What is mortgage subrogation?
Mortgage subrogation is a banking and legal transaction consisting of a transfer of receivables and, inclusively, accompanying guarantees. More concretely, the principle of subrogation is that the owner of the claims, in other words the subrogator, transfers the amount of the securities representing his outstanding financial commitments and guarantees to the beneficiary of the subrogation, that is to say the subrogataire.
It is therefore the transfer of one or more real estate loans and the guarantees that made it possible to obtain, in this case the mortgage guarantee, from one financial institution to another, or from one person to another. There are two forms of mortgage subrogation that must be distinguished in practice: the consent of the debtor and the consent of the creditor.
The subrogation granted by the debtor,
It is legally governed by Article 1250 ° 2 of the Civil Code, and relates to the consolidation of real estate credit. It is implemented when a borrower takes the initiative to repay in advance his current mortgage or loans by subscribing to another mortgage, whose monthly payment is more flexible. From the moment the credit institution approves this advance payment initiative, it is out of the transaction. In this case, it can only claim prepayment indemnities.
In addition, the law requires that subrogation be performed before a notary, and that the new loan agreement, the receipt of repayment, and the depreciation schedule are necessarily presented. Clarification must be made of the early repayment via the new credit, on the receipt and on the duly established credit agreement.
With regard to the subrogation granted by the lender, its terms are governed by Article 1250 ° 1 of the Civil Code. Here it is a matter for a credit institution to agree to be paid by someone other than the person who has taken out the credit offer. The fact that another debtor takes charge of the refund does not imply subrogation. As in the previous case, the law requires that it be performed before a notary. The new contract must include the signature of the new and the old borrower, and if possible that of the new creditor. Finally, in the case of subrogation granted by the lender, the contract must be concomitant at the beginning of repayments of the new borrower.