Removal of mortgage encumbrance is a procedure for removing imposed restrictions on the rights of the owner of the mortgaged property, the final stage of the entire “mortgage history”, which must be completed after repaying the debt to the financial institution. After passing this stage, the client becomes the full owner of the purchased property - he can dispose of the property at his own discretion, since it will no longer be under bank collateral. Mortgage encumbrance on an apartment - what is it? How to remove it and when is it permissible?
What is a mortgage encumbrance?
An encumbrance on a bank mortgage is a contractual restriction on the right of ownership.
Restrictions are determined by the Civil Code, Federal Law No. 102 and the terms of the agreement with the bank. Property under collateral cannot be exchanged, gifted, sold or, in some cases, rented out without the formal consent of the mortgagee.
The bank imposes an encumbrance on the loan funds after the client purchases a home. The basis for this is the contract. The purchased object, according to the terms of the document, is pledged to the bank for the entire period of debt repayment as security for the client’s financial obligations.
Data that the property is under restrictions is entered into the unified real estate database of Rosreestr. Typically, the mortgage registration procedure is carried out immediately on the day the agreement is concluded with the financial institution.
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What is a mortgage encumbrance and why remove it?
A mortgage encumbrance is understood as a restriction on the ownership rights of the owner of a home or other real estate purchased with borrowed funds from the bank. In most cases, it consists of registering a house or apartment as collateral, which means that the owner cannot sell or donate the said property without the consent of the bank. The purpose of such an event is obvious and is to reduce the risks of issuing a mortgage loan for a financial institution.
The encumbrance in the form of mortgage collateral is usually removed only after full repayment of the loan obligations.
Moreover, this is usually done by the borrower himself, which is quite logical, since it is he who is interested in the complete and fastest possible transfer of full control over the property to him from the bank.
When can you remove the mortgage from your apartment?
A property can only be exempted from restrictions if the bank has no financial claims against the owner of the property. In other words, removal of the mortgage encumbrance on an apartment is possible only after repaying the loan with interest in full. Moreover, the final payment can be made either on schedule or ahead of schedule.
Rosreestr cancels the entry on the imposition of restrictions based on one of the documents provided:
- certificate of ownership obtained as a result of the sale of an object at auction;
- a valid court document confirming the closure of the mortgage;
- a mortgage with a record that the amount of debt has been fully repaid by the client;
- application for removal of mortgage encumbrance from the owner and the bank.
In the absence of any claims and legal proceedings, the document on the basis of which the owner can redeem the record of the pledge is a statement written personally by him and a representative of the bank, and a mortgage note. You can start the procedure the very next day after making the last payment.
How does an encumbrance appear on real estate?
Encumbrance is when you are not allowed to sell real estate that you own. This can be an apartment, a house, or non-residential premises. Of course, you can make cosmetic repairs, live or work in it, but you cannot sell it to someone - an encumbrance has been imposed. And now we have to wait for the restrictions to be lifted.
An encumbrance arises by contract or by law. It does not allow the owner to completely dispose of the property: until the restriction is lifted, the property can be used, but alienated in any way.
The encumbrance can be forced or voluntary. The legislation of the Russian Federation names such types of encumbrance as: pledge by force of law under an agreement, arrest by a court decision, lease or rent.
An example of collateral under a contract is a mortgage. This is when you buy an apartment or house with bank money, live in it, do renovations, and invite guests. You can even register your parents, but you cannot remodel or sell without the bank’s permission. If you pay the bank on time, then no difficulties will arise. And when you repay the loan in full, the restriction on the apartment will be lifted.
Important! If you pay the bank the entire amount before the deadline specified in the agreement, then no one can prohibit the removal of the encumbrance.
When you have paid off your mortgage, you need to remove the encumbrance. After paying off your mortgage debt, only some banks can automatically remove it. For example, this is what Sberbank does when a mortgage was not issued.
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Conditions for removing mortgage encumbrances
There is a standard procedure for removing encumbrances from mortgaged housing. It is possible to prepare documents with the help of a local MFC, and, nevertheless, certain difficulties still sometimes arise.
It happens that interest (especially when repaying a debt early) is calculated incorrectly and the minimum amount of debt remains on the credit account. Gradually, penalties and fines are accrued on this small amount, as a result of which a conscientious payer turns into a debtor.
The banking institution must provide the borrower with official papers that will confirm that the borrower has paid the entire mortgage amount and the agreement is closed. This certificate is needed in order for the MFC to transfer the papers on the removal of the encumbrance, which is necessary for making an entry in the Unified State Register.
