, the parties to the agreement on which this obligation is based, the place and date of its conclusion, as well as the conditions for directing the mortgagee's claim to the account of the mortgage subject, taking into account the imperative norms established by law, the method of sale of the mortgage subject, the initial sale price of the mortgage subject or the independent appraisers who will determine this price, the person who must carry out the sale when the mortgage subject is sold on the open market and the procedure and sequence of distribution of the proceeds from the sale of the mortgage subject, and the e-mail address of the mortgagor. If the amount of the main obligation is determined in the future

If the obligation secured by the mortgage is to be performed in installments, the mortgage agreement must indicate the procedure for determining this amount. 13
If the obligation secured by the mortgage is to be performed in installments, the mortgage agreement must indicate the terms or periodicity of the relevant payments, their amounts or the conditions allowing to determine these amounts.
The mortgage agreement must indicate the right under which the object that is the subject of the mortgage belongs to the mortgagor and the state body that registered this right.

When concluding a mortgage agreement, the mortgagor must notify the mortgagee in writing of all rights of third parties known to him over the mortgage object, pledges and other

encumbrances of the mortgage object, claims and court disputes of third parties, as well as the nature and amount of obligations secured by the previous mortgage. Failure to fulfill this duty gives the mortgagee, including the subsequent mortgagee, the right to demand early performance of the main obligation or change the terms of the mortgage agreement, or breach of the agreement and compensation for the damage caused.

Article 11. State registration of mortgage

A mortgage agreement on immovable property shall be registered in the state register of immovable property, and a mortgage agreement on movable property shall be registered in the official register of movable property.
The mortgage right shall arise from the moment of state registration of the mortgage agreement. A mortgage agreement shall be considered state registered from the moment of entry of the information specified in Articles 11.3 and, in appropriate cases, 11.4 of this Law into the relevant register.
During state registration of a mortgage agreement, the subject of the mortgage, the essence, size, performance period of the main obligation and information about the mortgagee shall be recorded.14
If the mortgage agreement provides for the issuance or formalization of a mortgage paper, during state registration of the mortgage agreement, in addition to the above information, information about the issuance or formalization of the mortgage paper shall be recorded.15
If there are several mortgagees (creditors) under the same obligation, they shall be registered as joint mortgagees in the state registration body of the mortgage.

When mortgaged immovable property whose construction is not yet completed, the mortgage may be registered in advance in the state register of immovable property.
After the construction of the immovable property whose construction is not yet completed, which is the subject of the mortgage, is fully completed, the mortgage shall retain its force if the property is registered in the state register as a completed property (newly created property), provided that at that time the mortgage has not been terminated in accordance with this Law.

Article 12. Rules for state registration of mortgage

State registration of mortgage of immovable property shall be carried out in accordance with the Law of the Republic of Azerbaijan “On the State Register of Real Estate”.

Mortgage of movable property, the ownership rights of which are registered in the official register, shall be registered in the state by the relevant executive authority maintaining the state register of that property.16
The following documents shall be submitted to the official register together with the application for state registration of mortgage of movable property:
a notarized copy of the mortgage agreement;

a document confirming payment of the state fee for registration.
12.3-1. If it is possible to obtain the documents necessary for state registration of a mortgage of a movable property from the relevant state body (institution) through the Electronic Government Information System,

these documents are not required from the applicant. In cases where it is not possible to obtain such documents through the Electronic Government Information System, their submission is required from the relevant state body (institution) upon request with the applicant's consent or is provided by the applicant. 17

When the rights of the mortgagee are confirmed by a mortgage deed, the mortgage deed and its notarized copy are submitted to the state registration body.
12.4-1. When the rights of the mortgagee over real estate are confirmed by a mortgage deed, the state registration body obtains information about the mortgage deed through the electronic system.18

The body maintaining the official register of movable property conducts state registration of the mortgage of a movable property within 5 business days at the latest and provides an extract from the register to the mortgagee. Documents submitted for state registration are stored in the state registration authority.
The extract shall indicate the name of the authority conducting the state registration of the mortgage, the place, moment (date and time) of registration, registration number, other information identifying the mortgagee and the mortgagee, and a description of the mortgage subject.
When the rights of the mortgagee are confirmed by a mortgage deed, the mortgage deed shall indicate the name of the authority conducting the state registration, the moment (date and time) of registration, and its number, and shall be certified by the signature and special seal of an authorized person of the registration authority.

