Mortgage is the right given to the creditor to receive immovable (or difficult to move) property as a guarantee for the payment of a debt by the debtor.
As a rule, mortgages are made on immovable property (houses, apartments and land), but in some cases it is also possible to mortgage goods that are difficult to move, such as ships and planes, for example.
In mortgages, the right given to the creditor is over the value of the mortgaged property and not over its substance. For this reason, in cases of mortgage, the property remains in the possession of the debtor, who can normally enjoy this property.
THE mortgage release it occurs when the debtor clears his debt with the mortgage, otherwise the property is offered for sale and the amount obtained is delivered to the creditor as payment.
See also: O meaning of Pledge.
Types of mortgages
There are different types of mortgage, according to the law provided for in civil law. Brazilian law considers valid three types of mortgages: conventional, legal and judicial (or legal).
Conventional mortgage: in this case, the debtor is the one who requests the mortgage on the property. This model is common when an individual wants to apply for a loan from a credit provider and makes his property available as a guarantee for the full payment of the debt.
Legal mortgage: is provided for in article 1489 of the Brazilian Civil Code of 2002. This is a special mortgage model, granted to secure the benefit of specific lenders such as: a Public Treasury, to the children (as determined in article 1.523, item I, of the Penal Code), to the guardian, between others.
Art. 1.489. The law grants mortgage:
I - to people of internal public law (art. 41) on the properties belonging to those in charge of the collection, custody or administration of the respective funds and income;
II - to children, on the properties of the father or mother who pass on to other nuptials, before taking an inventory of the previous couple;
III - to the offended party, or to their heirs, on the offender's property, for the compensation of the damage caused by the offense and payment of legal expenses;
IV - to the co-heir, to guarantee his share or return to the share, on the property awarded to the heir in question;
V - to the creditor on the auctioned property, to guarantee payment of the remainder of the auction price.
Legal mortgage: it is the result of a condemnatory sentence, where the debtor (accused) must submit a certain property of his domain to mortgage, as an alternative to payment of a debt.
Mortgage and Chattel Mortgage
The main difference between these two property guarantee models is the following fact: na mortgage, the debtor continues to enjoy the mortgaged property, and the value of the property that is held by the creditor. If the debtor fails to pay the debt within the specified period, the mortgaged asset is sold and the amount corresponding to the debt is delivered to the creditor.
already in Fiduciary Sale (this model is more common in Brazil), the asset (mobile or immovable) is transferred to the creditor as payment of the debtor's debt, based on an agreement previously signed between both parties.
Find out more about the meaning of chattel mortgage.