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Statute of limitation expiration – grounds for termination of the mortgage?

The Ukrainian Supreme Court published a legal conclusion governing the aspects of termination of obligations and mortgages due to the expiration of the statute of limitations. Analyzing!

Prehistory of the withdrawal in case No. 522/12443/17-c from 22.01.2020

Consideration was given to a claim to invalidate an apartment sale and purchase agreement, a counterclaim to remove obstacles to the use of housing by eviction, and a counterclaim to recover funds under a loan agreement.

The local court combined all claims into one proceeding, establishing the following:

  1. In 2013, the parties entered into a loan agreement, according to which the plaintiff from one of the defendants received money for use for a year.
  2. We “insured” the transaction with a mortgage agreement regarding real estate (apartment).
  3. The parties have agreed on the procedure for satisfying the claims of the mortgagee.
  4. The contract fixed the right of the latter in the event of problems with the return of the debt out of court to sell the apartment on its own behalf to its buyer at its own price, having previously notified the borrower about it.
  5. The receipt in the case confirms that the plaintiff in the primary claim received money from the defendant in debt for 12 months.
  6. Another receipt confirms that a year later the lender received the amount of interest from the borrower.
  7. Legal examination of contracts and receipts showed their validity.

“Difficult combination! The plaintiffs in the counterclaim entered into an apartment sale and purchase agreement, which was declared invalid by the court of first instance. The counterclaim to recover the debt was satisfied by the court, and the court considered the next counterclaim “to remove obstacles in the use of the apartment by eviction” unlawful”.

The case “got” to the appellate instance!

She “deal of buy and sell” at first recognized as valid!

After all, the mortgagee’s right to sell was stipulated by the agreement of the parties and the requirement to warn the owner of the apartment was observed.

And immediately after that, she recognized it as invalid!

After all, the borrower’s monetary obligation remained unfulfilled, and the borrower, the mortgagee, missed the deadline for satisfying claims by paying off the debt.

In fact, the appeal court resolved the issue of the statute of limitations on the claim to invalidate the contract, while the application for the application of the statute of limitation was filed by the defendant in the counterclaim to collect the debt on the loan.

The SCU put a point in the case, indicating that …

The expiration of the statute of limitations to the main and additional claim of the lender regarding the debt under the loan agreement and the foreclosure of the collateralized property (also in the presence of a court decision to refuse this claim on the basis of missing the statute of limitations) in itself does not cancel the main obligation!

Consequently, the basis for the termination of mortgage relations under paragraph 2 of part 1 of article 17 of the Law of Ukraine “On Mortgage” cannot serve.

02.06.2020

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