and returned to the mortgagee.
12.7-1. When the rights of the mortgagee over real estate are confirmed by a mortgage deed, the mortgage deed shall indicate the name of the body conducting state registration, the moment of registration (date and time) and number, shall be signed with the electronic signature of the authorized person of the registration body, and a notification shall be sent to the mortgagee and the mortgagee through the electronic system.19

The registration body shall create a database on mortgages and ensure the storage of information. A copy of the registered mortgage agreement, and when a mortgage deed is issued, a copy of the mortgage deed (except for the mortgage deed establishing the mortgage right over real estate) shall be stored in the archives of the state registration body.20
A certificate from the official register on the rights registered over movable property and their restrictions (encumbrances) shall be provided within 3 calendar days to the right holder, the person authorized by him, persons having the right to inherit the property of the right holder by law or by will, and to the relevant state bodies in connection with the exercise of powers provided for by law.
Corrections shall be made in the register or extract from the register no later than 3 working days from the date of submission of the application of interested persons on correction of technical errors made during the state registration of a mortgage of a movable property.

The registration authority, its officials and employees shall be liable in accordance with the procedure established by legislation for the damage caused to the interested person as a result of violation of the registration rules.

Article 13. Refusal and suspension of state registration of a mortgage of a movable property

State registration of a mortgage of a movable property may be refused in the following

cases:

if the documents submitted for registration are incomplete (taking into account the requirements of Article 3-1 of this Law);

if the mortgagor does not have the authority to dispose of that property or if this right is restricted in accordance with the legislation.

If there is a court dispute over the right to the mortgaged property, the state registration of the mortgage of a movable property may be suspended on the basis of a court decision until the dispute is resolved.

When a decision is made to refuse or suspend state registration, the registration authority must inform the applicant in writing about the reasons for the refusal or suspension no later than the period specified for registration.
After the circumstances related to the refusal or suspension of registration are eliminated,
the mortgage shall be subject to state registration.

In connection with the unjustified refusal or suspension of state registration of a mortgage, or the illegal conduct of registration of a mortgage, the interested person has the right to file a complaint in administrative procedure and (or) in court.22

Article 14. Additional state registration of a mortgage23

Additional state registration of a mortgage shall be carried out within 3 business days from the date of submission of documents in the state register of real estate and the official register of movable property, respectively, in the following cases:
when the essence, size or term of performance of the main obligation in the mortgage agreement changes;
when the right of claim under the main obligation is transferred to another person;
when the mortgage subject is changed;24
when the mortgage subject is alienated.
The application for additional state registration of a mortgage shall be accompanied by a notarized copy of the agreement on amendments to the mortgage agreement, transfer of the claim to another person and alienation of the mortgage subject
14.2-1. If it is possible to obtain the documents or information necessary for additional state registration of a mortgage from the relevant state body (institution) through the Electronic Government Information System, such documents or information shall not be required from the applicant. In cases where it is impossible to obtain such documents or information through the Electronic Government Information System, their submission shall be requested from the relevant state body (institution) upon request with the consent of the applicant or shall be provided by the applicant.25

When the rights of the mortgagee are confirmed by a mortgage deed, when the essence, size, performance period of the main obligation changes, when the mortgage subject is changed or alienated, amendments shall be made to the mortgage deed and additional state registration shall be made.

Additional state registration of a mortgage formalized by a mortgage deed is carried out in the relevant register where the mortgage deed is state registered.

Additional state registration of a mortgage is confirmed by an extract from the state register of real estate and the official register of movable property, respectively, and by making an appropriate

notation in the mortgage document.26

Article 15. Cancellation of state registration of a mortgage

The state registration of a mortgage is canceled by the registration authority based on the application of the mortgagee or a court decision.
When the state registration of a mortgage is canceled, the mortgage document

shall be cancelled in accordance with the procedure established by this Law.

