MORTGAGE. – From ὑπό = beneath and τύψιμ = I place, it is a subsidiary contract serving as security for another; and it concerns immovable property belonging to the debtor or to a third party.
I. NATURE AND FOUNDATION
In the social exchange of goods it is not always possible to pay the agreed price; it is reasonable that in such a case the person who gives should be assured of receiving what is owed him; this is required by the very continuity of the exchange of goods. For something of little value, the word of a known and honest person is sufficient; but in the case of substantial sums and of persons not well known, or of an unnamed creditor (a company), an objective guarantee is necessary; all the more so because, through force majeure, even prudent persons encounter unforeseen financial difficulties. Hence the origin of the various real guarantees. Among these is the i.The system of guarantees in contracts was already known among the Eastern peoples and the Greeks, although the nature of these guarantees is disputed owing to the lack of texts. Among the ancient Romans, fiducia and piguus were used; later, with the increase in exchanges, the i. was introduced as an improvement on piguus; nevertheless, it had two deficiencies: it lacked publicity and extended only to the farming implements brought by the tenant onto the leased property. A further improvement was made in Justinian law. The modern age began introducing publicity and specificity toward the beginning of the seventeenth century, but their 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 in immovable property serving as security, established over specific assets of the debtor or of a third party, is deduced from arts. 2808 ff. of the Italian Civil Code (cf. also art. 2740); here the creditor is granted the right to expropriate the asset, even as against a third-party purchaser, in order to satisfy the debt in preference to other creditors who do not have privileged claims. In Italian law, a mortgage may be legal, judicial, or voluntary.1) Constitution. — All marketable immovable property, together with its appurtenances, may be mortgaged, as may certain real rights in immovable property (surface rights, usufruct, emphyteusis); among movables, registered government annuities, ships, aircraft, and motor vehicles (art. 2810). Constitution requires both title and registration.
In some cases, it is the law that grants the mortgage (legal mortgage: art. 2817). Such a mortgage is recognized in favor of the alienator over the assets alienated, for the performance of the obligations arising from the act of alienation; in favor of co-heirs, partners, and co-owners for the payment of equalization sums, over the immovable property allotted to the other co-owners; in favor of the wife over the husband’s assets as security for the dowry; and in favor of the State over the accused’s assets. A judicial mortgage is granted by the judge in every judgment ordering payment of a sum, performance of an obligation, or compensation for damages. In every contract containing a voluntary agreement, a mortgage may be established (voluntary mortgage), provided that the owner of the asset grants it by unilateral declaration in a public or authenticated instrument, excluding a will (art. 2821 ff.).
For civil-law purposes, registration in the public registers is mandatory; indeed, its effects begin with registration.
In every land-registry office, an official known as the “registrar of the registers” is assigned responsibility, together with the corresponding liability, for 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 fails to arrange for renewal, he forfeits 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, debtor, and third-party purchaser. — The creditor: a) in the event of the debtor’s default, may satisfy his claim by requesting, upon the agreed due date, the expropriation of the mortgaged assets, even if in the meantime they have passed to third parties. b) As against other non-privileged creditors (art. 2745 ff.), he has a right of priority, enabling him to satisfy the entire claim. The rank of the mortgage among several mortgage creditors must be taken into account.
The debtor, if he possesses the property, must not be disturbed; he may collect its fruits until the due date and may redeem it from the mortgage by satisfying his obligation.
A mortgage may also be granted in favor of the debtor by a third party over that party’s own assets (third-party mortgagor); it may also happen that, after registration, the mortgaged asset is alienated 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. However, being personally extraneous to the obligation-based relations between creditor and debtor, he has by law certain options, to be exercised at his choice: pay the creditor directly, thereby becoming in turn a creditor of the debtor; free the asset from the mortgage by offering the creditor the price stipulated with the other party; or surrender the asset to expropriation, with the right to the corresponding indemnity from the debtor (arts. 2858-67).
3) Several mortgages may be established over the same asset; in this event, the rule «prior tempore potior iure» applies, time being calculated from the day of the individual registrations according to rank and order (arts. 2852-57). This gives rise to mortgage subrogation or succession.
A mortgage is extinguished by cancellation, failure to renew it, extinction of the principal obligation, destruction of the property, waiver by the creditor, expiration of the agreed period, or occurrence of the resolutory condition (art. 2878). If the claim is reduced or the value of the mortgaged asset increases, the mortgage may be reduced, provided that the asset permits this (art. 2872 ff.).