4. Encumbrances (Section C)

I. PRELIMINARY REMARKS

Answers Contact Points

  1. The content of Section “C”

Section “C” is understood as the part of the ELRD which would collect all type of charges, burdens or restrictions encumbering the property or LR Unit “object” (or connecting factor), axis of the Section “A”.
So, roughly, this is the Section of the template intended for collecting:

    1. Mortgages. “Mortgage” means right in rem or lien on the property guaranteeing obligations (usually payment duties) that falls on properties and usually constituted by means of registration. If guaranteed debts are not fulfilled, it might lead to auction.
    2. Property rights. “Property rights” pr “rights in rem” mean “a right involving or determining the status of a thing (the res), exercisable against the world at large and not just the parties to the litigation concerned. As opposed to a right in personam, which is a right against a specific natural or legal person (e.g. a party to litigation) (IATE).”
    3. Restrictions. In particular, “judiciary restrictions” mean limitations, burdens or duties resulting from judiciary resolutions of any type as long as they are related to immovable properties; particularly, those restrictions that involve claims on property or notice of dispute; attachment for debts; seizure; freezing or sequester or confiscation.
    4. Other restrictions. Whatever encumbrances or restrictions included by LR information, different from the previous ones, as long as affect properties. So, mostly is used as a residual category.
  1. Criteria of organization of information of Section “C”

For purposes of the ELRD, information on encumbrances is organized by the criterion of date of registration.

Date of registration may determine the rank of the mortgage or other encumbrance registered. Rank also may be determined by means of agreements of the interested parties.

In order to facilitate the comprehension of the meaning of the different encumbrances, these ones have been distinguished by means of labels. There are four of them:

II.RULES AND DEFINITION

1st HOW TO DESCRIBE / DEFINE SECTION C

GENERAL RULE: For the purpose of this Template, section C is the section that contains all land registry information which is not included in section A or B.

A) Intersection between Section C and A

a. Real Servitudes (the right to way…)

RULE: Real Servitudes will be treated as a limited property right and be always placed in C section, irrespectively of its content. However, it would be admissible to mention them also in Section A, as a quality of the property.

a. Public restrictions

RULE: Public restrictions, public servitudes and other public limitations imposed directly to the property which are created, modified or extinguished by disposition of law will be located in Section A.

Given that most of the Contact Points have agreed under certain conditions and up to 4 can’t accept this rule, the possibility of taking public restrictions to other Section —Section C obviously— should remain.

B) Intersection between Section C and B

a. Restrictions

RULE: Restrictions which are imposed directly to the property, affecting its proprietor, irrespectively his/her personal situation, in so far is the owner of the land, and which will continue affecting the property when it passes to a new owner they must be placed in C Section.

a. Limited property rights which are capable, according to national land registry law, to create an individual file (a real folio, a title sheet)

RULE: A limited property right, capable to create a new folio will be placed in B section of its own folio and on C section of the folio of the absolute property right from which derives.

a. Plural holders of limited property rights. Term, conditions and mode. Bankruptcy entries; Personal restrictions; Civil status and matrimonial property regime.

aa) RULE: Terms, conditions, personal restrictions and other limitations will be placed close to the affected right or person. When they are referred to the main folio right or its proprietor they will be placed in B section, and if they are referred to a limited property right or its holder they will be placed in C section, close to the affected right.

bb) RULE: A limited property right’s holder will be described in C section following the same scheme approved in section B for proprietorship of the main right, duplicating same fields to the extend stated in law.

C) Intersections between Section C and D

RULE: When the information is registered in the same registry but in different sections, all the information will be listed in C section of the template. When the information derives from different registries, each Registry will deliver its own template, but each one will contain an explicit reference to the information provided by the other registry.

2º HOW DO WE ORGANIZE THE INFORMATION IN SECTION C

RULE: the information of section C of template will be represented in chronological order, following date of registration, irrespectively of its nature, content, effects or type of entry. Agreements or decisions altering the rank or priority of a limited property right will be place next to it.

3º PROVIDING ADITIONAL INFORMATION. BROAD CATEGORIES, LABELS

a) The template will develop labels of categories to qualify the information presented in section C. These categories will be created by means of semantic concepts, previously agreed by the WS1 members.

b) The different labels for registered information will be created starting from the following criteria: (for a proper understanding of this section, please check the definitions presented in the other paper called Section C semantic concepts)

1st The content and nature of the information

– Mortgages
– Limited property rights
– Restrictions
– Other burdens

2nd The land registry effects with regard to the type of entry

– Full registration (inscription)
– Priority reservation entries
– Restriction entries
– Awareness remarks

3rd The origin of the legal information

– Private
– Judicial
– Administrative
– Statutory (legal)

4th The time limit of the entry

– Indefinite entry
– Provisional entry

Developing first category of labels:

1. MORTGAGE

Mortgage is a security property right, a right granted by the owner of the property (mortgagor) to secure the fulfilment of an obligation ( usually a loan) to the creditor ( mortgagee), by giving him/her in case the debtor fails, the right to sell the property and get paid with the price.

