Civil Code > TITLE XVIII CONTRACTS RELATING TO IMMOVABLE 4

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Chapter 4. Mortgage and antichresis

Section 1. Creation of mortgage

Art. 3041 – Mortgage how created.

A mortgage may result from the law or a judgment or be created by a contract or other private agreement.

Art. 3042 – Legal mortgage of seller of immovable.

Whosoever sells an immovable shall have a legal mortgage on such immovable as a security for the payment of the agreed price and for the performance of any other obligation laid down in the contract of sale.

Art. 3043 – Legal mortgage of co-partitioner.

(1) A co-partitioner shall have a legal mortgage on the immovables allotted to his co-partitioners in accordance with the act of partition.

(2) Such mortgage shall secure the payment of any compensation in cash that may be due to him or such other compensation as may be due by the co-partitioners where he is dispossessed of any property allotted to him.

Art. 3044 – Judicial mortgage.

(1) A court or arbitration tribunal may secure the execution of its judgments, orders or awards by granting one party a mortgage on one or more immovables the property of the other party.

(2) The judgment or award shall specify the amount of the claim secured by mortgage and the immovable or immovables to which such mortgage applies.

Art. 3045 – Instrument creating mortgage.

(1) The contract or other agreement creating a mortgage shall be of no effect unless it is made in writing.

(2) It shall be of no effect unless it specifies in Ethiopian currency the amount of the claim secured by mortgage.

Art. 3046 – Claim secured by mortgage.

(1) A mortgage may be created to secure any claim whatsoever, whether existing, future, conditional or contingent.

(2) It may be created to secure a claim embodied in a title to order or to bearer.

Art. 3047 – Property liable to mortgage.

(1) A mortgage may charge an immovable only.

(2) Nothing shall affect the provisions of this Code or special laws whereby certain kinds of movables may be mortgaged.

Art. 3048 – Immovable mortgage.

(1) The act creating the mortgage shall clearly specify the immovable mortgaged.

(2) Such act shall specify in particular the commune in which the immovable is situate, the nature of the immovable and, where appropriate, the number of the immovable in the cadastral survey plan.

(3) Where the immovable is situate in an area where there is no cadastral survey plan, not less than two of its boundaries shall be specified.

Art. 3049 – Conditions for creating a mortgage.

(1) A mortgage may be created by the debtor or by some other person in favour of the debtor.

(2) A person may not secure his debt by mortgage unless he is entitled to dispose of the immovable for consideration.

(3) A person may secure the debt of another by mortgage where he is entitled to dispose of the immovable gratuitously.

Art. 3050 – Sanction.

(1) A mortgage shall be of no effect where it is created by a person who is not entitled to dispose of the immovable as provided in Art. 3049.

(2) It shall not become valid where the mortgagor subsequently acquires the right to dispose of the immovable.

(3) A mortgage shall be of no effect where it relates to future immovables.

Art. 3051 – Ownership evidenced by title deed.

(1) A mortgage shall be valid where it is created by a person who is the owner of the immovable under a title deed issued to him by the competent authorities.

(2) It shall be valid notwithstanding that the title deed was issued on the basis of an act which is invalidated, unless the person who avails himself of the mortgage is shown to be in bad faith.

(3) In such cases, the owner who discharged the mortgage shall be compensated by an insurance fund created, in accordance with administrative regulations, by means of the fees charged on delivery of title deeds.

Art. 3052 – Registration necessary.

A mortgage, however created, shall not produce any effects except from the day when it is entered in the registers of immovable property at the place where the immovable mortgaged is situate.

Art. 3053 – Manner of making registration.

(1) The keeper of the registers of immovable property required to make an entry relating to a mortgage shall make such entry in the manner provided by the Title of this Code relating to “Registers of immovable property” (Art. 1587-1601).

(2) The provisions of the same Tile shall apply as regards the correction and alteration of entries (Art. 1621-1627).

Art. 3054 – Costs of registration.

(1) The costs of registration shall be borne by the debtor.

(2) Whosoever has caused a mortgage to be registered for useful purposes and has advanced the costs of registration shall be refunded by the debtor.

Art. 3055 – Reduction of claim.

(1) Where the debtor has discharged one fourth of the debt, he may apply for the entry to be corrected accordingly.

