The mortgage is a useful source for debt recovery when the borrower fails to repay the debt on time and in full. However, in practice, the realizing of mortgaged assets by the lender does not always proceed smoothly. During the execution of the contract, especially in the stage of realizing mortgaged assets, disputes between the parties often arise. In this article, TNTP will present several methods that parties in a mortgage relationship can apply to resolve disputes.
1. Types of disputes arising from mortgage contracts
Disputes arising from mortgage contracts are varied, but basically include the following types:
• Disputes related to the parties establishing and performing the contract;
• Disputes due to violations of the form of the mortgage contract;
• Disputes over ownership and use of the mortgaged asset;
• Disputes due to breaches of obligations in the mortgage contract;
• Disputes in selecting the method of realizing the mortgaged asset;
• Disputes when negotiating and valuing the mortgaged asset;
• Disputes over the priority order of payment and the discrepancy between the value of the mortgaged asset and the secured loan amount in the mortgage contract;
• Disputes related to the applicable law and jurisdiction for dispute resolution.
2. Methods for resolving disputes arising from mortgage contracts
Several common methods for resolving disputes arising from mortgage contracts include negotiation, mediation, arbitration, and court litigation.
• Negotiation:
The participants include the parties in the mortgage contract and lending contract relationship. Additionally, the parties may seek support from third parties such as lawyers, experts, etc. The parties will meet and discuss to reach a mutual agreement, but this agreement is not binding and relies entirely on the voluntary compliance of the parties.
• Mediation:
In this method, besides the parties involved in the mortgage contract and lending contract relationship, a mediator’s assistance is also required. The mediator acts as an intermediary to help the parties reach a dispute resolution agreement. The mediator can advise and propose solutions, which the parties may accept or reject, or propose alternative solutions. The mediator does not have the authority to impose solutions on the parties. If the mediation is successful, for the result to be enforceable, the mediation agreement must be submitted to the court for recognition as per the Civil Procedure Code. If the parties fail to reach a resolution through mediation, they may proceed to resolve the dispute through arbitration or court, depending on their agreement.
• Arbitration:
The parties must have an arbitration agreement to resolve disputes through arbitration. The arbitration agreement can be established before or after the dispute arises. Depending on the parties’ agreement, the arbitration can be an arbitration center or ad hoc arbitration. When the parties reach a dispute resolution agreement, the arbitration tribunal will prepare a mediation record and then issue a decision recognizing the parties’ agreement. This decision is final and has the same value as an arbitral award. Arbitral awards are binding on the parties, providing an advantage over negotiation and mediation.
• Court litigation:
This is the most common method that parties use to resolve disputes arising from or related to mortgage contracts after unsuccessful negotiation attempts. One of the parties must submit a lawsuit petition to the court, clearly stating the facts of the case, the claims, and relevant evidence. During the court proceedings, the plaintiff must undertake several tasks, such as paying court fees in advance, attending court meetings and sessions, preparing statements, and providing additional evidence as requested by the judge, participating in the trial, etc. The court’s judgment/decision is binding on the parties, and if the obligor does not voluntarily comply, the other party has the right to request enforcement through the competent civil enforcement agency.
The above article on “Dispute resolution methods arising from Mortgage contracts” is presented by TNTP to readers. TNTP hopes this article provides valuable insights for readers.
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