Commencement: March 20, 1987
LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS
TITLE 24. PROPERTY
CHAPTER 3.
REAL PROPERTY MORTGAGE
ARRANGEMENT OF SECTIONS
Section
1. Short title.
2. Establishment of mortgages on leasehold interest.
3. Requirements for mortgages.
4. Registration of mortgages.
5. Procedure for registration.
6. Priority of mortgage interests.
7. Effect of non-registration.
8. Foreclosure of mortgages.
9. Judicial foreclosure of mortgages.
10. Power of sale foreclosure.
11. Sale under power of sale.
12. Right to deficiency subsequent to foreclosure sale.
13. Discharge, re-conveyance and satisfaction.
14. Impairment of security.
15. Appointment of receiver.
16. Registration of assignments.
17. This Act to prevail over any other law.
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An Act to establish the procedure relating to real property mortgages in
the Republic.
Commencement: March 20, 1987
Source: P.L. 1987-13
P.L. 1988-20
§ 1. Short title.
This Act may be cited as the "Real Property Mortgage Act
1987". [P.L. 1987-13, § 1.]
§ 2. Establishment of mortgages on leasehold
interest.
In order to secure the performance of an obligation or the payment of a
debt a person may mortgage any lease or leasehold interest of any real
property; provided, however, that such a mortgage does not entitle the
mortgagee to possession of the property, except as hereinafter provided:
(a) a
real estate mortgage created under this Act may encumber a lease or leasehold
interest only, and any mortgage purporting to encumber the title or any
ownership rights in the real property shall be null and void;
(b) the lease or leasehold
interest upon which a mortgage is granted shall contain a term which is reasonably
equal to the life of the improvements situated on the real property after the
consideration for the mortgage has been advanced to the mortgagor, but in no
event shall exceed a term of fifty (50) years;
(c) nothing in this Act shall
prevent a direct lease from the then existing Iroij Laplap, Iroij Erik, where
applicable, and the Alab and Senior Dri Jerbal of the property to be mortgaged
in order to secure the performance of an obligation or the payment of a debt.
Any such lease may be conditioned on an event which constitutes a default
pursuant to the mortgage before such lease becomes effective and entitles the
mortgagee to possession of the leasehold premises. Any mortgage executed on a
conditional leasehold interest under this Subsection may be foreclosed pursuant
to either Section 8, or Sections 9 and 10 of this Act. [P.L.
1987-13, § 2.]
§ 3. Requirements for mortgages.
All mortgages made or entered into pursuant to this Act shall contain:
(a) the
name, address, and marital status of the mortgagor and mortgagee;
(b) the
legal status of the mortgagor and mortgagee describing whether they are
individuals, a corporation, or a partnership;
(c) a
description of the lease or leasehold interest with the following information:
(i) the
names of the lessors and lessee;
(ii) the
date and period of the lease; and
(iii) a
description of the property with reference to a survey map or in metes and
bounds including the name of the veto, island and atoll;
(d) a
statement whether the mortgage encumbers the improvements, appurtenances and
fixtures on the property;
(e) a reference to the
promissory note or other instrument of indebtedness being secured by the
mortgage indicating the amount of indebtedness, the term, and whether the
mortgage will attach to future advances;
(f) a
statement indicating the consideration being given for the mortgage;
(g) date
of execution and effective date;
(h) the
maturity date of the mortgage with any right to extend;
(i) mortgagor's covenants;
(j) mortgagee's rights including
events which shall constitute a default by mortgagor; and
(k) notarially
executed signature of the mortgagor. [P.L. 1987-13, § 3.]
§ 4. Registration of mortgages.
All mortgages executed pursuant to this Act shall be registered with the
Clerk of the Court [P. L. 1987-13, § 4.]
§ 5. Procedure for registration.
(1) Upon the receipt of a mortgage for registration from a mortgagor
lessee (applicant), along with a copy of the encumbered lease, the Clerk of the
Court shall, within two weeks of the date of receipt, issue public notice of
and afford opportunity to object to, the mortgage and the encumbered lease.
