Borrowers to be able to sell mortgaged property independently
A mortgage borrower facing hardships and unable to repay a loan now can independently sell the property pledged under a contract and thus settle with the bank. This right is provided for by the law that the State Duma adopted on 28 May 2024.
Until now, when such issues arose, banks preferred to sell the pledged property themselves. However, court costs make such a scheme not very beneficial for people and the price for the property is often understated at the auction. Creditors in turn do not always provide their consent to the client selling the pledged property independently, since they have no guarantee that the debt will be repaid following the transaction. The law, in the development of which the Bank of Russia was involved, ensures the balance of interests of both creditors and borrowers.
Thus, if the client informs the bank that he/she intends to sell the property pledged under a mortgage contract independently, the bank sets the minimum price and sale deadlines. However, if the price exceeds the debt, the person holds the difference. The client can sell the pledged property independently during the entire validity period of the mortgage contract. During the set sale period, the creditor is not allowed to foreclose the pledged property, but can help the borrower sell it.
The creditor may prohibit the person from selling the property independently only in the specific cases listed in the law. For example, this is possible if the foreclosure is underway and the pledgor or the pledgee goes bankrupt. Moreover, the client cannot sell the property independently if it is already pledged under other contracts.