Section I The Constitution of Mortgages

Article 1030

Mortgage is a contract by which a creditor acquires, over an immovable appropriated to the payment of his debt, a real right by which he obtains preference, over ordinary creditors and creditors following him in rank, for the payment of his claim out of the price of the immovable, no matter into whose hands the immovable has passed.

Section I The Constitution of Mortgages

Article 1031

A mortgage can only be constituted by an authentic document.

The costs of this authentic document are, in the absence of an agreement to the contrary, borne by the mortgagor.

Article 1032

The mortgagor may be the debtor himself or a third party who consents to mortgage his property in the interests of the debtor.

In both cases, the mortgagor must be the owner of the mortgaged property and must have legal capacity to dispose of it.

Article 1033

If the mortgagor is not the owner of the mortgaged property, the mortgage contract becomes valid if ratified by the true owner of the property by an official deed. In the absence of ratification, the mortgage is only effective from the time that the immovable becomes the property of the mortgagor.

A mortgage on property in expectancy is void.

Article 1034

A mortgage constituted by an owner whose title to the property is subsequently annulled, resiliated, abolished or ceases to exist for any other reason, remains a valid mortgage in favor of the mortgagee creditor if he has acted in good faith at the time of the conclusion of the mortgage.

Article 1035

In the absence of any provision of the law to the contrary, a mortgage can only be constituted on immovable property.

The mortgaged property must be marketable and capable of being sold by public auction; it must be specifically and precisely described both as regards its nature and situation, and such description must be contained either in the deed constituting the mortgage or in a subsequent authentic document, otherwise the mortgage is void.

Article 1036

In the absence of an agreement to the contrary, and without prejudice to the privilege provided for by Article 1148 attached to sums due to contractors or to architects, a mortgage extends to the accessories of the mortgaged property which are considered to be immovable accessories, particularly to servitudes, properly forming part of the immovable as a result of the use to which it is put and to improvements and other works which benefit the owner.

Article 1037

From the date of the transcription of the formal summons to pay, the fruits and revenues of the mortgaged property shall be assimilated to the immovable and distributed in the same way as the price of the property.

Article 1038

The owner of constructions erected on land belonging to a third party may grant a mortgage on these constructions. In such a case, the mortgage shall have a preferential claim for recovery of his debt on the price of the break up value of the constructions if they are demolished, and on the compensation paid by the owner of the land if he keeps the constructions in accordance with the rules of accession.

Article 1039

A mortgage granted by all the co-owners of an immovable held in common remains effective whatever may be the ultimate result of a partition of the immovable or if its sale by auction owing to impossibility of partition.

If one of the owners grants a mortgage on his undivided share or on a divided part of an immovable and, as a result of the partition, a property other than the mortgaged property is attributed to him, the mortgage will be transferred, with its degree of priority, to a portion of this property equivalent in value to the value of the property formerly mortgaged. This portion will, upon petition, be fixed by an order of the judge. The mortgagee shall be bound, within ninety days of the notification of the transcription of the partition made to him by any interested party, to proceed with a new inscription describing the portion of the property to which the mortgage has been transferred. The mortgage so transferred shall not have any prejudicial effect on a mortgage already granted by all the co-owners or on the privileges of co-partitioners.

Article 1040

A mortgage may be granted to secure a conditional, future or contingent debt, and may also be granted to secure an opened credit or the opening of a current account, provided that the amount of the debt secured, or the maximum amount which such debt may attain, is fixed in the mortgage deed.

Article 1041

In the absence of a provision of the law or of an agreement to the contrary, every part of the mortgaged immovable or immovables shall secure the whole of the debt, and each part of the debt is secured by the whole of the mortgaged immovable or immovables.

Article 1042

In the absence of a provision of the law to the contrary, the mortgage cannot be separated from the debt that it secures, but depends both as regards its validity and as regards its extinction, upon the debt itself.

If the mortgagor is a person other than the debtor, he may, in addition to the defenses that are personal to him, avail himself of those which belong to the debtor as regards the debt: he keeps this right notwithstanding the renunciation of the debtor.