Deadline for removing mortgage encumbrances
In accordance with Art. 25 Federal Law No. 264, Rosreestr carries out the removal of the mortgage encumbrance within 3 working days from the moment the owner submits the documents.
If the papers were submitted through the MFC, the process may take 1-2 days, since the center will need additional time to send the documents.
The period will increase to 5 working days if the owner wants to remove the mortgage encumbrance on the property acquired through shared construction.
Some financial institutions carry out this procedure themselves. But in this case, the deadlines will be delayed to 3-4 weeks.
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What documents are needed to remove the encumbrance?
After making the last payment on the mortgage loan, the citizen must contact the bank to obtain a document confirming full payment of the debt. A mortgage specialist advises on the procedure for removing the encumbrance.
It is required to collect documents according to the following list:
- certificate of absence of debt (the period for its preparation is up to 30 days);
- a letter from the bank about the client’s full fulfillment of obligations under the loan agreement, which is sent to the address of the registration authority;
- statement of the loan account;
- a general statement of the parties regarding the removal of the mortgage encumbrance, which must be signed and certified by a bank specialist;
- mortgage agreement (and its copy);
- passports of everyone mentioned in the certificate of ownership (originals and copies);
- all specified citizens must be present during the application procedure;
- certificate of ownership of housing;
- sometimes some other documents relating to property
- a receipt indicating that the state duty for removing the mortgage encumbrance has been paid;
- a court decision, in the case where the mortgage is completed on its basis.
To receive a letter from the bank, you need to submit the following application:
Sample application for removal of encumbrance
Is it possible to remove the encumbrance if the apartment is seized?
If the apartment is under arrest, then the encumbrance can be removed. The very essence of the arrest is a prohibition of any registration actions, designed to limit the registration of rights and the transfer of property rights. The repayment of the mortgage record is not related to alienation or other disposition. The court's position on this issue can be found in detail here.
Judicial practice on this issue:
- Decision of September 22, 2014 _ Arbitration Court of the Kaliningrad Region _ In case No. A21-5248_2014
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Author:
Maria Yurievna Sokhan
Date of publicationDecember 18, 2018February 25, 2019
Statement
What you need to indicate:
- FULL NAME.
- Passport details.
- Place of residence and contact information (phone number, email).
- Reason for termination of the encumbrance (fulfillment of obligations under the contract).
- Details of the document on the basis of which the restrictions are lifted (date and number).
- Selecting the object from which you want to remove restrictions: plot, house, apartment, etc.
- Characteristics of the object: area, cadastral number, exact address.
- Signature and number.
Sample:
Sample application to Rosreestr for removal of encumbrance
The application form can be requested from the bank or registration authority. The document must be certified by a financial institution. If the apartment has several owners, then each of them must write an application.
The application may not be required if the bank has issued a mortgage. In this case, as a basis document, you can submit a mortgage with the bank’s seal and a note stating that the loan has been repaid and the financial institution has no financial claims against the borrower.
State duty
Removing restrictions from an apartment requires making changes to the real estate register.
A paper extract can be ordered through the MFC - the state fee is 460 rubles.
An extract from the Unified State Register in electronic form will cost less; the state fee for this service is 290 rubles.
Repeated Certificate of State Registration of Rights is not issued
Please note that each participant in the procedure will need to pay a fee.
It is not necessary to draw up a new document, since according to the law and in fact, the property after the procedure for lifting restrictions already becomes free from the rights of third parties. However, the old title deed will have a mortgage entry. If the owner wants to receive a paper without this record, he can order a certificate. The title document is prepared within 10-14 days.
How to check if there is an encumbrance?
Are you planning to buy or exchange apartments? First, find out whether encumbrances have been applied to the selected property. The necessary information is contained in a standard or extended extract from the Unified State Register.
To speed up the transaction, while remaining confident in the integrity of the other party and the legal purity of the apartment, we recommend using the online service “KTOTAM.PRO” to prepare an extract from the Unified State Register.
Here it is enough to enter in the electronic field the full address of the real estate (region, locality, street, house, apartment) or indicate its cadastral number. The extract is prepared within a short time.
Key benefits of using the portal:
- only reliable information
- without documents,
- around the clock,
- no long queues,
- SMS informing,
- Possibility of printing an electronic document.
The statement will be available in your personal account in HTML format.
The state fee, which you can pay online using a bank card, is 250 rubles.