Article 16. State duty

A state duty shall be paid in accordance with the procedure and amount established by law for notarization of a mortgage agreement, state registration and additional state registration of a mortgage.27
Unless otherwise provided for in the agreement between the mortgagor and the mortgagee, the payment of the fee for state registration of a mortgage shall be borne by the mortgagor.
Except for the case provided for in Article 14.1.2 of this Law, the fee for additional state registration of a mortgage shall be paid by the mortgagor, provided that otherwise provided for in the mortgage agreement.
In cases of termination of a mortgage, the fee for cancellation of the encumbrance of rights on real estate shall be paid by the mortgagor.28

Chapter

MORTGAGE PAPER

Article 17. Mortgage paper

A mortgage paper may be issued or formalized during the term of the mortgage agreement. In the event of a mortgage deed, the rights and obligations of the mortgagor, mortgagee, as well as its other owners shall be exercised taking into account the features established in this Law regarding the mortgage deed.29
A mortgage deed confirms the following rights of its owner:30
the right of mortgage over the mortgaged subject;
to demand the execution of the main obligation without providing other evidence;
to direct seizure against the mortgaged subject in the cases stipulated in Article 34 of this Law.
The mortgage deed shall be drawn up in one copy and shall be delivered to the mortgagee
17.3-1. The mortgage deed establishing the mortgage right over real estate shall be drawn up electronically in the electronic system by the person determined by Article 17.4 of this Law, and the electronic system shall send an electronic notification to the mortgagor about it.31

The mortgage deed shall be drawn up by the mortgagor, or if he is a third party, also by the debtor under the main obligation. The signature of the individual who draws up the mortgage deed (except for the mortgage deed establishing the mortgage right on real estate)

must be notarized.32

17.4-1. The procedure for drawing up the mortgage deed establishing the mortgage right on real estate shall be determined by the body (institution) determined by the relevant executive authority.33

If there are several mortgagees on the same obligation, the mortgage deed
is not allowed to be issued or formalized.34

The rights under the mortgage deed may be transferred to other persons in accordance with the procedure specified in Article 20 of this Law.

Article 18. Contents of the mortgage deed

When the mortgage deed is issued to the primary mortgagee or formalized in the name of the primary mortgagee, it must reflect the following:35

the word “mortgage deed” included in the title of the document and the place of its preparation;

the name and address of the mortgagor, or if the mortgagee is a legal entity, its name and location;

The name and address of the mortgagee, if the mortgagee is a legal entity, its name and location;

the place and date of conclusion of the mortgage agreement;
if the debtor under the main obligation is not the mortgagor, the name and address of the debtor, if the debtor is a legal entity, its name and location;
the essence of the main obligation, its size (amount), the grounds for its formation, the term of execution, the parties to the agreement on which this obligation is based, the place and date of its conclusion must be indicated. If the obligation secured by the mortgage is to be executed in parts, the mortgage deed must indicate the terms or periodicity of the relevant payments, their amounts or the conditions allowing to determine these amounts.
a description and location of the object that is the subject of the mortgage;
information on the right by which the object that is the subject of the mortgage belongs to the mortgagor and the name of the body that registered this right, the number, date and place of state registration, other encumbrances on that object;
a note on the exercise of the rights of the mortgagee to direct the seizure to the mortgage object based on the notary's execution record; 36
the signature of the mortgagor, and if he is a third party, also the signature of the debtor on the main obligation;

the date on which the mortgage deed was issued or formalized 37
Notes on the mortgage deed prohibiting its subsequent issuance to other persons or formalization in the name of other persons are invalid.38
The form of the mortgage deed shall be determined by the relevant executive authority.

18.3-1. The form of the mortgage deed establishing the mortgage right on real estate shall be determined in the electronic system. The administration of the electronic system shall be carried out by the body (institution) determined by the relevant executive authority.39

In the event of a discrepancy between the mortgage deed and the mortgage agreement, the owner of the mortgage deed may demand its cancellation and the issuance or formalization of a new mortgage deed at the same time. If the owner of the mortgage deed discovers such

inconsistency, he shall immediately notify the mortgagor, and if he is a third party,

and the debtor on the main obligation

must provide information.40

The person who draws up the mortgage deed shall be liable for the damage caused by the specified inconsistency and its elimination.

Article 19. State registration of the mortgage deed

State registration of the mortgage deed shall be carried out in accordance with the procedure established by the legislation.

19.1-1. State registration of the mortgage deed establishing the mortgage right on real estate shall be carried out by the body (institution) determined by the relevant executive authority.41

When rights under the mortgage deed are transferred to another person, the transfer record shall be additionally registered in the relevant register where the mortgage deed was registered.42 Article 20. Transfer of rights under the mortgage deed

The transfer of rights under the mortgage deed shall be carried out by making a transfer record (endorsement) in favor of another person on the mortgage deed and transferring the mortgage deed to him. If the person who makes the transfer record is a natural person, his signature shall be certified by a notary.
20.1-1. The transfer of rights under a mortgage deed establishing a mortgage right over real estate shall be carried out in the electronic system by making an electronic signature on the mortgage deed in favor of another person (endorsement) and sending a notification to this person in the electronic system.43

The mortgage deed shall be transferred to another person together with the mortgage agreement, and that person shall acquire all the rights and obligations of the mortgagee under the mortgage agreement.

