Section 7: Effects of mortgages

An unpaid mortgagee may pursue the sale of the mortgaged property in accordance with the procedures set out in the Code of Civil Enforcement Procedures, from which the mortgage agreement may not derogate. The sale price is paid in preference to unsecured creditors. If he is in competition with other mortgage creditors, he is paid in the rank assigned to him by articles 2418 to 2420.

The mortgagee may also apply to the court for the property, if it is not the principal residence of the grantor, to remain in payment to him.

It may be agreed in the mortgage agreement that the creditor will become the owner of the mortgaged property. However, this clause has no effect on an immovable that is the debtor’s principal residence.

In the cases provided for in the two preceding articles, the property must be valued by an expert appointed amicably or judicially. If its value exceeds the amount of the secured debt, the creditor owes the debtor a sum equal to the difference; if there are other mortgagees, he shall record it.

If the property is sold, the mortgage follows it into the hands of the third party purchaser. The third-party purchaser is thus obliged, within the limit of the registrations, for the entire secured debt, in capital and interest, whatever the amount. If it remains unpaid, the mortgagee may take legal action for the sale of the mortgaged property under the conditions set out in Book III of the code des…

A third-party purchaser who is not personally liable for the debt may oppose the sale of the property if other properties mortgaged to the same debt are still in the possession of the principal debtor, and request prior discussion of the matter in accordance with the procedure laid down in Chapter I of Title I of Book IV of this Code. During this discussion, the sale of the mortgaged property…

Once summoned to pay, and without prejudice to the benefit of discussion provided for in the preceding article, the third-party purchaser may: -either pay, -or purge the property in accordance with the rules set out in the following sub-section, -or allow itself to be seized.

The third party purchaser must compensate the mortgagee for the loss resulting from any deterioration that has reduced the value of the property through his own act or fault. However, he may obtain reimbursement, by deduction from the sale price, of his expenses necessary for the conservation of the immovable and of those which have increased its value, up to the limit of the estimated increase in value on the…

If the sale price exceeds the mortgage debt, the difference is for the third-party purchaser, except for the rights of his creditors registered on the property.

After the sale, the third-party purchaser regains the real rights, in particular easements, that he had over the building before he acquired it.