Mortgage

MORTGAGE. - From ὑπό = under and τύψιμ = I place, it is a subsidiary contract in guarantee of another; and it has as its object an immovable good of the debtor or of a third person.

I. NATURE AND FOUNDATION

In the social exchange of goods it is not always possible to give the agreed price; it is reasonable that in such a case, the one who gives should be guaranteed to receive what is his; this is so because of the very continuity of the exchange of goods. For a thing of little value, the word of a known and honest person suffices; but in the case of substantial sums and of persons not well known, or of an unnamed creditor (a company), an objective guarantee is required; all the more so since, through events of force majeure, even prudent persons meet with unforeseen financial reverses. Hence the origin of the various real guarantees. Among them is the i.

The system of guarantees in contracts was already known to the Oriental peoples and to the Greeks, although the nature of these guarantees is disputed, for lack of texts. Among the ancient Romans, fiducia and pignus were used; later, owing to the increase in exchanges, the i. was introduced as a refinement of pignus; nevertheless it had two deficiencies: it lacked publicity and it extended only to the instruments of cultivation introduced by the colonus into the leased land. A refinement occurs in Justinianic law. The modern age began to introduce publicity and specialty toward the beginning of the 17th century, but the general introduction took place in the last century. England has the i. with a somewhat different character (mortgage).

II. IN ITALIAN CIVIL LAW

The nature of the mortgage as a real right over immovable property given as security, constituted over specific assets of the debtor or of a third person, is inferred from arts. 2808 ff. of the Italian Civil Code (cf. also art. 2740); here the creditor is given the right to expropriate the asset, even as against a third-party purchaser, for the purpose of satisfying the debt in preference to other creditors who are not privileged. In Italian law the mortgage may be legal, judicial or voluntary.

1) Constitution. — All alienable immovable assets may be mortgaged, together with their appurtenances, as may certain real rights over immovables (superficies, usufruct, emphyteusis); among movables, registered State securities, ships, aircraft and motor vehicles (art. 2810). For its constitution a title and registration are required.

In certain cases it is the law that grants the mortgage (legal mortgage: art. 2817). Such a mortgage is recognized in favor of the transferor over the assets transferred, for the performance of the obligations arising from the act of transfer; in favor of co-heirs, partners and co-partitioners, for the payment of equalizing payments, over the immovables assigned to the other co-partitioners; in favor of the wife over the husband's assets as security for the dowry; in favor of the State over the assets of the accused. The judicial mortgage is granted by the judge in every judgment that orders payment of a sum, performance of an obligation, or compensation for damages. In any contract with a voluntary agreement the mortgage may be constituted (voluntary mortgage), if the owner of the asset grants it by unilateral declaration in a public or authenticated deed, wills being excluded (art. 2821 ff.).

For civil purposes registration in the public registers is mandatory; indeed, the effects begin with registration.

In every office of the immovable property registers there is a official known as the "registrar" (conservatore dei registri), to whom is entrusted the task, with corresponding liability, of keeping the mortgages up to date (cf. arts. 2852 f.; 2843; 2847-2851; 2882; 2673; 2675; 2682).

A duly registered mortgage is valid for twenty years (art. 2847). If the interested party does not attend to its renewal, he loses his rights; he may nevertheless obtain a new registration, valid from the new date (art. 2848); the mortgage securing the dowry is excepted (art. 2849).

2) Rights of the creditor, of the debtor and of the third-party purchaser. — The creditor: a) in the event of the debtor's non-performance, may satisfy himself by requesting, at the agreed maturity, the expropriation of the mortgaged assets, even if these have meanwhile passed to third parties. b) As against other non-privileged creditors (art. 2745 ff.) he has a right of preference, so as to be able to satisfy the whole of the debt. Account should be taken of the rank of the mortgage among several mortgage creditors.

The debtor, if he possesses the thing, must not be disturbed; he may collect its fruits until maturity, and may redeem himself from the mortgage by satisfying his obligation.

The mortgage may also be granted in favor of the debtor by a third party over his own assets (third-party grantor of the mortgage); it may also happen that after registration the mortgaged asset is transferred to a third party (third-party purchaser). The latter is subject to the enforcement action of the mortgage creditor, since the mortgage is a real right. Nevertheless he, being personally a stranger to the obligatory relations between creditor and debtor, has by law certain options of his own choosing: to pay the creditor directly, thereby himself becoming a creditor of the debtor; to free the asset from the mortgage by offering the creditor the price stipulated with the other party; to surrender the asset to expropriation, with a right to the corresponding indemnity from the debtor (arts. 2858-67).

3) Over one and the same asset several mortgages may be constituted; in this case the rule "prior tempore potior iure" applies, time being reckoned from the day of the individual registrations according to rank and order (arts. 2852-57). Here there arises mortgage subrogation or substitution.

The mortgage is extinguished by cancellation, by failure to renew, by the extinction of the principal obligation, by the destruction of the thing, by the creditor's waiver, by the expiry of the agreed time, by the occurrence of a resolutory condition (art. 2878). Where the debt is reduced or the value of the mortgaged asset increases, reduction of the mortgage may be carried out, if the asset permits it (art. 2872 ff.).

III. THE MORTGAGE IN CANON LAW

Saving natural law and express exceptions, the CIC refers contracts to civil law (can. 1529); therefore also in matters of mortgage. Here in summary is what is expressly contemplated in the CIC with regard to mortgages. For the defense of the goods of the Church against the titleholder or administrator, the CIC provides that a mortgage may not be made, except in the case of alienable things, for a just and proportionate cause, with authorization according to can. 1532, after the judgment of experts, having heard the interested parties and observing the forms of civil law. The superior, if authorized, may fix an annual sum to amortize the mortgage (cann. 1538, 1529-33).

IV. SOME MORAL QUESTIONS

1) The civil laws on the matter have moral obligatoriness (cf. can. 1529; M. Serafino a Lojano, Institutiones theol. moralis, III, Turin 1938, n. 258). 2) The debtor and the third possessor burden themselves with injustice, by negligence regarding the mortgaged goods such that these, diminished in their value, are insufficient to pay the creditors (cf. A. Ballerini-D. Palmieri, Opus theol. morale, III, Turin-Rome 1899, n. 947); by fraudulently concealing in the constitution other real charges and by exaggerating the price of goods of little value. 3) The creditor sins against justice with extralegal usurious conditions, by refusing the amortization of the debt; and in the case of forced sale, by preventing the sale under good conditions. 4) If two persons constitute the mortgage in private form, even with witnesses, in order to avoid expenses or annoyances, the rights of preference granted directly by positive law cannot be advanced on the part of the creditor, whereas by natural right only relatives and the poor have preferences. 5) Regarding the degree and order fixed by law among the various mortgage creditors, after the judge's sentence an obligation in conscience arises; before the sentence, according to St. Alphonsus, preference must be given to the one who directly contributed to the restoration of the mortgaged good; for the other creditors the opinions are various: there are those who require that one must in conscience divide pro rata, those who wish to prefer the poorest, those who prefer the first registered. It should be observed that, in the time of the Saint, the mortgage followed Roman law, in which the civil formalities were lacking. Since the civil law has now specified the uncertain natural right, it creates a moral obligation, at least because only thus is there legal protection (St. Alphonsus, Theol. moralis, I. III, tract. V, n. 690 ff., ed. L. Gaudé, II, Rome 1907, p. 157 ff.).

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