Are there material registration costs associated with the creation of mortgages over real estate?

Real Estate (3rd edition)

Austria Small Flag Austria

Yes in some states. Some states and municipalities impose a mortgage recording tax which is calculated as a percentage of the face amount of the mortgage and is paid by the borrower (see Q15). In all cases, in addition to its own costs, a borrower will be responsible for the lender's title insurance, legal fees, and due diligence costs as well as a de minimis recording charge.

Brazil Small Flag Brazil

There are notary costs for the mortgage institution and for the registration at the relevant Real Estate Registry Office, which vary in accordance to the transaction values. As mentioned above, registration is mandatory for the purposes of enforceability against third parties.

Cayman Islands Small Flag Cayman Islands

See question 14 for a breakdown of stamp duty applicable to security interests over Cayman Islands real property. Registration fees are immaterial.

Cyprus Small Flag Cyprus

The loan agreement, the mortgage agreement and any other guarantee must be stamped at the tax Authorities. The stamp duty is estimated on the amount of the mortgage and is paid by the mortgagee. It is calculated as follows: when the amount of the mortgage is less than €5.000,00 no duty is paid. Duty of €1,5 for every 1000 euro on the first 170.000,00 euro is charged and for any amount above €170.000, the duty raises to €2 for every thousand euro. The stamp duty does not exceed the amount of €20.000,00.

When the mortgage is registered at the land registry, mortgage fees are payable which are the 1% of the mortgage amount.

Denmark Small Flag Denmark

As mentioned above, mortgages over real estate must be registered with the Danish Land Registration Court. This registration is a perfection requirement. A fixed fee in the amount of DKK 1,640 (approx. EUR 220) and a variable fee equivalent to 1.45% of the amount secured by the mortgage is payable in connection with the registration of the mortgage. There is no upper limit on the variable fee.

The value of mortgages that have already been registered on the real estate in question may under certain circumstances be set off against new mortgages to be registered on the real estate in connection with refinancing.

France Small Flag France

Creation and registration of a mortgage trigger:

  • notarial fees – a legally defined percentage of the secured receivable (e.g. for securing a loan financing a professional activity: 0.447% (VAT excluded) of the principal secured amount), subject to possible legally limited discount depending upon the amount of the secured receivable;
  • land registry tax (TPF) - 0.715% of the principal secured amount and of the ancillary secured amount (ancillary secured amount being usually between 5 and 15% of the principal secured amount and being contemplated to secure, among others, enforcement costs of the mortgage); and
  • other tax (CSI) – 0.05% of the principal secured amount and of the ancillary secured amount.

Lender's liens are less expensive than mortgages (i.e. same costs, except for the 0.715% land registry tax (TPF)) but can only be granted when the relevant conditions are met (as explained above in question 19).

Germany Small Flag Germany

Generally, mortgages and land charges must be notarised and typically will contain a clause submitting the property to immediate enforcement. Such a clause helps to shorten the enforcement process, because no prior court ruling on the underlying claim would be required (but the foreclosure procedure as such still needs to be carried out). Notarization of the lien and said enforcement clause will trigger notary fees.

In addition, registration (and later deletion) of the lien in the land register will trigger land register fees. A land charge or mortgage can either be certificated (i.e. a certificate will be issued by which the right can be assigned outside the land register by transfer of the certificate) or uncertificated (in which case it can only be transferred by registration of the new creditor in the land register). Many banks prefer a certified lien because it allows quicker transfer and gives more flexibility. However, issuance of the certificate results in additional costs.

There are no property or transfer taxes payable in relation to the creation of security over real property.

Greece Small Flag Greece

The mortgage/prenotation of mortgage registration fees with the Land Registry amount to 0.775% and with the Cadastre amount to approximately 0.8% and 0.9% respectively on the amount of the mortgage/prenotation of mortgage. In case a mortgage is registered by virtue of a Notarial Deed, the following additional expenses apply: (a) legal fees vary depending on the amount of legal work required; (b) notarial fees equal to 1% of the amount of the mortgage if the latter amounts to a maximum of 320,000 euros. The percentage is steadily reduced if the mortgage amounts to more than 320,000 euros. The legal and judicial fees for the issuance of a Court decision, by virtue of which a prenotation of mortgage securing a loan is placed upon an asset, amount to approximately Euro 1,000 depending on the amount of time and effort expended. Subject to certain exemptions, mortgage is in principle subject to stamp tax, payable to the State, at the rate of 2.4% or 3.6% (depending on whether the secured claim is commercial or not) on the amount of the secured claim. On the other hand, a prenotation of mortgage is not subject to stamp tax. Stamp tax is only due at the time the prenotation is turned into a mortgage.

