The Protection Of Mortgagee’s Interests Under The Rule Of Free Transfer Of Collateral

Under the rapidly changing economic background,the rules for the transfer of collateral have undergone multiple legislative changes.Finally,Article 406 of the Civil Code established the rule for the free transfer of collateral,allowing the mortgagor to transfer the collateral without the consent of the mortgagee.Under this rule,the risks faced by the mortgagee when exercising the mortgage right significantly increase,and the effectiveness of the mortgage right recovery weakens.However,the Civil Code also affirms that both parties have the right to separately agree to prohibit the transfer of the collateral,fully respecting the autonomy of the parties.If the mortgagee believes that the rights are damaged,they can also request early repayment or deposit.In order to prevent the mortgagor from arbitrarily disposing of the mortgaged property,which makes the mortgage ‘virtual’,this article also imposes a timely notification obligation on the mortgagor.However,the role of this restriction in practice is limited,and the interests of the mortgagee still face significant challenges.There have been issues such as increased risks of realizing the rights of the mortgagee,incomplete rules for prohibiting the transfer of collateral and registration of special agreements,and loopholes in the rules for eliminating rights.Therefore,how to protect the interests of the mortgagee under the rule of free transfer of collateral has become an important issue that theory and practice must pay attention to.In response to this issue,the article first uses typical cases as support to summarize and discover the difficulties faced by the protection of the interests of mortgagees in judicial practice,mainly including serious damage to the recovery and effectiveness of mortgage rights,obstacles to the implementation of the effect of prohibiting the transfer of collateral and the registration of special agreements,and confusion in the application of removal rights rules;Then,based on the discovery of the dilemma,the causes of the dilemma in protecting the interests of mortgagees are analyzed from two aspects:legislative shortcomings and theoretical disputes;Finally,considering how to protect the legitimate interests of the mortgagee under the current legal system,providing examples of existing regulations,it is analyzed that under the current legal framework,the mortgagee has the right to exercise the right to claim compensation for damages in specific circumstances,while the buyer should exercise the right to exclusion within the scope of ‘legitimate interests’,and at the same time,reasonable restrictions should be placed on the application of the special agreement prohibiting the transfer of collateral.In terms of legislative improvement,the first step should be to clarify the remedies available to the mortgagee when the mortgage right is difficult to realize,such as determining the legal consequences of not fulfilling the obligation to notify,and supplementing the explanation of the constituent elements of ‘potentially damaging the mortgage right’;Secondly,it is necessary to improve the system of prohibiting the registration of special agreements for the transfer of collateral,and the most important thing is to stipulate the legal liability for violating the registration of special agreements for the transfer of collateral;Finally,to improve the rules of exclusion,it is necessary to unify the criteria for judging ‘legitimate interests’,while affirming the right of mortgagees to refuse the exercise of exclusion rights.