Mortgage Registration System

There are many defects in our existing mortgage registration system. To illustrate some, the formation of mortgage contract confuses with the establishment of right of mortgage, the registration of right of mortgage (or mortgage registration) does not distinguish from the registration of collateral, personal property differs from real property in the effect of mortgage registration, registration may be done in several agencies for some collaterals while nowhere can be filed at all for some other collaterals,and so on . These problems terribly impede the effective functioning of our mortgage system.To address the above-mentioned problems, by referring to relevant experience of other nations and regions and linking theory with practice, this author manages to put forward some ideas to improve our mortgage registration system. This author holds that the wording of registration of collateral in the security law and the judicial interpretation ought to amended as registration of the right of mortgage or mortgage registration, and that the formation and effectuation ought to distinct with the registration of the right of mortgage.A mortgage contract is a legal act to establish the right of mortgage by a creditor and his debtor or a third party, and it is a type of civil contract, therefore, its formation and validity shall comply with the provisions of the contract law. In addition that the contractual parties ought to be legally competent and that the manifestation of their mutual assent ought to be genuine and that the form of the contract ought to comply with the requirements of the law, to constitute a valid mortgage contract largely depends on the legality of the collateral, i.e., the property (or right) ought to be lawfully allowable to be mortgaged.The essence of registration of collateral is to create the right of mortgage, not to file the relevant statehood of collaterals, and such registration is simply to clarify the scope of the right of mortgage.The collateral registration can only serve to implement a valid mortgage contract that it has begun to take effect, rather than serve as an essential element tomake a mortgage contract valid. Contractual right features privity, there is no sense to disclose contracts to the public and it is unnecessary to file contracts. The effect of mortgage registration shall only be maintained within the area whether the mortgagee has obtained the right to dominate the exchange value of the collateral, and it shall not decide the validity of contractual right.Registration of collateral is a combination that requires both application of the parties concerned and review of the registration agency. Liability of state compensation shall incur when registration agencies make mistakes in their work. This liability depends on which review policy that is adopted. Currently, there are mainly two kinds of review policy in the world, namely, formal review policy and substantive review policy. At present, our country adopts a policy similar to formal review policy, and there is no provision in law on liability of registration agencies. In the days to come, our country should adopt the international practice to found indemnification fund for the wrong of real property registration.The effect of registration of the right of mortgage under the legislative regime in various countries can be roughly divided into two doctrines: doctrine of publicity to perfect a security interest and doctrine of publicity to constitute the right of mortgage, and each doctrine has its own advantages and disadvantages. Currently, both doctrines exist in our law. There is no provision on public confidence in registration in our law. Moreover, our law does not define its bounds of registration of mortgage in either time or space.Our mortgage registration system should be perfected in the following areas. First, registration agencies should be unified. At present, there exist two points of view, to unify totally and to unify partially, the former being that mortgage in both personal property and real estate is to be registrated in one registration agency, and the latter being that mortgage in real estate and similar property is to be unified to be registrated in one department and the existing system of mortgage registration in other property keeps on. This author agrees to the latter. On the issue of registration agency for mortgage in real estate, there are three opinions: the doctrine of registration with the court, the doctrine of registration with administrative agency and the doctrine ofcompromise to the current situation. This author holds that registration agencies be unified on the basis of original registration agency of land, and within it, a uniform and regular registration department of real estate be singled up to carry out mortgage registration of real estate, thereby, it is less costly and more convenient. Second, legal basis for registration should be unified. The legislative department should keep the existing law provisions on legal basis of registration streamlined and enact a special law or administrative regulation, alternatively, unify legal basis of registration in real right law or civil code to be enacted. The law may be named as law on registration of the mortgage. At present, as a provisional measure, registration system of real estate may go first to be integrated and later on a uniform law on registration of real estate should be enacted. To prevent false registration, rules of preliminary registration, objection registration, correction registration etc. should be stipulated.Third, legal effect of registration should be unified. Under the current dual system of mortgage registration runs contrary to the establishment of mortgage registration and goes against the doctrine of party autonomy. In practice, it is not helpful for implementation of mortgage contracts and increases security costs, thus, it is an obstacle on promotion of mortgage system. It is not in conformity with the international legislation trend. Therefore, the legal effect should be unified to adopt the doctrine of registration to perfect security interests. Fourth, mortgage registration in future property should be unified in law. It is quite necessary to create mortgage right in future property. This kind of mortgage is mortgage in expectation right and its creation must meet certain conditions, including competent parties to be recognized as mortgagors, effective input in property designed to be mortgaged, and mortgage registration and etc.