(2) The creditor shall give his consent to the correction.

(3) The fact that part of the debt has been discharged shall not enable the debtor to require that part of the immovable mortgaged be released.

Art. 3056 – Increase of claim.

(1) The amount of the claim as specified in the original entry may not be increased by was of a correction made to such entry.

(2) A new entry shall be required to secure such part of the claim as is not covered by the original entry.

Art. 3057 – Time for making entry.

(1) An entry relating to a mortgage shall be of no effect where it is made after a third party who is not liable for the payment of the debt has acquired the immovable and registered his rights in the registers of immovable property.

(2) An entry relating to an immovable shall be of no effect where it is made after an action for the attachment of the immovable has been brought and entered in the registers of immovable property or after the mortgagor has been declared bankrupt.

Art. 3058 – Effect of registration.

(1) The registration of a mortgage shall be effective for ten years from the day when the entry was made.

(2) The effect of such registration shall continue where, prior to the expiry of the period of ten years, a new entry is made with a view to renewing the first registration.

(3) In such case, the first registration shall be effective for ten years from the day when the new entry was made.

Section 2. Effect of mortgage

Art. 3059 – Principle.

(1) Where the immovable mortgaged is attached by the creditors of the mortgagor, the mortgagee may demand to be paid, out of the proceeds of the sale of the immovable, in priority to any other creditor.

(2) Where the immovable has been sold by the mortgagor, the mortgagee may attach it in the hands of the purchaser whose rights have been registered subsequently to the registration of the mortgage.

(3) The mortgagee shall in addition have all the rights of an ordinary creditor.

Art. 3060 – Prohibited provisions.

(1) Any provision whereby the creditor may, after the debt has become due, appropriate or sell the immovable without due regard for the conditions prescribed by law shall be of no effect, notwithstanding that such provision was made after the creation of the mortgage.

(2) Provisions may however be made to the effect that the mortgagor shall, after the debt has become due, transfer the ownership of the immovable to the mortgagee.

Art. 3061 – Legal proceedings. – 1. Jurisdiction.

Any action relating to the registration of a mortgage or the sale of the mortgaged immovable shall fall within the exclusive jurisdiction of the court of the place where such immovable is situate.

Art. 3062 – 2. Address for service.

(1) The mortgagor and the mortgagee shall, on the request of any interested party, specify an address for service at the place where the sittings of the court having jurisdiction are held.

(2) Where they fail to specify such address within one month from having been required to do so, the court shall specify the place where service shall validly be made.

Art. 3036 – 3. Curator.

The court may, on the application of any interested party, appoint a curator to a creditor whose name or domicile is unknown, where the personal appearance of such creditor is required by law and urgent decisions are to be made.

Paragraph 1. Preferential rights of mortgagee

A – Property to which such rights extend

Art. 3064 – Intrinsic elements and accessories. – 1. Principle.

(1) The mortgage shall charge the mortgaged immovable together with its intrinsic elements and accessories.

(2) Any object expressly specified as an accessory in the act creating the mortgage shall be deemed to be an accessory.

(3) Evidence may be adduced to rebut the presumption laid down in sub-art. (2).

Art. 3065 – 2. Rights of third parties.

(1) The mortgagee may not enforce his rights on such intrinsic elements or accessories of the mortgaged immovable as have been separated therefrom and transferred to a third party.

(2) In such case, he may only exercise the rights vested in him by Art. 3073, 3074 and 3107 of this Code.

Art. 3066 – Improvements and buildings. – 1. Principle.

The mortgage shall apply to any improvement made on the mortgaged immovable and to the buildings, plantations and crops made on such immovable.

Art. 3067 – 2. Prior rights of contractors and suppliers.

(1) The contractors who built the buildings or made the improvements mentioned in Art. 3066 and the suppliers who supplied the materials, plants, seeds or fertilizers used in the improvements, buildings, plantations or crops shall have priority over mortgagees on such part of the proceeds of the sale of the mortgaged immovable as is necessary to cover the costs of the improvements, buildings, plantations or crops made by them.

(2) In case of dispute, the court shall settle the amount to be paid in priority.

(3) Where appropriate, the court shall settle, how such amount shall be distributed among contractors and suppliers.

Art. 3068 – Rent.

