Mortgages limit the rights afforded to the mortgagor and allow for limited rights to be given to the mortgagee.
This is why mortgages are also referred to as limited real right.
This means that the property cannot be sold by the mortgagor or burdened with servitudes without the permission of the mortgagee.
However, the mortgagor can rent the property out or subject it to further mortgages should he/she wish.
General notarial bonds usual refer to to a mortgage of a debtors tangible movable property so as to provide security for the repayment of debt or any other financial obligations.
The mortgagee becomes a secured creditor of the debtor in most cases and thus allows for the mortgagee who registered the general notarial bond will be the first to receive the amounts they are owed from the proceeds when the movable property is sold.
In order to obtain this possession, however, the creditor will have to obtain a court order. Once in possession of the movable property, the mortgagee will have become a secured creditor with real right. Only then can the attached items be sold in order to repay the debt.
Should a mortgagee and mortgagor come to a parate executie agreement, then the secured assets are allowed to be sold without the mortgagee needing to get a court order, but the mortgagor will need to agree to this beforehand.
Should the movable assets not be taken possession of by the mortgagee, and the mortgagor goes into liquidation or business rescue, then the mortgagee will remain an unsecured creditor until a court order is obtained in order to secure the assets.
In the event of more than one general notarial bond being registered over the same movable property, then the first creditor or mortgagee to obtain a court order will be the secured creditor.
This highlights the importance of mortgagees to use haste in obtaining a court order so that they can take possession of the property before any other creditor who also has a general notarial bond registered over that movable property.
Contact Van Deventers & Van Deventers for assistance with general notarial bonds.
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