Hungary Small Flag Hungary

There are a variety of fees and expenses payable in relation to the creation and registration of mortgages over real estate, including the fees of notarization, registration fees with the Land Registry, translation costs etc.

In typical cases the most relevant costs associated with the creation of real estate mortgages are the notary fees. Real estate mortgage agreements are in typical cases concluded in notarized form, which allows the secured creditor to avoid lengthy court procedures in the case of enforcement (see answer to Q19 above). The fees of the notary are defined by law and is calculated generally on the basis of the claim secured by the mortgage. Notarial fees typically amount to approx. EUR 10,000-12000, as notarial fees significantly increased in July 2019 due to new legislation.

The registration costs of a real estate mortgage with the Land Registry are not significant (approx. EUR 40).

India Small Flag India

Stamp duty will be payable on the mortgage instrument. In the state of Maharashtra, where possession is not given or agreed to be given under the mortgage, stamp duty is levied at the rate of 0.5% of the amount secured, subject to a maximum of Rupees 10 lakhs (INR 1,000,000). A reasonable registration fee is also payable.

Ireland Small Flag Ireland

No, only registration and filing fees. The registration fee in the Land Registry is €175, the fee in the Registry of Deeds is €50 and the fee in the CRO for registering a charge under CA 2014 is €40.

Japan Small Flag Japan

The main cost of the creation of a mortgage is the registration and license tax. Registration and license tax is 0.4% of the secured loan amount. On the other hand, the lodgement of a mere provisional registration costs only JPY 1,000 for each item of real property. In addition, stamp taxes apply and lawyer fees will be incurred.

Kenya Small Flag Kenya

The concept of mortgages was abolished. However, in order to register a charge over property, the following costs apply:

The cost of registration of a charge is nominal.

However, before a charge can be registered, the chargee is liable for stamp duty on the charge at the rate of 0.1% of the amount secured by the charge.

In addition, there are other costs associated with charging a property, including cost of valuation of the property and legal costs.

Mexico Small Flag Mexico

Creation of mortgages over real estate involve notary public fees and legal fees, as well as Public Registry duties to record the public deed. These costs vary depending on the characteristics of the transaction and the place where the property is located.

Mortgages do not involve any tax payments, except for the applicable taxes on interests paid by debtors to creditors under the relevant loan that is secured by the mortgage.

Monaco Small Flag Monaco

The creation of mortgages over real estate requires registration fees of 0.65 % of the amount to be secured payable to the mortgage registry.

A contractual mortgage will also implies a duty of 3 % for mortgage agreement documents or for the engrossed copy.

Romania Small Flag Romania

Mortgages over real estate must be provided in a contract executed before the notary public. Notary taxes and tariffs are calculated as a percentage of the mortgage value.

Land book registration is currently subject to a tax of RON 100 (approximately EUR 22) per each immovable asset plus 0.1% of the value of the secured receivable.

Russia Small Flag Russia

The costs associated with the creation of mortgages are not significant. No notarization is required, and the fee for registering the mortgage with the public register is only RUB 4,000 (approximately EUR 55).

Slovenia Small Flag Slovenia

The creation of a mortgage is under Notary Tariff subject to notary fee, which varies according to the form, that has been chosen to create a mortgage. After the completion of transaction in which a mortgage is stipulated, it has to be registered in the Land Registry for which an additional registration fee applies.

Spain Small Flag Spain

Yes, mortgages can be created over real estate. This is the most commonly-used security in relation to real estate assets. A mortgage ("hipoteca") constitutes, under Spanish law, an encumbrance over a property as security for fulfilment of a personal obligation. If the secured obligation is not fulfilled, the mortgagee is entitled to request the sale of the property in public auction and the proceeds would serve to pay the mortgagee's credit right plus any judicial costs. Any remaining balance is handed over to the mortgagor. Mortgages in Spain confer a lien on the property in favour of the mortgagee without conferring title to the property, which remains in the hands of the mortgagor.