(1) Where the mortgaged immovable is leased, the mortgage shall apply to the rent having run from the day when the immovable was attached.

(2) The lessees and farmer-tenants may not validly pay the rent to the owner of the mortgaged immovable after they have been notified of the attachment of the immovable.

Art. 3069 – Indemnities charged by mortgage. – 1. Principle.

(1) The mortgage shall apply to any insurance compensation or compensation for damages which may be due in cases of loss or deterioration of the immovable.

(2) The mortgage shall also apply to the compensation due to the owner whose immovable is expropriated.

Art. 3070 – 2. Consent of creditors to payment.

(1) Insurance or expropriation compensation and compensation for damages may not be paid to the mortgagor unless all the mortgagees who have a registered claim on the immovable agree to such payment.

(2) The mortgagor to whom such compensation is due shall inform all registered creditors of the amount of and reason for compensation and of the name and address of the person liable to pay it.

(3) The creditors shall be deemed to agree to the compensation being paid to the debtor where they fail to declare their objection to the payment within thirty days from having received information as provided in sub-art. (2).

Art. 3071 – 3. Rights of mortgagor.

(1) The mortgagor may demand that any compensation not exceeding one thousand Ethiopian dollars be paid to him.

(2) He may demand that any compensation be paid to him where he undertakes to use it to rebuild or repair the immovable and offers to furnish sureties or securities sufficient to guarantee that he will comply with his undertaking.

(3) He may in any case require that compensation be paid into the hands of a trustee appointed by the court.

Art. 3072 – Mortgage of bare ownership.

A mortgage charging the bare ownership of an immovable shall, upon the extinction of the usufruct, extend to the full ownership of such immovable.

Art. 3073 – Reduction in value of immovable. – 1. Due to mortgagor.

(1) Where the mortgagor intentionally or by negligence reduces or endangers the value of the immovable mortgaged, the mortgagee may demand new securities.

(2) Where the mortgagor fails to furnish such securities within the period of time reasonably fixed to him by the mortgagee, the mortgagee may demand that an adequate part of the debt be discharged.

Art. 3074 – 2. Due to third party acquiring the immovable.

The mortgagee may exercise against the mortgager the rights mentioned in Art. 3073 where the value of the immovable mortgaged is reduced or endangered by a third party who has acquired such immovable from the mortgagor.

Art. 3075 – 3. Other cases.

The mortgagor may not demand new securities nor that part of the debt be discharged where the actual or possible reduction in the value of the immovable mortgaged is due to causes other than those specified in Art. 3073 and 3074.

B – Priority of mortgages

Art. 3076 – Capital of claim.

The mortgage shall secure the payment to the mortgagee, in priority to other creditors, of the registered amount of claim.

Art. 3077 – Interest.

(1) The mortgage shall secure the payment to the mortgagee, in priority to other creditors, of interest on the claim at the rate fixed in the registration of the mortgage.

(2) The mortgage shall secure the preferential payment of interest to an amount not exceeding two years interest.

(3) It may not be specified in the registration of the mortgage that the mortgage shall secure the payment of interest for a longer period of time.

Art. 3078 – Necessary expenses and insurance premiums.

The mortgage shall secure the repayment to the mortgagee, in priority to other creditors, of the necessary expenses made by him for the preservation of the mortgaged immovable and of the insurance premiums due by the owner and which have been paid by the mortgagee.

Art. 3079 – Costs of attachment proceedings.

The mortgage shall secure the repayment to the mortgagee, in priority to other creditors, of the normal costs arising from proceeding instituted by him for the attachment of the immovable.

Art. 3080 – Legal interest.

(1) Interest at the rate provided by law shall run on the sums specified in Art. 3076-3079 from the day when the immovable was attached.

(2) The mortgage shall secure the payment of such interest until the immovable is sold by auction following attachment.

C – Plurality of mortgagees

Art. 3081 – Principle.

(1) Where several creditors have a registered claim on the same immovable, they shall rank according to the date on which they have registered their claim.

(2) No regard shall be had to the date on which the claims became certain or exigible.

Art. 3082 – Creditors registered on the same day.

Creditors whose claims have been registered on the same day shall rank equally and be paid in proportion to the amount of their claims.

Art. 3083 – Subrogation.

(1) Any mortgagee may pay a creditor having priority with the consent of such creditor or, where the immovable is attached on the latter’s request, without such consent.

