The Law on introduction of amendments into certain Ukrainian legislative instruments pertaining to the renewal of crediting (the "Law"), dated 03.07.2018. The Law will enter into full force on 4 February 2019).
The Law has excluded a number of legislative collisions and gaps, which existed in the credit- and mortgage-related legal relationships as well as in relation to the suretyships, resulting in overall strengthening of protection of the creditors' rights.
In particular, it is stipulated by the Law as follows:
Regarding mortgage and pledge agreements
- Pledge/mortgage of a debtor, which is a legal entity, and/or property guarantor, does not cease concurrently with liquidation of the debtor's legal entity/property guarantor if the pledgee/mortgagee has exercised its/his/her right of enforcement of the pledged/mortgaged property, by filing a respective statement of claims or lodging a claim, prior to liquidation of the debtor. This is one of important novelty pursuant to the Law, leading to enhancement of the creditors' rights.
- In the instances of reconstruction/remodeling of the mortgaged property, the relevant mortgage shall not cease and all reconstructed, newly built real estate property shall be deemed to be collateral pursuant to the mortgage agreement. This is a very important novelty under the Law, which settles the issue which was previously unsettled: automatic mortgaged such newly built real estate property; it should put an end to the related abuses on the part of mortgagors.
- The requirement regarding notarization of the transportation vehicle pledge agreement has been canceled. The aforesaid novelty will make the execution transportation vehicles pledge simpler and cheaper.
- Within 14 days from the date of credit repayment, the mortgagee shall release (deregister) encumbrance on the mortgaged property.
- Availability in the State Register of Proprietary Rights to the Immovable Property of the data pertaining to any encumbrances, restrictions, seizures or other prohibitions on the mortgaged property, which arose after the mortgage had been registered, does not constitute a ground for rejection of state registration of the ownership right to the real estate in the name of the mortgagee.
- It is planned that banks and financial institutions will be given access to the number of state registers. Such novelties will enable banks to conduct legal due diligence of their clients, efficiently and rapidly.
Regarding suretyship agreements
- Sureties acting under various suretyship agreements with respect to the same obligation are joint and several promisors. Accordingly, underlying secured debts may be collected from any surety.
- Suretyship does not cease as a result of the surety's increased liability without its/his/her consent. In the instances when a liability increases in the absence of the surety's consent, the surety shall continue to bear liability within the initial scope covered, regardless of the increased obligation. Accordingly, when amendments are introduced into the underlying obligation secured by the suretyship, in the absence of the surety's consent, the suretyship shall continue to be valid.
- The time limits set for lodging claims against the surety have been extended from 6 months up to 3 years, unless a fixed suretyship term is set out in the agreement.
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