Notice shall be issued in such form and manner as the High Court deems proper;
provided, however, that the duration of notice shall not exceed sixty (60) days
from the date of application.
(2) All expenses required for issuance of notice Subsection (1) of this
Section, in addition to fees charged for registration, shall be borne by the
applicant.
(3) If no objections are received by the Clerk with respect to the
mortgage and/or the encumbered lease, he shall then register the mortgage; and
all persons, other than the lessor claiming under the lease, shall be estopped
from claiming any rights against the interests of the mortgagee or the lessee
under the mortgage or the lease.
(4) If objections are received by the Clerk with respect to the mortgage
or the encumbered lease, he shall so notify the applicant. If within thirty
(30) days after receiving such From the Clerk, the applicant requests the Clerk
to register the mortgage, then the Clerk shall register the mortgage; and all
persons, other than the lessor claiming under the lease and the objector with
respect to his objection, shall be estopped from claiming any rights against
the interests of the mortgagee of the lessee under the mortgage or lease. [P.L. 1987-13, § 5; completely amended by P.L. 1988-20, § 2.]
§ 6. Priority of mortgage interests.
The priority of mortgage interests on the same real property shall be
determined by the order and date of registration pursuant to Section 4 of this
Act with the first to register having superior rights over subsequent
mortgages. [P.L. 1987-13, § 6.]
§ 7. Effect of non-registration.
Failure to register an executed mortgage in accordance with Section 4 of
this Act shall not affect the validity of the mortgage; provided, however, that
such non-registered mortgage shall be subordinate to any and all mortgages
which may have been duly registered, irrespective of the date of execution or
any actual or constructive notice. [P.L. 1987-13, § 7.]
§ 8. Foreclosure of mortgages.
Mortgages created pursuant to this Act may be foreclosed in the
following manner:
(a) by filing an action in the
High Court seeking judicial foreclosure and sale of the mortgaged premises with
a right to deficiency judgment as provided in Section 9 this Act; or
(b) by
power of sale as provided in Sections 10 and I1 of this Act. [P.L.
1987-13, § 8.]
§ 9. Judicial foreclosure of mortgages.
(1) Any action to foreclose a mortgage filed in the High Court shall
name as defendants all other mortgage lien holders on the property shown in the
register with the Clerk of Courts.
(2) No foreclosure sale shall take place under this Section unless:
(a)
thirty (30) days have lapsed from the date the judgment is entered; and
(b) a
notice of sale for the mortgaged premises is given:
(i) by
publication in a newspaper of general circulation in the Republic on the island
where the property is located at least once a week for two consecutive weeks
immediately prior to the sale; and
(ii) by radio announcement
transmitted by a radio station with regular programming, serving the atoll or
island within which the property is located, once each day for seven (7) days
within the twenty (20) days immediately prior to the date of sale;
(c) any notice of sale given pursuant to Subsection (2)(b) of
this Section shall be published, announced, and posted in both the Marshallese
and English languages; and
(d) it
is stated that every sale made under this Section vests in the purchaser free
from encumbrance of the leasehold interest of the mortgagor without equity or
right of redemption.
(3) Any action to foreclose a mortgage filed in the High Court shall
contain the following averments:
(a) the
date of the mortgage;
(b) the
name of the mortgagor;
(c) the
name of the mortgagee;
(d) the
date the mortgage was registered with the Clerk of Court;
(e) the
names of all mortgage or lien holders in the register with the Clerk of Court
who shall also be named as defendants;
(f) a description of the lease
giving the date of the lease along with the names of the lessors and lessee,
and a description of the property with reference to a survey map or in metes
and bounds including the names of the weto, island, and atoll;
(g) the
amount of the original indebtedness as indicated in the mortgage or promissory
note;
(h) statements
as to defaults and the amount now due:
(i) a
prayer including the following:
(i) for
a judgment of foreclosure and sale of the mortgage;
(ii) if
necessary, for the appointment of a receiver pursuant to Section 15 of this
Act;
(iii) for
the appointment of a commissioner to conduct the foreclosure sale in accordance
with the Court's instructions; and
(iv) for
a personal deficiency judgment if the indebtedness is not satisfied by the
foreclosure sale pursuant to Section 12 of this Act. [P.L.