(2) The creditor who has paid shall be subrogated to the rights of the creditor whom he has paid.

Paragraph 2. – Right to follow immovable

A – General provisions

Art. 3084 – Right to transfer ownership of mortgaged immovable.

(1) He whose immovable is mortgaged shall retain he right to transfer the ownership thereof.

(2) Any provision to the contrary shall be of no effect.

Art. 3085 – Right of mortgagee.

The mortgagee who has registered his mortgage prior to the registration of the deed evidencing the transfer may attach the immovable in the hands of the person who acquired it.

Art. 3086 – Effect on original debtor.

(1) The transfer of the immovable mortgaged shall bring no change in the obligations of the original debtor.

(2) The original debtor shall however be released where the person who acquired the immovable has undertaken to pay the debt, unless the mortgagee informed the original debtor in writing that he would continue to hold him liable.

(3) Such information shall, under pain of loss of right, be given within one year from the mortgagee having been informed of the agreement made between the original debtor and the person who acquired the immovable.

Art. 3087 – Indivisibility of mortgage.

(1) A mortgage is indivisible.

(2) Where part of the immovable mortgaged is alienated or such immovable in divided, each part shall secure the full payment of the debt.

Art. 3088 – Creation of rights in rem on immovable mortgaged.

(1) He whose immovable is mortgaged shall retain the right to charge it with an usufruct, servitudes, mortgages or other rights in rem.

(2) Any provision to the contrary shall be of no effect.

Art. 3089 – Rights of creditor.

(1) Registered rights in rem on an immovable mortgaged shall not affect the mortgagee where such rights have been registered after the mortgagee has registered his mortgage.

(2) The mortgagee may cause the immovable to be sold as though such rights had not been created.

(3) Where the immovable is attached, the beneficiary of the right in ?????? may demand that the value of such right be paid to him in priority to creditors whose mortgage has been registered subsequently to his own right being registered.

B – Position of person acquiring the immovable

Art. 3090 – Attachment of immovable. – 1. Assimilation to surety ship.

He who acquires an immovable mortgaged may, in his relations with the mortgagee, avail himself of the rights vested in the guarantor by the provisions of the Title of this Code relating to “Contracts in general”.

Art. 3091 – 2. Improvements or buildings.

(1) He who has acquired an immovable mortgaged and has increased its value by making thereon improvements, buildings, plantations or crops, may require to be paid, out of the proceeds of the sale, an amount corresponding to the increase in the value of the immovable since the day when the transfer of ownership was registered.

(2) Servitudes and other rights in rem which the person who acquired the immovable had on such immovable prior to acquiring it shall give rise to compensation, where they cannot revive.

Art. 3092 – 3. Loss or deterioration of immovable.

(1) He who acquires an immovable mortgaged shall not be liable to the mortgagee for the loss or deterioration of the immovable.

(2) He shall however be liable where such loss or deterioration is due to his fault or negligence and occurs after he has been informed that proceedings have been instituted for the attachment of the immovable.

Art. 3093 – 4. Fruits.

(1) He who acquires an immovable mortgaged shall not account for the fruits he has collected prior to attachment.

(2) He shall cease to be the owner of such fruits on the day when the immovable is attached in his hands.

Art. 3094 – 5. Action for warranty.

(1) Where the immovable is attached in the hands of the person who acquired it, such person may bring an action for warranty against the person from whom he acquired the immovable.

(2) He may bring such action notwithstanding that he acquired the immovable gratuitously.

(3) An action for warranty may not be brought where it is expressly prohibited in writing by the deed evidencing the transfer of ownership.

Art. 3095 – 6. Subrogation.

(1) Where the immovable is attached in the hands of the person who acquired it, such person shall be subrogated to the rights of the mortgagee.

(2) He may not avail himself of such subrogation to the detriment of third parties who have acquired for consideration, from the debtor or guarantor, an immovable intended to secure the debt.

Art. 3096 – 7. Appointment of curator.

(1) He who acquired the immovable may, where he is not personally liable for the payment of the debt under the mortgage, demand that proceedings for attachment instituted against him be discontinued.

(2) In such case, he may appoint or cause to be appointed by the court a curator against whom the proceedings shall be contained.

