Realization Of Security Interest On Real Property

Security for obligation plays a significant role in the development of market economy and the safety of transactions. In real security, the method of using real property as security will not only provides more protection for obligation, but also promotes the prosperity of realty industry. Therefore, real property security occupies an important status in social development.From the aspect of security interest, security interest on real property is a kind of security interest that is set on or occurs from real property. The aim of security interest is to guarantee the payment of obligation. Since unsettled obligations hinder the present economic development in our country, the realization of security interest becomes one key issue.However, the study of real property security has just begun in our country. In consideration of the importance of real property security and the realization of security interest, this thesis will research on the realization of security interest on real property. Based on the analysis, sublation and summarization of present materials, and some relevant introduction from original English works, this thesis is intended to provide some reference for this specialized topic.The realization of security interest on real property is closely related to the methods of real property security. In Anglo-American law system, mortgage, as a type of security which involves transfer of title, is the most frequently used real security in Anglo-American law countries. While in civil law system, hypothecation as a type of security on the mere value, is also the most adopted real security. They both are typical real property security. This thesis will only focus on them.In English law of mortgage, foreclosure and private sale is the realization of security interest. Foreclosure should be taken in judicial proceeding. With order for foreclosure, the mortgagee obtains the fee simple absolute and all the mortgagor's rights on the real property. Private sale based on power for sale and can only be adopted under certain circumstances. The effect of private sale is to foreclose the mortgagor's equity of redemption. The mortgagee bares the duty of reasonable care during the sale.In America, foreclosure is the principal method to realize the security interest in mortgage, but strict foreclosure is now an ancillary method. The major method of foreclosure involves a public sale of the premise, i.e. judicial foreclosure and power of sale foreclosure. The result of foreclosure is that the mortgagor's interest in the mortgaged property is sold or taken over by the mortgagee. The title of the purchaser at the sale may be influenced by the defects in the foreclosure, or be terminated by the mortgagor's exercise of statutory redemption. The sale may also be upset by inadequacy of price and fraud. There are moratoria on foreclosure and antideficiency legislation.In hypothecation, realization of hypotheca is the creditor's act of exercising his rights and disposing the property for the priority in repayment when the debt is due but the debtor fails to pay. The conditions for the realization include the existence of hypotheca, the main obligation is due but is not satisfied, and the creditor has no fault in this failure. The ways of realization consist of auction (mandatory auction and voluntary auction), conversion and sale. The introduction of mandatory auction bases on Japanese law as example, while voluntary auction is introduced in the chapter about the realization in our country. The effects of auction are discussed from five aspects, i.e. distribution of the money from the auction, the extinction of hypotheca, the transfer of the right of the property, the defects in the auction and the protection for lease. Conversion is introduced from the basis of this method, its requirements and its effects. Sale is discussed in three aspects, i.e. the selling party, the protection for a third party and the effects of the sale.The legislation about the realization of security interest on real p...