Withdrawal of Mortgage Notes Registered by a Credit Institution on Nine Properties of a Creditor Company

Critical points:

• The case concerned a dispute between a private limited company and a banking institution which, in order to secure its claim arising from a credit agreement between them, had concluded a credit agreement with an open mutual account, registered a mortgage on nine properties owned by the creditor company, pursuant to a payment order issued against the latter, despite the fact that it was already overcollateralised by an earlier mortgage registered by the latter, pursuant to an injunction, on sixteen of its properties.

• The correct support of that case resulted in the total revocation of the contested second time-registered mortgage note registered under a payment order for the amount of EUR 435 000 on the additional nine properties of the creditor company.

Background

• A credit agreement was concluded in 2007 between the private equity company and the banking institution with an open (mutual) account up to the amount of €700,000. In order to secure its claim, the banking institution initially registered a mortgage lien in 2007, pursuant to an injunction, on sixteen properties owned by the company. 
• Subsequently, however, and despite the fact that the value of those properties exceeded the alleged claim of the banking institution, the latter did not hesitate, in 2018, to register a new mortgage lien on nine additional properties owned by the creditor company, pursuant to a payment order issued in 2017 at its request. 

Strategy

Key points for the successful outcome of the case and the total revocation of the contested mortgage note were the following:

• The creditor company, as well as the guarantors, brought an application for injunctive relief before the competent court, in which they sought the total revocation of the second registered mortgage note.
• The invocation and substantiation of successive legal reasoning, as well as the collection and production before the court of crucial evidence, in order to achieve the above objective. 
  
• To establish the merits of the grounds of opposition raised by the creditor company and the guarantors for the annulment of the payment order under which the second mortgage note in question was registered, bearing in mind that a registered mortgage note must be revoked in the event of any reason for the annulment of the payment order under which it was registered.  This has been achieved not only by setting out in detail the grounds for opposition to the payment order in question, but also by supporting them with recent case-law.
  
• The substantiation of the allegation that the disputed claim of the banking institution against the creditor company was not due and payable, which led to the revocation of the second mortgage note at issue.
  
• The documentation that there is no imminent risk that the alleged claim of the banking institution will not be satisfied if the mortgage note in question is revoked. That was achieved by submitting to the court decisive comparative evidence and proof of the value of the properties on which the first mortgage note was registered, which led to the conclusion that it exceeded the total amount of the credit institution's alleged claim, with the result that the second mortgage note became unnecessary and completely abusive. The evidence gathered led the court to believe that the credit institution was indeed fully secured by the mortgaged property under the first mortgage note, so that there was no imminent risk of a new mortgage note being registered and that it should therefore be revoked in full. 

Result

The creditor company and the guarantors filed their application on 9 June before the competent court, which was heard on 3 July. The judge presumed that the banking institution's claim was covered by the mortgaged properties of the first mortgage note and thus granted the application in its entirety, issuing the relevant decision on 13 August, pursuant to which he revoked the second mortgage note in its entirety.

Conclusion 

Sometimes litigation is a one-way street to achieve the client's goals. And it is the targeted, litigious action and the direct, comprehensive and documented support of this action that ultimately leads to the successful outcome of his case. In the present case, although the banking institution succeeded in registering a new mortgage lien for the amount of 435. 000 to nine additional properties of the creditor company, the immediate recourse to the court, the methodical processing of the facts of the case, the invocation and full documentation of successive legal reasoning, as well as the collection and presentation of crucial and decisive evidence for the court's judgment, ultimately led to the total revocation of the second mortgage lien and the release of nine properties of our client - the creditor company.