(3) The curator shall reside or specify an address for service at the place where the sittings of the court of competent jurisdiction are held.

Art. 3097 – Voluntary discharge of debt.

(1) He who acquires an immovable mortgaged may pay a creditor having a registered claim on such immovable with the consent of such creditor or, where the immovable is attached on the latter’s request, without such consent.

(2) In such case, he shall be subrogated to the rights of such creditor and merger may not be raised against him.

Art. 3098 – Redemption of mortgage. – 1. When possible.

He who acquires an immovable mortgaged may redeem the mortgage where he is not personally liable for the payment of the debt under the mortgage.

Art. 3099 – 2. Offer to redeem.

He who intends to redeem the mortgage shall serve on the registered creditors and on the person from whom he acquired the immovable a document specifying:

(a) the nature and date of the title by virtue of which he acquired the immovable and the date on which he registered his rights; and

(b) any particulars necessary for identifying the immovable, such as the place where such immovable is situate and its number in the cadastral survey plan; and

(d) an offer to pay such price or value; and

(e) a list of the mortgages registered on the immovable together with the name of the registered creditors, the amount of the claims and the date of registration of the mortgages; and

(f) his address for service at the place where the sittings of the court of competent jurisdiction are held.

Art. 3100 – 3. Offer may not be withdraw.

(1) He who offered to redeem the mortgage shall be bound by his offer for a period of sixty days.

(2) He may not withdraw his offer during this period unless all the persons to whom such offer was made agree to the withdrawal.

Art. 3101 – 4. Offer accepted.

(1) The creditors shall be deemed to accept the offer where they do not reject it within sixty days from the day when it was made.

(2) The amount offered shall in such case be distributed among the creditors according to their rank.

Art. 3102 – 5. Offer rejected.

(1) Where a creditor refuses the offer, the immovable shall be sold by public auction.

(2) The creditors who have refused the offer shall advance the costs of such sale by auction.

Art. 3103 – 6. Costs of sale by auction.

(1) The costs of the sale shall be borne by the purchaser, where the immovable is sold at a price exceeding by ten percent the price offered under Art. 3099.

(2) In other cases, such costs shall be borne by the creditors who rejected the offer of redemption.

Art. 3104- 7. Time for making offer.

No offer to redeem the mortgage may be made after proceedings for attachment have been instituted and an entry to this effect has been made in the registers of immovable property.

C – Special provisions applicable to guarantor

Art. 3105 – Presumption.

He who has mortgaged his immovable to secure the debt of another person shall be presumed not to have bound himself on his other property.

Art. 3106 – Position of guarantor.

Without prejudice to the provisions of art. 3107 and 3108, the guarantor shall be assimilated to the person who acquires an immovable mortgaged.

Art. 3107 – Loss or deterioration of immovable.

(1) Where the guarantor intentionally or by negligence reduces or endangers the value of the immovable mortgaged, the mortgagee may require him to produce new securities.

(2) The mortgagee shall have the3 same right where the value of the immovable is intentionally or negligently reduced or endangered by a third party who acquired the immovable from the guarantor.

Art. 3108 – Other differences.

(1) Where the immovable is attached in his hands, the guarantor may not bring an action against the person from whom he acquired the immovable.

(2) He may not require that proceedings fro attachment instituted against him be discontinued.

(3) He may not offer to redeem the mortgage.

Section 3. Extinction of mortgage

Art. 3109 – Principle.

(1) A mortgage shall be extinguished where the registration of the mortgage is cancelled in the registers of immovable property.

(2) The registration shall be cancelled in accordance with the provisions of the Title of this Code relating to “Registers of Immovable Property” (Art. 1630-1636).

Art. 3110 – Grounds for cancellation.

Any interested party may require the registration to be cancelled where:

(a) the claim secured by the mortgage is extinguished; or

(b) the mortgagee has renounced his mortgage; or

(c) the immovable mortgaged has been sold by auction and the proceeds of the sale have been distributed among the creditors; or

(d) the amount accepted by the creditors in cases of an offer of redemption has been distributed among the creditors.

Art. 3111 – Mortgage of usufruct.

(1) Any interested party may require the cancellation of the registration of the mortgage of an usufruct, where such usufruct is extinguished.

(2) The usufructuary may not renounce the usufruct to the detriment of the mortgagee.

