In general, a mortgage extends to all improvements on the mortgaged land (including any construction realised on the land). In the event that a third party holds a superficies right over the land (that is a right which creates a horizontal split in ownership, enabling a third party to own a building, whilst the land on which such building has been built is owned by a different person), such third party may grant a mortgage over the buildings whose erection has been started, completed or is merely planned and the owner of the land may grant a separate mortgage over the land.
2.1 The distinction between mortgages on land and buildings on the land?
With respect to the mechanisms for registering and perfecting a mortgage, there is no such distinction.
Any mortgage is granted by the owner of the relevant right (ownership, superfiecies right etc.) by means of an unilateral notarial deed and must be registered in the Land Registry (Ufficio dei registri immobiliari) by filing a notice of registration (see also paragraph 3 below).
2.2 Are mortgage certificates for a certain value issued? What is the cost? Are they transferable?
Mortgage certificates do not exist in the Italian system.
In order to ascertain whether a real estate is subject to a mortgage or any other charge (e.g. a privilege) it is necessary to obtain an abstract from the Land Registry or a certification by a Notary Public.
The mortgage is considered as an ancillary instrument (principio di accessorietà), meaning it can not be assigned to a third party separately from the secured obligation. Therefore the mortgage is deemed to be assigned together with the relevant secured obligation and/or the secured credit.
For this purpose it is necessary to have the assignment registered with the Land Registry, unless the assignment is made pursuant to article 58 of the Italian Consolidate Banking Law (en masse assignment – mainly used in securitisation transactions), in which case the assignment of the mortgage is enforceable against any third parties without any need of registration.
It is also possible that two or more mortgagees agree to swap their security ranking (subrogation) in respect of a specific asset.
2.3 Can second ranking security be taken? If so, how is it registered? Is a priority deed also registered?
Yes. The Italian law allows creating more than one mortgage over the same asset. Security ranking depends on the date of application for registration of the mortgage. The registration process of second (or subsequent) ranking mortgages is the same as the one for first ranking mortgages (see also paragraph 3 below).
2.4 Can the real estate be transferred to a third party (being still subject to the mortgage) without the lender’s consent?
A mortgage is an ancillary instrument and cannot be assigned to a third party separately from the secured obligation. If the third party obtains title to the real estate (which does not need lender consent), the real estate remains subject to the mortgage.
2.5 Are there any preferred creditors (other than prior ranking mortgage holders)?
There can be additional preferred creditors being (i) any creditors who have started enforcement proceedings against the real estate for repayment of the debt and (ii) the Italian State for direct/indirect taxes.
2.6 Can “all monies” mortgages be taken?
“All monies” mortgages are not available in Italy. Security is available for specific obligations only e.g. “all sums due under a facility agreement between the parties dated 30 June 2010”.
2.7 Can a landlord’s right to receive rent be charged, assigned or transferred to a lender by way of security? If so, how?
Generally speaking, the landlord’s right to receive his rent could be pledged or assigned to the lender by way of security without the consent of the tenant. A written pledge or assignation in security is taken and needs to be (i) notified to the tenant and (ii) bear a date which has been either (i) notified to a Court Bailiff or (ii) authenticated by an Italian post office to be enforceable against the tenant and any third parties.
2.8 It is customary/possible for a lender to take a charge/security over bank accounts of the borrower? Is it usual for lenders to contractually restrict rights to withdraw funds in accounts until the scheduled interest and capital repayments are made?
Yes. A bank account pledge is customary. Generally, a borrower is entitled to operate the account(s) until it is in default.
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