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Registration of mortgages securing future claims

Czech Republic
20/10/2004
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Section 155(4) of the Civil Code allows mortgages to be used to secure future claims. This is commonly used to secure claims by mortgagees for sums other than the principal loan, such as for interest, contractual penalties, damages etc.

Until recently, the Prague Cadastral Registry would accept applications to register mortgages securing specified future claims arising without any limitation in amount or time.

One of the governing bodies of the Prague Land Registry, the Czech Office for Surveying and Cadastres, has recently issued a legal opinion stating that mortgages securing specified future claims must, in addition to the usual requirements:

  • specify an exact date by way of time limit, by which the claims must arise
  • specify the financial limit up to which such claims are secured by the mortgage.

Although some legal experts disagree with this interpretation, it is being followed by the Prague Cadastral Registry. There is a risk that a petition to register a mortgage which does not impose express time and financial limits on specified future claims secured could therefore be dismissed as a result of the respective Cadastral Registry interpreting the lack of such limits as a reason for invalidity of the mortgage agreement.

For further information, please contact Pavla Kreckova at [email protected] or on +420 221 098 888

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