In this article I’ll tell you about Parties To The Mortgage Contracts. Mortgage contract is commonly used when one obtained a loan and uses properties as collateral. It can be either real property or personal property. If real property is used as a security, it is called real property mortgage. On the other hand, if personal properties are used as security for the loan, it is identified as chattel mortgage.
Mortgage contract is not really a principal contract. It exists only if one has a debt over another. It is therefore a mere ancillary or subsidiary contract to the contract of loan. It is usually made if one owes another in a form of money loan. The term in the mortgage contract cannot be executed unless the principal loan is not paid by the debtor.
Oftentimes, most people encounter mortgage contracts and simply sign them without knowing exactly the definitions of some legal terms included therein. If you happen to get confused of the parties to a mortgage, you may want to check out the following terms about the involved parties to a loan and mortgage contracts.
1. Debtor. This party is the one who obtained the loan. The loan that would result to a mortgage is usually a money type loan. Debtor can be either an individual or a group of individuals such as association, partnership, organization or corporation. If you will notice, they are either natural or juridical persons with capacity to sue and can be sued.
2. Creditor. Creditor is the one where the debtor applied or obtained the loan. They are the one who released the amount. Just like the debtor, they may either be a natural person such as an individual, or juridical parties like association, partnership or corporations. They are sometimes called as the capitalist.
3. Mortgagee. To grant the applied loan, the creditor usually requires the debtor to offer properties as security for the loan. If the security is secured in a contract of mortgage, the creditor will become the mortgagee in that contract. Mortgagee cannot execute the term of the mortgage contract unless the principal debtor failed to pay the entire amount. Should the debtor failed, it is only then that he can foreclose the properties offered as security. They are sometimes called as the creditor-mortgagee.
4. Mortgagor. The debtor to the principal contract who executes a mortgage contract to secure his or her debt or load over the creditor is called as the mortgagor. The mortgagor is responsible for the execution of a mortgage contract as the signatory of the contract. The action of the mortgagor is an act of dominion over the owned property and therefore he or she must be fully aware of the contract prior to the execution.
Mortgagor has the right to redeem the property if he or she failed to pay and it was sold for public auction. Failing to redeem the real property on the given period will result to complete loss of the rights over the said property. The law oftentimes protects the right as the original owner of the land but since the entire process and transactions are with the mortgagor’s full consent, he or she shall lose the property upon failure to pay. This party is sometimes called as the debtor-mortgagor.
5. Foreclosure sale buyer. Once the mortgage was executed, foreclosure sale shall follow. The highest bidder during the foreclosure sale is called as the foreclosure sale buyer. This party has the right to cause the registration of the property under his or her name should the debtor-mortgagor failed to redeem it. It is as if he or she is the buyer of the real property and therefore the new owner.