1987-13, § 9.]
§ 10. Power of sale foreclosure.
Any mortgage containing a provision for power of sale shall be
foreclosed in the following manner:
(a) the mortgagee shall first
file for registration with the Clerk of Court a notice of default, identifying
the mortgage by the name or names of the mortgagor and giving the date of
registration and the location where the same is registered, a description of
the leasehold property encumbered by the mortgage, a statement that a breach of
the obligation for which such mortgage was given as security has occurred and
setting forth the nature of such breach, and of mortgagee's election to sell or
cause to be sold such leasehold interest in the property to satisfy the
obligation;
(b) a registered copy of the
notice of default and election to sell shall be personally served on the
mortgagor, or if personal service is not made despite efforts in good faith,
mailed by registered or certified mail with postage prepaid to the mortgagor or
his successor in interest if such address is known, otherwise by posting on the
mortgaged property;
(c) not less than ninety (90)
days shall elapse after such notice during which time the mortgagor shall have
the right to reinstate the mortgage by paying the mortgagee or his successor in
interest, the entire amount then due including principal and interest
(including cost and expenses actually incurred in enforcing the terms of such
obligation in the mortgage) and thereby cure the default thereto existing,
whereupon all proceedings thereto had or instituted shall be dismissed or discontinued
and the obligation and mortgage shall remain in force and effect as if no such
acceleration had occurred; and
(d) after the lapse of ninety
(90) days, and if no reinstatement has been made pursuant to Paragraph (c) of
this Section, the mortgagee shall within sixty (60) days thereof, give notice
of sale, stating the time and place thereof, in the manner, and within the
time, specified in Section 11 of this Act for the exercise of a power of sale
in the mortgage. [P.L. 1987-13, § 10.]
§ 11. Sale
under power of sale.
(1) All sales of a leasehold interest in real property under a power of
sale contained in any mortgage must be held on the island in the Republic where
the real property is situated, and shall be by public auction to the highest bidder,
between the hours of 8:00 a.m. and 5:00 p.m.
(2) Before the sale of property under a power of sale in a mortgage is
carried out, notice thereof must be given by:
(a) personal service or, if
personal service cannot be made despite efforts in good faith, by mailing a
copy of said notice of sale at least twenty (20) days and not more than sixty
(60) days before the date of sale, by registered or certified mail with postage
prepaid to the mortgagor or his successor in interest if such address is known,
or otherwise by posting at a conspicuous place on the mortgaged property;
(b) publishing a copy thereof
once a week for two (2) consecutive weeks at least twenty (20) days prior to
the date of sale in a newspaper of general circulation in the Republic on the
island in which the property is situated, or, if there be no such newspaper, by
posting such notice at least twenty (20) days prior to the date of sale in
three (3) public places in the community in which the property is to be sold;
(c) posting a copy of said
notice of sale in some conspicuous place on the property to be sold, at least
twenty (20) days before the date of sale; and (d) announcement transmitted by a
radio station with regular programming, serving the atoll or island on which
the property is located once each day for seven (7) days within the twenty (20)
days immediately prior to the date of sale.
(3) Whenever the mortgagee elects to postpone or cancel the sale under a
power of sale, the mortgagee shall thereupon, by public declaration, postpone
the sale to another date and hour so fixed, or in the case of
cancellation, terminate all notices required pursuant to this Section.
(4) The mortgagee, upon such sale, shall make without warranty, execute,
and after due payment made, deliver to the purchaser, his heirs or assigns, a
conveyance of the leasehold interest of the premises so sold which shall convey
to the purchaser all of the mortgagor's interest in and to the lease on the
premises, and shall apply the proceeds of the sale thereof in payment: firstly,
to the expenses of such sale including reasonable attorney's fees; and
secondly, to the obligation or debt secured and interest thereon then remaining
unpaid, and the amount of monies with interest thereon agreed to be paid by mortgagor.