Art. 3112 – Renunciation of mortgage.

(1) Where the creditor renounces his mortgage, such renunciation shall be of no effect unless it is made expressly and in writing.

(2) Unless otherwise agreed, such renunciation shall not imply that the mortgagee renounces his claim.

Art. 3113 – Creditor making subrogation impossible.

Where the mortgage applies to an immovable which is not the property of the debtor, the cancellation of the registration may be sought where the creditor makes it impossible for the owner of such immovable to be subrogated to the rights of the creditor.

Art. 3114 – Conditions for canceling registration.

(1) No registration shall be cancelled unless the court so orders.

(2) The court shall order cancellation where the creditor agrees in writing to the cancellation.

(3) The creditor shall be liable where he refuses without good cause to agree to the cancellation.

Art. 3115 – Effect of cancellation.

(1) Where the registration is cancelled, such cancellation shall benefit the creditors having registered their claims after the entry which is cancelled.

(2) The owner may not create a new mortgage to replace the mortgage the registration of which has been canceled.

Art. 3116 – Cancellation mad without good cause.

(1) Where a registration has been cancelled, such registration shall in no case revive, notwithstanding that the cancellation was made without good cause.

(2) The mortgage which has been cancelled without good cause shall be registered again and shall be effective from the day of the new registration.

(3) Nothing shall affect the liability of the person who caused the registration to be cancelled without good cause.

Section 4. Antichresis

Art. 3117 – Definition.

A contract of antichresis is a contract whereby the debtor undertakes to deliver an immovable to his creditor as a security for the performance of his obligations.

Art. 3118 – Creation of antichresis. – 1. Principle.

Without prejudice to the provisions of art. 3119, the provisions of this Title relating to the creation of mortgages shall apply to contracts of antichresis.

Art. 3119 – 2. Special rules.

(1) Antichresis may be created by contract only.

(2) It may not be created to guarantee a claim embodied in an instrument to order to bearer

(3) It may not be created by the bare owner of an immovable.

Art. 3120 – Relations between parties.

Without prejudice to the provisions of the following Articles, the provisions of this Code regarding the relations between the lessor and lessee or farmer-tenant shall apply to the relations between the parties under a contract of antichresis.

Art. 3121 – Delivery of immovable.

(1) The person having created the antichresis shall deliver the immovable and its accessories to the creditor or such other person as has been specified in the contract.

(2) The antichresis shall have the same effects as a mortgage until such delivery has taken place or after the immovable has been returned to the person having created the athichresis.

Art. 3122 – Warranty against defects.

(1) The immovable shall be delivered in its condition as on the day of the making of the contract.

(2) The person having created the antichresis shall give no warranty against the defects of such immovable.

(3) He shall only be liable, where he knew of them at the time of the contract and failed to mention them, for such defects of the immovable as seriously endager the life or health of the possessor of the immovable, of persons living with him or of his employees.

Art. 3123 – Repairs.

The person having created the antichresis may not be compelled to make repairs on the immovable.

Art. 3124 – Interest on claim.

(1) The creditor under the contract of antichresis shall pay no rent to the person having created the antichresis.

(2) The use the creditor makes of the immovable and the fruits and profits he drives therefrom shall replace interest on the claim.

(3) Any provision whereby the creditor is entitled to interest in addition to such use, fruits and profits shall be of no effect.

Art. 3125 – No duty to furnish premises.

The creditor shall be under no obligation to furnish the premises.

Art. 3126 – Contract relating to land.

Unless otherwise agreed, where land is given as a security under a contract of antichresis, the creditor shall have the direction of the works.

Art. 3127 – Assignment of right.

The creditor may not lease the immovable nor assign his right to a third party without the consent of the person having created the antichresis.

Art. 3128 – Unilateral termination of antichresis.

(1) The creditor may at any time renounce his right of antichresis.

(2) Unless otherwise agreed, the creditor may at any time terminate the antichresis by performing the obligation secured by the antichresis.

Art. 3129 – Relations between creditor and third parties.

The provisions of this Title relating to the registration and effect of mortgages shall apply to contracts of antichresis.

Art. 3130 – Extinction of antichresis.

The provisions of this Title relating to the extinction and stricking out of mortgages shall apply to contracts of antichresis.

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