In complex contractual relationships, there is sometimes doubt whether one or both of the parties will fulfill their contractual obligations, and this gives rise to the need for certain guarantees of the fulfillment of the obligation. One of the types of this guarantee is, among others, liens on real estate, i.e., mortgages.
In this way, real estate is specified from which the creditor will later be able to collect if the debtor does not fulfill his contractual obligation, and that before the other creditors of the debtor, who do not have secured claims.
A mortgage based on an enforceable mortgage agreement or an enforceable pledge statement, if they meet the conditions prescribed by Article 15 of the Mortgage Law, is entered in the real estate registers as an "enforceable extrajudicial mortgage."
After registering the mortgage, the creditor has the right to choose the method of settlement of his claim, that is, whether he will realize his claim in court or extrajudicial proceedings. In this sense, the out-of-court settlement procedure is prescribed by the Mortgage Law, while the provisions of the Law on Enforcement and Security will be applied to judicial settlement.
This text is focused on the settlement procedure in accordance with the provisions of the Law on Enforcement and Security, to be precise on possibility of collecting the debt secured by a mortgage after the time of the statute of limitations has passed.
An interesting situation arises when enforcement proceedings are initiated on the basis of a mortgage agreement or pledge statement as enforcement documents, which were given as security for a claim that arose more than 10 years ago. In such situations, debtors often, out of ignorance, file appeals against the writ of enforcement, where they mainly refer to the reason for appeal that prescribes the statute of limitations for claims from the enforcement document. For example, a question rises on behalf of a debtor: how can someone issue a writ of enforcement if I concluded a loan agreement 15 years ago, isn’t that debt uncollectible anymore? The answer that is imposed is that the writ of enforcement cannot be brought by court because the 10-year statute of limitations has expired, but this is not the case, solely because of the mortgage.
At this point, it is necessary to pay attention to the institute of the statute of limitations. The statute of limitations represents the passage of time due to which the creditor's right to demand the fulfillment of the obligation ceases. The statute of limitations begins to run from the day the obligation is due, that is, from the first day after the day when the creditor has the right to demand the fulfillment of the obligation. After the expiration of the statute of limitations, the creditor no longer has the possibility to legally force the debtor to pay the debt or perform another obligation because he failed to do so within the legal term. However, this does not mean that the debtor's obligation to the creditor is terminated; it becomes a natural obligation, an obligation that is not enforceable but is collectible, considering the fact that what was given or done in the name of fulfilling a natural obligation cannot be demanded back.
However, there is a situation in which the passage of time does not affect the creditor's ability to collect, and in that sense, if the claim is secured by a pledge or mortgage, such a claim can be settled even after the statute of limitations has expired, but only from the encumbered thing, if the creditor has control over the movable property or if the claim is secured by a mortgage - a lien on immovable property, and its right is registered in Land register, i.e. inscribed in property sheet. However, this is not the case with secondary claims accompanying the main claim. Obsolete interest claims and other occasional payments cannot be settled even from the encumbered property and collateral.
Bearing in mind what has been said, if the claim secured by the mortgage is outdated, the owner of the mortgaged real estate cannot result the cancellation of the mortgage on this basis, nor will the appeal against the writ of enforcement filed for these reasons be accepted. It can be concluded that although the Law on Enforcement and Security prescribes as the appealing reason the statute of limitations of the claim from the enforcement document, the appeal based on this reason in cases where claims are secured with mortgage won’t be successful.
Contact: Milena Šejnjanović, Associate at IVVK in cooperation with LexQuire
E-mail: milena.sejnjanovic@ivvk.rs
07/12/2023
