Supreme Court: Can the maximum mortgage be transferred with the principal creditor's rights?

The maximum mortgage can be transferred together with the principal creditor's rights. Mortgage is a legal agreement, which can protect the lender when the borrower can't pay the money required by bonds or bills. Mortgage gives the lender the right to be compensated for the cash obtained from the sale of the borrower's assets as determined by the agreement, and the borrower and the lender agree on various mortgage terms.

Article 192 of the Property Law stipulates that the mortgage right shall not be transferred separately from the creditor's rights or used as a guarantee for other creditor's rights. Where the creditor's rights are transferred, the mortgage right guaranteeing the creditor's rights shall be transferred together, unless otherwise provided by law or agreed by the parties.

Extended data:

Ways to realize mortgage:

There are many restrictions on obtaining the ownership of collateral by discounting collateral in legislation, the most important of which is the county's ban on "liquidity contract". The so-called liquidity contract, also known as mortgage contract, mortgage contract or advance mortgage payment, refers to the clause that the guarantor of the property agrees that the collateral belongs to the creditor before the debt performance period expires and the creditor's rights are not paid off.

The fundamental reason for prohibiting "liquidity contract" is that when the value of collateral is higher than the amount of creditor's rights or appreciates in the future, the excess will not be returned to the guarantor, and the interests of the guarantor or other creditors will be harmed; However, if the collateral depreciates later and neither party makes up for it, the interests of the secured party will be damaged.

All the above situations are unfair. In particular, debtors are often in a weak position economically, while creditors are usually in an advantageous position. Creditors may take advantage of the debtor's urgent need for loans, forcing it to use collateral with higher value to guarantee smaller claims, and hope to obtain the ownership of collateral for profiteering when the debtor cannot repay the debt at maturity.

Therefore. Based on the principle of fairness and justice in civil law, in order to protect the interests of vulnerable debtors and balance the rights and interests of all parties, most modern civil laws prohibit liquidity contracts. China's property law explicitly prohibits this. In addition to the above methods, in theory and practice, the mortgagee and the mortgagor are generally allowed to negotiate to realize the mortgage in other ways.

Among them, the most meaningful way is to refer to the system of Anglo-American law, collect fruits from the mortgaged property possessed by the mortgagee, or manage the mortgaged property by trust to realize the mortgage right. If the financial department negotiates with the mortgagor to lease the mortgaged property or the bank uses the mortgaged property, the loan will be repaid by rent.

In the financing of foreign-related projects in China, the collateral is mostly large power stations, highways, bridges and so on. It is difficult to change the price by auction, so it is usually recognized that foreign creditors have the right to take over the collateral and pay off their debts with the proceeds.

Baidu encyclopedia-mortgage

Baidu Encyclopedia-People's Republic of China (PRC) Property Law