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Why a National Register of Charges/Mortgages?

posted 6 months ago

For many years the question of priorities of mortgages over moveable property and other financial instruments caused issues in Romania. A step to resolve this issue was the passing of and implementation of Law 297. 

According to Article 1 para. 1 point d) of Law no. 297/2018, the National Register of Mortgage Registration is a national electronic system for the registration of priority in case of foreclosure and for the publicity of legal acts and operations provided by law. The National Register of Mortgage Registration is the legal system of publicity for movable mortgages, trusts, specific endorsements, securitized claims and mortgage bonds.

Any mortgage creditor who, in order to obtain a priority ranking, wishes to make public the existence of a mortgage on moveable property, according to the provisions of the Romanian Civil Code, must file a mortgage notice in a paper or electronic format (TED document), and send it together with the relevant fee to an authorised operator of the Register, in order for them to be registered in the Register. 

The Supervisory Authority of the National Registry of Real Estate Publicity is the Romanian Ministry of Justice who designate authorised operators. Authorised operators are the only people who can make entries in the register.

The information entered in the register is made available to the public when requested. The registration of transactions relating to mortgages on movable property, and similar transactions including documents under private signature which are enforceable titles as well as other rights provided for by the law and legal acts and transactions provided for by the law, are entered in the Register.

The Register and the registration constitute a system for recording the priority of mortgages on movable property as well as their publicity. It can relate to persons and property. Thus, if a creditor in relation to a loan contract has set up a mortgage in relation to movable property to guarantee the repayment of the money, then to have priority in respect of that property, they must register the mortgage in the Register.

The mortgage takes effect between the parties from the moment the contract is signed, but the mortgage is only perfected and takes effect against other persons if it is registered in the Register. The rank of perfect mortgages is determined according to the order of registration. Perfect mortgages are always preferred to mortgages that have not been perfected, i.e., entered in the Register. The contract establishing a mortgage on moveable property can be concluded in authentic form or under a private signature.

If you wish to register a transaction in relation to immovable property or transactions which can be assimilated to them, you make an application called “a Guarantee Notice,” to an authorized operator.  The operator enters the data from the Guarantee Notice form into the information management system. Entering the guarantee notices is a simple administrative activity. The Operator does not check the accuracy of the information in the guarantee notice or any steps leading up to it.

Regarding similar contracts concluded in other countries, the conditions of their validity, publicity and effect are subject to the law of the place where the property is located at the date of conclusion of the contract. If the object of the mortgage is represented by an intangible movable asset, such as money, and the debtor has its residence or registered office in Romania at the time of the conclusion of the mortgage contract, then that movable mortgage may be noted in the Register.

Under Romanian law, the mortgage contracts are enforceable titles and if the debtor does not perform its obligation, the creditor can enforce against the mortgaged property.

The above is a brief description of the regime in respect of registering the security and obtaining priority regarding non real estate assets. It is now used in many transactions by banks and commercial lenders to ensure repayment of the monies lent where security is given over a moveable asset. This is an aspect often overlooked in transactions by private individuals and as Romanian Lawyers we are often asked to advise in cases where registration has not taken place. For anybody lending money, even a non-commercial person should always consider registration to give notice in respect of loans and obtaining priority.

Author: Păduroiu Mirel

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