As a property right the security is against everybody so it confers the mortgagee a privilege over the asset, over any other creditor or situation (even in some cases over debtor’s bankruptcy).

Regularly the mortgage is casual; it is connected to the obligation so it follows its life. But in some legal systems, mortgage is abstract and it remains irrespectively the obligation’s life, so it can be used to secure a different obligation.

In most jurisdictions the registration of mortgage has constitutive effect, so mortgage only exists when it is registered, and it is usually ranked by the registration.

2. LIMITED PROPERTY RIGHTS (IURA IN RE ALIENA) (SECONDARY RIGHTS).

A limited property right is a real right, a right against the world, other than the most comprehensive right a person has over a property. A limited property right confers to his/her holder only a specific part of the general powers granted to the owner over a property which belongs to someone else.

There are different kinds of limited property rights. It is most frequent to make a distinction depending on their content, the powers given to its holder/proprietor over the property:

Rights of use, such as the right to only use (right of use) or to use and enjoy) (usufruct) someone else’s property. Enjoy means to acquire the fruits/incomes produced by the asset.

-Security rights, the right secure a loan or other type of obligation (mortgage),

-pre emption rights, right of first refusal to purchase land in the event the grantor of the right should decide to sell (Oxford dictionary of law),

– Other type of limited property rights: enphyteusis, superficies, habitation, servitudes, charges…

Servitudes or burdens falling on a property that impose to its owner either restrictions over his/hers powers or obligations. The obligation could be positive imposing a certain behaviour or negative tolerates certain acts for the benefit of a person or another piece of land.

3. RESTRICTIONS

We might call “personal restrictions” those imposed to the owner due to his personal consideration; they are reflected in section B), while “objective restrictions” are imposed to the property. They affect the proprietor, irrespectively his/her personal situation, in so far is the owner of the land, and so they will continue affecting its successive owner.

Restrictions normally consist on a limitation of certain powers ( of use, of disposal, of creation a security,…) of the owner with regard to the property, which they normally would have been part of the content of his/her right ( ownership or other limited registered property right). They can also demand a positive behaviour from the owner.

Restrictions often impede the future registration of legal acts or rights performed against such a restriction. They are normally reflected by an specific type of entry. A limited time entry. It is usually called NOTICE or CAVEAT

Restriction can derive from a judicial order or from a private decision (in those cases permitted by the law). Depending on who creates the restriction we could make a broad distinction between Judicial restrictions and private restrictions.

Judicial restrictions/ Judicial charges:

In order to facilitate understanding about LR information on judicial restrictions or judicial charges, notices or caveats would mean LR entries made by virtue of judicial orders. Basic categories of judicial charges:

    1. involving attachment or seizure of a property due to a court proceeding in what is pursued the fulfilment of debts or obligations (notices of seizure, notices of attachment);
    2. for purposes of claims about ownership of rights in rem about properties (notices of claims or dispute);
    3. for purposes of freezing ownership or banning the disposal of the property (notices of prohibition of disposal);
    4. warning about the foreclosure or enforcement procedures affecting the property (notices of foreclosure or notice of enforcement);
    5. indicating the confiscation or forfeiture of the property (notices of forfeiture or confiscation)
    6. warning about aspects of the proceedings of insolvency or bankruptcy (notices of insolvency).

This is not an exhaustive collection at all but just a list —rather generic— of usual notices.
B) Private restrictions
They could be established by means of an agreement between the interested parties or by a sole act imposed by the landlord over his/her or someone else property, but always within the legal/ statutory limits. Examples of private restrictions: a covenant forbidding building in the land, or restrictions in the power of disposition: when a donor imposes the done the prohibition of disposal the asset gifted.

In some cases, these restrictions are considered as limited property rights, and so it is difficult to make a clear distinction between both situations. (E. g. Restrictive covenant Vs. Easement)

4. OTHER BURDENS AND PRIVILEGES

a) Burdens

Under this category we incorporate all different encumbrances and privileges that are noyt included in the previuos three categories. Administrative burdens and specifically tax burdens are to be place under this category.

The burden falls on the real estate, whose value will be devoted to cover the expense derived from the burden. These burdens are often referred to legal situations which are not registered. As they are not registered they don’t produce the registry effects, but they may prevent registered rights to develop correctly.

It has not any legal effect rather than giving notice of a certain situation that may overcome and affect registered rights due to non registered ( and usually not needed of registration) interests which may prevail over registration. As far as registry gives notice of those, there is sometimes an important negative effect since that publication may prevent the bona fides effect in successive registered interests.

b) Privileges

Privileges are specific credits which have a preference right to be recovered with the property value. A mortgage is a privilege which derives from a registered property right. But mortgage is created by the owner, it is subjected to registration and normally backs private interests, while these could be statutory privileges or privileges derived from law, not needed of registration to prevail, even over registered interests.

There are cases when specific credits/claims/obligations usually from the public sector, tax debts, and state subsidies…have been granted by the law with a special privilege to be secure by certain asset, whose value becomes affected to that obligation, irrespectively of its owner.

 

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