20.2-1. When the rights under a mortgage deed establishing a mortgage right over real estate are formalized in the name of another person, the mortgage agreement shall be presented to that person and that person shall acquire all the rights and obligations of the mortgagee under the mortgage agreement.

With the transfer of rights under a mortgage deed, the claim on the main obligation shall be relinquished to the new owner of the mortgage deed. If the main obligation is partially fulfilled when transferring rights under a mortgage paper, the owner of the mortgage paper shall make a corresponding note on the mortgage paper and the unfulfilled part of the main obligation shall be considered to have been transferred. 44
The transfer note shall clearly and accurately indicate the name of the person to whom the rights under the mortgage paper are transferred. Endorsement shall be allowed without indicating the name of the right holder on the mortgage paper.

The transfer note shall be signed by the mortgagee indicated in the mortgage paper, and if this note is not an initial note, by the owner of the mortgage paper indicated in the previous note. 45
A person who acquires a mortgage paper that has been removed from his possession as a result of theft or in any other way, regardless of the will of the person who made the transfer notes, shall not be considered the legal owner of the mortgage paper, provided that it is proven that he knew or should have known about it. 46
The person who transferred his rights under the mortgage paper shall notify the debtor of the main obligation

in writing. Failure to fulfill this obligation shall entail the consequences for the debtor and the new mortgagee of the concession of claims provided for in the Civil Code of the Republic of Azerbaijan.

Article 21. Exercise of rights under mortgage paper

At the time of the exercise of rights under mortgage paper, the owner of the mortgage paper must make notes on the execution of the main obligation in the mortgage paper. These notes must be clear to both the mortgagor and possible subsequent owners.47
21.1-1. The mortgagee in respect of real estate must make notes on the execution of the main obligation in the mortgage paper in an electronic system. A notification of these notes must be sent to the mortgagor via an electronic system.48

If there is no other evidence, the presence of the mortgage paper in the possession of the owner or the absence of a note on the partial execution of the main obligation in the mortgage paper or any other confirmation indicates that this obligation or its relevant part has not been executed. Unless otherwise established, the presence of the mortgage paper in the possession of the mortgagor confirms the execution of the main obligation.49
21.2-1. The presence of a note on the partial fulfillment of the main obligation or other confirmation in the mortgage document establishing the mortgage right on real estate in the electronic system indicates that this obligation or its relevant part has been fulfilled. Termination of the mortgage document in the electronic system confirms the fulfillment of the main obligation.

The direction of seizure of the mortgage subject under the mortgage document is carried out in the manner provided for by this Law.

The mortgagor may not raise objections not based on the mortgage document against the request of the owner of the mortgage document.50
When a mortgage document is canceled in accordance with this Law, the body conducting the state registration of the mortgage, upon receiving it, shall immediately cancel it by stamping “terminated” on its face and store it in its archive.
21.5-1. When a mortgage document establishing the mortgage right on real estate in accordance with this Law is canceled, the body conducting the state registration of the mortgage shall make entries in the relevant register.

A r t e

22. Restoration of rights on lost or damaged mortgage paper
Rights on mortgage paper lost or damaged due to improper storage or for other reasons shall be restored upon the application of the owner of the mortgage paper by issuing a duplicate of the lost (damaged) mortgage paper in accordance with the copy of the mortgage paper kept in the state register where the mortgage paper is registered. The duplicate must bear the word “duplicate”, be signed by an authorized person of the registration authority, be certified with a seal and given to the owner of the mortgage paper, and appropriate entries must be made in the register.51
The duplicate of the mortgage paper must fully correspond to the lost (damaged) mortgage paper. Otherwise, the state registration authority that issued the duplicate of the mortgage paper shall be liable for the damage caused due to the discrepancy that has arisen.

Article 23. Termination of the mortgage paper

The mortgage paper shall be terminated when the mortgage paper is voluntarily transferred to the mortgagor or in the cases provided for in Article 48 of this Law.

