Real estate liens as security for cross-border property finance The Eurohypothec - a security instrument with real prospects

Abogados Civil

Resumen

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Eurohipoteca

Las operaciones inmobiliarias complejas y la financiación (por ejemplo, la financiación de carteras y la estructuración) exigen gravámenes inmobiliarios modernos y flexibles. Este es, desde luego, el caso a nivel nacional, pero es aún más el caso en operaciones transfronterizas. La expansión de las carteras diversificadas pan-europeas de crédito hipotecario -y de su cesión a otros bancos o vehículos de refinanciación- es un desafío importantísimo que desafortunadamente a menudo no se supera, por lo menos no sin incurrir en costes desmesurados.

La eurohipoteca y el eurotrust podrían constituir un medio viable de lograr esto. Ya están sobre la mesa las primeras propuestas concretas. Se hace un llamamiento a los juristas y profesionales europeos a participar en este labor. Aunque el desarrollo de dichos instrumentos legales a nivel europeo podría tardar un tiempo, desde luego que el trabajo sirve de algo. El trabajo hecho sobre los principios de la Ley Hipotecaria en Europa puede por lo menos hacer una aportación clara a las mejoras que se hagan a nivel nacional, demostración de lo cual se encuentra en algunos ejemplos alentadores de Europa Central y del Este.

Eurohypothec/Euromortgage

Complex property transactions and financing - e.g. portfolio finance and structuring - require flexible modern real estate liens. This is certainly the case at national level, but even more so in cross-border transactions. The expansion of pan-European diversified mortgage credit portfolios - and their transfer to other banks or refinancing vehicles - is a huge challenge that unfortunately is all too often not mastered at all, or at least not at reasonable expenses.

The Eurohypothec and the Eurotrust might be a feasible means of doing this. The first concrete proposals are already on the table. Academics and practitioners in Europe are being called upon to participate in this work. Although it might take some time for such legal instruments to be developed at European level the work is certainly not being done in vain. Work done on the principles of mortgage law in Europe can at least make a definite contribution towards improvements at national level, as demonstrated by some encouraging examples in Central and Eastern Europe.

(Trabajo recibido el 18-7-2007 y aceptado para su publicación el 30-7-2007)

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Extracto

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Real estate liens as security for cross-border property finance The Eurohypothec - a security instrument with real prospects

I. Development of Cross-Border Mortgage Business.

Cross-border 1 investment in real estate is not a new phenomenon. However, its funding by foreign banks - i.e. cross-border financing by a bank situated in State A of a property situated in State B - was only boosted with the realisation of the single market, along with its abolition of barriers under the law on the supervision of banks.

The development of complex, high-volume international financing methods has meant that under many legal systems real estate liens have not kept pace with modern requirements 2 .

1. Its Beginnings: Simple Low-Volume Structures.

For a long time cross-border mortgage transactions were not of any great interest to German banks. Apart from a few cases, mostly in regions close to the German border, business was confined to national territory. This was particularly so in the case of German mortgage banks, which were not permitted to secure loans on properties situated in other EC States by way of real estate liens until the middle of 1988.

The banks lacked the necessary know-how about property markets and legal terms and conditions because, until then, they had confined their activities to domestic mortgage transactions. The VDH/vdp 3 therefore started up an intensive information and training programme. Since 1989 the VDH/ vdp has been analysing legal terms and conditions in the form of national seminars, as well as conducting an intensive systematic review of mortgage and land registration law in the individual EU States - both through working groups on foreign business and its own VDH/vdp staff.

Most mortgage banks were hesitant in taking on foreign mortgage business - not least of all because of the fact that, during the reunification period, all available resources were invested in developing the new German Länder. The fact that this then involved venturing into territory as yet unknown also meant that, at that time, they were only inclined to take small steps on a few foreign markets, with small volumes of credit that seldom amounted (after conversion) to more than 500,000 euros.

At the beginning of the 90s the structure of real estate funding transactions in Europe still generally took a relatively simple form. Foreign lending structures were therefore also simple. It quickly became apparent, however, that the different legal terms and conditions, particularly in relation to land registration and real estate liens, would lead to procedures for the grant of credit - and particularly the disbursement of loans - that differed from the procedure then followed in Germany.

If ownership title passes inter partes as soon as a written transfer deed is concluded but a mortgage is not created until it is entered in the land register 4 , the problem then is that the vendor will not want to lose or encumber his title to the property before he receives the purchase price, the purchaser does not yet have authority to dispose of (mortgage) the property but the bank will not pay over the loan to the purchaser before being sure that it will receive a mortgage over it. When one then also considers that a legal instrument such as a caution ( Vormerkung ) does not exist everywhere outside Germany and that, in...

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