Encumbrances (Section C)

MORTGAGE and REAL ESTATE LIENS

Original name: KIINTEISTÖKIINNITYS (and) PANTTIOIKEUS KIINTEISTÖÖN

Definition of this right: The titleholder of the property has the right to raise liens over the real estate. A lien over real estate shall be raised by handling the mortgage document over to the creditor as security for a debt. Nowadays the lien may also be raised digitally, in which case the mortgage document consists (merely) of an entry in the Land Register.

Type of right according to national classification: “Security rights”.

Observations: A mortgage may be created over register unit, a share in jointly held register unit, a transferable registered leasehold for building or facility purposes, or over an unseparated parcel of a register unit (real estate) when the parcel concerned is not belonging to the titleholder of the register unit. The registration of title concerning the property to be mortgaged shall be a prerequisite for the entitlement to apply for a mortgage.

The purpose of a lien (mortgage)is that the creditor shall have the right to receive payment of a debt backed by a lien when the assets of the real estate are being distributed because of execution or redemption or otherwise by authorities (foreclosure procedure)

A lien over real estate shall remain valid even if the titleholder of  the property has prior to the raising of the lien lost his right of decision over it, unless the loss of that right was entered into the title and mortgage register at the time of the rising of the lien and the creditor also otherwise did not know or should have known that the titleholder no longer had the right to raise a lien over the real estate.

1.1. With respect to the mortgage liability, the Finnish mortgage system prepares in general one option:

a) There is no connection between mortgage and loan, credit or other obligation. Or this is not showed in regular extracts.

1.2. Regular LR information in this system also comprises ordinarily:

a) Name of the mortgagee or creditor

However, there should not be expected any information about contract or basis of obligation guaranteed by a mortgage, deadline of the loan or credit or other contract which is basis of the mortgage, the deadline of the mortgage, name of the mortgagor or debtor, or deed whereby mortgage was constituted or awarded.

1.3. With respect to the mortgage rank (preference of the mortgage in comparison with other mortgages or encumbrances), this LR system has the following criteria:

a) Information indicates specifically what the mortgage rank is, as a general rule.

In this LR system these are the following:

SPECIAL RIGHTS

Original name: ERITYSET OIKEUDET

Definition of this right: According to the Finnish legislation it is important to make a difference between an easement and an encumbrance.

Establishment of easement between register units (f.ex. right to use the road on the neighbouring real estate unit) is carried out in land survey act and the established right will recorded in the Real Estate Register (Cadaster) not in the Land (property) Register. However, either the information in Land Register (Title and Mortgage Register) or cadastral information is part of the National Land Information System which is maintained by NLS.  Title registration is based on the cadastral information and cadastral maps.

Special rights are prescribed in Code of Real Estate (540/1995) Chapter 14.

According to the code Registrable special rights (encumbrances) are:

(1) A lease or other usufruct;

(2) A right to a pension off the real estate;

(3) A right to take timber; and

(4) A right to extract land or mineral resources or another comparable right of extraction.

An agreement between the joint titleholders of a real estate on the possession of the real estate may also be registered (Code of Real Estate, Chapter 14, Section 3)

In some cases the right of ownership relating to buildings, constructions, machines or facilities located on a real estate of another can be registered (Code of Real Estate, Chapter 14, Section 4).

A declaration of the titleholder, that a machine or some other equipment on his / her real estate does belong or does not belong to the said real estate as a component or as accessories of that real estate (Code of Real Estate, Chapter 14, Section 5).

The two latter types of registrations applies only to the real estates which are used for business purposes.

Type of right according to national classification: Rights of use. (Code of Real Estate, Chapter 14, Section 1 and 3); Right of ownership concerning separate items on the land of another (Chapter 14, Section 4); Declaration of Components and Accessories (Chapter 14, Section 5).

Observations: Even if the 1995 Code of Real Estate has somewhat extended the area of registerable rights registration still is possible only in the cases permitted by the law. So the numerus clausus principle is also, as to the law of land registration, known in the Finnish property law (numerus clausus in broader meaning has not been accepted as such in the Finnish property law).

A special right shall not be registered in Landregister (Property Register) in the case  that the right is permanent, if it is for the benefit of a given real estate or area or if it has been established by an official real estate formation measure or otherwise by a decision of the authorities, but in Real Estate Register (Cadaster).

A right to take timber shall be registered to remain valid for at most five years and an extraction right for at most 50 years from the attachment of the right; a usufruct shall be registered for at most the statutory maximum period.

Mainly it is not mandatory to register the above mentioned encumbrances (1-4) but the holder of a lease or another usufruct on the real estate of another shall apply for the registration of his right, if the usufruct is transferable to a third party without hearing the titleholder and if there are buildings or other constructions belonging to the usufructuary on the real estate or it has been agreed that they may be built.

The registration shall be applied for when the usufruct has been established or when the usufructuary has received the usufruct by conveyance or other acquisition.

This information includes LR entries or notices related to restrictions decreed by judicial orders which mean either a claim on the property, or a challenge on the registered title, or an attachment of the property to debts as a result of judicial procedures, etc.

In this system:

a) Information on judicial restrictions or charges forms part of the regular land register extracts

LR information does not include orders of attachment or seizure from administrative authorities.

Fiscal burdens (tax liabilities falling on the properties and entered in the Land Register) work in this system as remarks warning to third parties so they can’t allege good faith.