Any balance or surplus of such proceeds of sale shall be paid to the mortgagor,
his heirs, executors, administrators or assigns.
(5) There shall be a recital in the conveyance executed pursuant to the
power of sale, of the compliance with all requirements of law regarding filing
of notice of default, election to sell and notice of sale to the mortgagor or
his successor in interest, publishing, posting, and radio announcement, notice
of sale, and personal service of notices which shall constitute prima facie
evidence of compliance with such requirements and conclusive evidence thereof
in favor of bona fide purchasers.
(6) Every sale made under this Section vests in the purchaser, free from
encumbrance, of the leasehold interest of the mortgagor without equity or right
of redemption.
(7) If, at the time and place specified for sale, no buyer appears, or
no acceptable bid is made, the mortgagee may bid in his own name and purchase
the leasehold interest in his own name and for his own use. [P.L.
1987-13, § 11.]
§ 12. Right to deficiency subsequent to foreclosure
sale.
The mortgagee shall have a right to a deficiency judgment against the
mortgagor for satisfied balance on the debt being secured by the mortgage
subsequent to judgment and foreclosure sale for any mortgage foreclosed
pursuant to Sections 8(a) and 9 of this Act. There shall be no right to a
deficiency judgment for any mortgage foreclosed pursuant to Sections 8(b), 10,
and 11 of this Act, and the foreclosure sale under said Sections shall be a
final discharge and release of the mortgage and the obligation secured thereby.
[P.L. 1987-13, § 12.]
§ 13. Discharge, re-conveyance and satisfaction.
(1) A mortgage must be discharged and released by a certificate of
acknowledgement signed by the mortgagee, his personal representative or assign,
stating that the debt secured by mortgage has been paid, satisfied or
discharged. Reference shall be made in such certificate to the name of the
mortgagor, the date of registration and the location where the mortgage is
registered.
(2) When any debt secured by a mortgage has been duly satisfied, the
mortgagee, or his assignee, shall execute, acknowledge, and deliver to the
mortgagor a certificate of discharge of the debt and mortgage. The mortgagee,
his personal representative or assign shall deliver to mortgagor, the mortgage
and the note so paid marked "satisfied". [P.L.
1987-13, § 13.]
§ 14. Impairment of security.
No person who has executed and delivered a mortgage on a leasehold
interest in real property as security for the performance of an obligation or
the payment of any debt shall do any act which will substantially impair the
mortgagee's security. [P.L. 1987-13, § 14.]
§ 15. Appointment of receiver.
(1) At any time after an action to foreclose a mortgage is filed in the
High Court pursuant to Section 9 of this Act, or after the filing of a notice
of default and election to sell a leasehold interest in real property under a
power of sale in a mortgage, pursuant to Section 11 of this Act, the mortgagee
may apply to the High Court for the appointment of a receiver of such property.
(2) A receiver shall be appointed where it appears that the real
property subject to mortgage is in danger of substantial waste, or that the
income therefrom is in danger of being lost, or that any personal property
subject to the mortgage is in danger of being lost, removed, materially injured
or destroyed, or that the property is or may become insufficient to discharge
the debt which it secures. [P.L. 1987-13, § 15.]
§ 16. Registration of assignments.
Any assignment of mortgagee's interests under a mortgage shall be
registered with the Clerk of the High Court, and from the time the same is
filed for registration, all persons are deemed to have notice of the contents
thereof. [P. L. 1987-13, § 16.]
§ 17. This Act to prevail over any other
law.
Notwithstanding anything contrary in any other law, the provisions of
this Act shall prevail, and in the event there is any inconsistency in this Act
with the provisions of any other law, the provisions of this Act shall prevail.
[P.L. 1987-13, § 17.]
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