Mortgage is an efficient tool to secure the borrower’s obligations. The creditor may use mortgaged assets to recover the debts.

However, unfair borrowers may use creative techniques to lift the mortgage instead of settling their debts.

A brief review of the current jurisprudence of the Supreme Court for counteracting the unfaithful mortgagors presented by Liubomyr Muzhyk, senior associate at EVRIS.

Put the matter to rest 

Decision of the Supreme Court under case No.910/18506/16 will, at last, put the matter to rest concerning the attempts of mortgagors to delay the procedure of levying an execution upon the property provided to mortgage by a mortage holder.

I agree with the decision in general but I do not agree with substantiation. Specifying that the “agreements on pledge/mortgage are signed to secure the performance of obligations only, in this case to secure the obligations under a loan, which is not an unconditional alienation by an owner of his/her property in favour of the pledge holder and the mortgage holder”, the Supreme Court has narrowed the meaning of “transaction” to the actions on property alienation only.

Legal entities’ statutes contain, as a rule, a provision about a required agreement of the Business Entity’s General Meeting to make transactions that exceed a fixed amount or per cent from the total cost of the enterprise’s property. These transactions are not always an alienation. This can be a rent or custodial agreement.

I think that the Supreme Court has made a correct decision in its essence but the conclusions specified do not completely comply with the equity of statute.