The mortgage deed establishing the mortgage right on real estate shall be terminated voluntarily by the mortgagee in the electronic system or in the cases provided for in Article 48 of this Law. 52

Chapter
MUTUAL RELATIONS BETWEEN THE MORTGAGER AND THE MORTGAGEE

Article 24. Rights and obligations of the mortgagor and the mortgagee

In addition to the rights and obligations provided for in this Law, the mortgage agreement concluded between the mortgagor and the mortgagee may determine additional rights and obligations of the parties.

Article 25. Rights and obligations of the mortgagee

The mortgagor shall have the following rights:
to possess the mortgaged item and use it in accordance with its purpose, except for the case when the mortgaged item is transferred to the ownership and (or) use of the mortgagee under the mortgage agreement;
to bequeath the mortgaged item;
to dispose of the mortgaged item in accordance with Article 30 of this Law;
If the mortgagee fails to properly ensure the storage and use of the mortgaged object, to demand from the mortgagee in court the termination of the mortgage and the acceptance of the early performance of the main obligation.
Termination shall be carried out after the notification of the imposition of the seizure of the right specified in Article 25.1.3 of this Law is issued.
The mortgagor shall have the following duties:
to ensure the storage and safety of the mortgaged object;
to take necessary measures to protect the mortgaged object from the intentions and demands of third parties and to maintain it in proper condition;
to pay taxes, utility bills and other such obligations related to the object that is the subject of the mortgage;
to create conditions for persons wishing to purchase the mortgaged object to inspect the mortgaged object on site when the seizure is imposed on the mortgaged object; 53

to obtain a certificate from the mortgagee on the amount of the main obligation and submit it to the notary in the cases provided for in Articles 6 and 38.2 of this Law.

Article 26. Rights and obligations of the mortgagee

The mortgagee has the following rights:
to verify the existence, condition and storage conditions of the mortgaged object on the basis of documents and in fact;
to require the mortgagor to take the necessary measures to maintain the mortgaged object in proper condition;

if it is evident that the mortgagor is unable to fulfill his obligations, to demand the transfer of the mortgaged object to him in court;
to require the persons who committed such actions to cease actions that damage or cause deterioration of the integrity of the mortgaged object;

to assign or sell the claim on the main obligation to another person;
to pledge the mortgage right;
to direct the seizure of the mortgaged object on the basis of a notary’s execution record, unless a complaint is filed with the court regarding the direction of the seizure of the mortgaged object in accordance with Article 37.1 of this Law.54
When the mortgaged object is transferred to the mortgagee’s ownership and (or) use in accordance with the terms of the mortgage agreement, the relevant obligations of the mortgagor shall pass to him.
The mortgagee shall provide the mortgagee with a certificate on the amount of the principal obligation to be submitted to the notary in the cases provided for in Articles 30.6 and 38.2 of this Law. 55
Article 27. Storage and insurance of the mortgaged item

If provided for in the mortgage agreement, the mortgagee shall insure the mortgaged item against the risks of destruction and damage, taking into account the market price of the item at the time of conclusion of the mortgage agreement, and the debtor, who is an individual, shall also insure his life and the risk of loss of working capacity, provided that it is not less than the amount of the claim secured by the mortgage. 56
The mortgagee shall immediately notify the mortgagee if there is a danger of destruction or damage to the mortgaged item.
Rules for the use of the mortgaged item, the duty to store the mortgaged item

If the mortgagee grossly violates the mortgage and such violation creates a threat of destruction or damage to the mortgaged property, as well as if the obligations to insure the mortgaged property are not fulfilled, the mortgagee may demand early performance of the main obligation. If such a demand is not met, the mortgagee may direct the seizure to the mortgaged property.
When the mortgaged property is transferred to the mortgagee's ownership and (or) use, it must be insured at the mortgagee's expense, if provided for in the mortgage agreement.

Article 28. Transfer of a claim secured by a mortgage

When a claim secured by a mortgage is transferred to another person, the mortgage, which is the security for that claim, is transferred to him. The person to whom the claim is transferred acquires the rights and obligations of the mortgagee.

The transfer of a claim to another person is carried out by concluding a contract of concession of the claim or making a note (endorsement) of transfer in favor of another person in the mortgage document. The transfer of the claim to another person shall be subject to additional state registration in accordance with this Law. If this condition is not met, the transfer of the claim to another person shall be considered invalid.57

Article 29. Transfer of a debt secured by a mortgage

When the debt on the main obligation is transferred to another person (except for cases of transfer of debt by inheritance), the mortgage shall be terminated if the mortgagor does not give the mortgagee written consent to the mortgagee to maintain the mortgage in force. 58