Together with the KTOTAM.PRO online service, individuals and legal entities can remain confident in their real estate transactions.
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Application methods
There are several options for submitting papers and applications.
Via Companies House
You can contact Rosreestr either in person or remotely by sending documents by mail. The procedure is as follows:
- Receiving a mortgage or application from the bank.
- Collection of documents.
- Submitting papers to the local branch of the Registration Chamber.
What documents are needed:
- statement;
- mortgage from a bank;
- passports;
- birth certificate (if one of the owners of the property is a child under 14 years of age).
A repeated application to the authority after completion of the procedure is not required, unless, of course, the owner has ordered a new certificate of ownership.
At the MFC
The procedure is the same as in the first case, but contacting the multifunctional center will save time. The owner can complete the paperwork without queuing, and at the same time receive assistance from a center employee when filling out the application.
Please note that at the MFC, the time frame for removing mortgage encumbrances may increase to 5 days.
Through the Internet
Restrictions can be lifted through State Services. However, remote removal of restrictions on housing is available only to users who have an electronic signature.
If there is no electronic signature, then through State Services you can only make an appointment at the registration chamber or MFC.
Reasons for refusal to remove the encumbrance
Borrowers who have fully paid the debt to the bank and provided the MFC with a full set of documents can remove the encumbrance from an apartment. If these conditions are met, an employee of the department or Rosreestr cannot refuse to lift the restriction.
The MFC may refuse to accept documents to remove encumbrances from real estate if there are one or more reasons:
- incorrectly completed application,
- provision of documents whose information does not correspond to reality.
If you believe that the refusal to accept documents is illegal, leave a complaint to the MFC. The period for its consideration, depending on the grounds, reaches 15 days.
How to remove a mortgage encumbrance at SberBank?
For mortgage borrowers of Sberbank there is a simplified procedure for removing the registration record of the mortgage. After making the last payment, the financial institution independently removes the object from the encumbrance. The client does not need to write an application, contact a bank branch or the registry office - everything happens automatically.
Procedure steps:
- After making the last payment, the borrower receives a message on the phone the next day informing them that the process of lifting restrictions has begun.
- If the client changes his phone number during the loan repayment, this must be reported to the bank in advance.
- Next, the loan information is verified. During this period, the financial institution may request additional information or documents to remove the mortgage encumbrance. They can be delivered in person at the office or remotely.
The procedure lasts up to 1 month. The client will learn about its completion via SMS.
Since the borrower practically does not participate in this process, after receiving a notification from Sberbank about the removal of the pledge record, it will not be amiss to check the result. You can request an extract from the register on the Registration Chamber website, through State Services or through the Sberbank DomClick online service.
Special cases
To remove the encumbrance from an apartment in the MFC, just follow the above guidelines. However, special cases may arise that require separate consideration.
Military mortgage
The main feature of military mortgage lending is that the acquired real estate is pledged not only to the bank, but also to the Federal State Institution Rosvoenipoteka. The lien in favor of a government agency is removed if the service member reaches 20 years of service, but not automatically.
When this date occurs, the participant in the savings-mortgage system must send an application to the Federal State Institution "Rosvoenipoteka" (a report is submitted to the Ministry of Defense of the Russian Federation in accordance with the order of the Ministry of Defense of Russia dated April 24, 2017 No. 245). The application review period is 30 days, then it is forwarded to Rosreestr to make changes to the USRN records.
Note! The restriction in favor of the Russian Federation is lifted no earlier than the final payment of the mortgage.
If a serviceman needs to obtain the right to fully dispose of an apartment purchased with a mortgage (for example, to conclude a purchase and sale agreement), he can remove the encumbrance before reaching the date of the 20-year period of service. To do this, you need to fully repay the mortgage with accrued interest, obtain a mortgage and contact the MFC with a full package of documents.
Mortgage using maternity capital funds
Removing the mortgage encumbrance in the MFC, if the apartment was purchased using maternity capital funds, has no special features. The mortgagee is only the bank, but not the Russian Pension Fund, so the repayment rules remain the same: it is necessary to fully repay the mortgage loan, prepare a set of documents and submit them along with the application to the MFC.
Mortgage in shared or common joint ownership
If the apartment is in shared or common joint ownership, removal of the encumbrance is allowed only after full payment of the debt. It is impossible to remove the restriction only from a certain share (for example, 1/2 of real estate).
When submitting an application to remove the encumbrance from an apartment in shared or common joint ownership, you must attach the passports of all owners to it. Otherwise, the procedure and deadlines remain the same.