Mortgages must be made in writing, executed before a Notary Public in a public deed, and registered at the relevant Land Registry. Without such formalities, mortgages have no legal effect. Second or further mortgages are permitted but they are subject to the priority system of the Land Registry. The person who registered his/her mortgage first will have a priority right over the second (first in time, first in right). For this reason, it is common practice to obtain a title search certificate from the Land Registry attesting as to whether or not prior mortgages or encumbrances exist over the property to be mortgaged.

The law imposes a limit on the amount of interest on the principal debt that may be secured by a mortgage; that is a limit of up to five years' interest, referring to both ordinary and default interest.

Mortgages may be granted by contractual agreement or by unilateral decision of the owner of the property. In the latter case, the person in favour of whom the mortgage is granted must accept it. Should he/she not do so within two months of being notified of the mortgage, the mortgagor may cancel the mortgage by executing a further public deed.

For the creation of a mortgage it is necessary for the parties to agree on the value of the property, which will be the reference amount for the auction in the case of foreclosure. A valuation certificate must be issued by an expert and attached to the mortgage deed.

In Spain, both the amount and the obligation secured by the mortgage must be determined in the mortgage deed. The amount of the debt, however, need not be known exactly at the time of the execution of the mortgage deed, and the mortgage may be established at a maximum amount (as would be the case if the mortgage secures a line of credit). Furthermore, a mortgage may secure a future obligation, provided that the Land Registry is notified when the obligation arises.

The mortgagor may transfer the mortgaged property by a deed of transfer to a third party. In this case, the new owner will have his/her property encumbered by the mortgage, as mortgages run with the land. In order for the new owner to subrogate the underlying personal obligation secured by the mortgage, the consent of the mortgagee has to be obtained.

The mortgagee, on the other hand, may assign all or part of his/her credit to a third party. The assignment of a credit secured by a mortgage involves the assignment of the mortgage as well. The assignment must be executed in a public deed and registered at the Land Registry and the mortgagor must be notified of the assignment. In practice, however, mortgagors routinely waive the right to be notified.

In the event of a default by the mortgagor, the mortgagee may request a judge to give him/her possession of the property and allow him/her to manage it until it is sold in public auction. It must be stressed that a mortgage in Spain will not confer title over the property in the event of default by the mortgagor. It only gives the mortgagee the right to settle his/her debt with the proceeds from the foreclosure sale of the property. The mortgagee may also request that the property be awarded to him/her at the foreclosure proceedings. The sale may be carried out by public auction either through judicial or extrajudicial proceedings.

A judicial sale of the mortgaged property may be carried out via foreclosure proceedings ("Procedimiento Ejecutivo") or through one of the two special and faster summary proceedings: the "Procedimiento Sumario" which is heard by a Judge or the "Procedimiento Extrajudicial" which is heard by a Notary.

After the property is acquired in public auction, the price will have to be deposited with the Court (or the Notary in extrajudicial proceedings). The Court will subsequently issue a writ (a public deed in the case of the Notary) evidencing the award of the property to the highest bidder and ordering the discharge or cancellation of later liens over the property. This discharge or cancellation does not extend to any liens or encumbrances that may have been attached to the property before the registration of the mortgage.

It is important to note that credits secured by a mortgage have priority in the event the debtor becomes insolvent.

In recent years regulations related to mortgages have been amended to include measures to reinforce the protection of mortgagors, as a result of certain court rulings (both at domestic and European levels) in the context of the economic crisis and the large number of non-performing loans which gave rise to numerous eviction proceedings.

Sweden Small Flag Sweden

The only material cost associated with the creation of mortgages is a stamp duty levied on the property owner. The stamp duty on mortgages is currently 2 percent of the mortgage amount.

Thailand Small Flag Thailand

Yes. One material cost for the creation of a mortgage over real estate is a registration fee assessed by the Land Department: one percent of the mortgage limit amount, however the maximum amount of the registration fee is capped at THB 200,000.

Turkey Small Flag Turkey

The title deed fee (%0,455 of the contract value as for 2019), stamp tax (%0,948 as for 2019) and fix fee are compulsory material costs in creation of mortgage over real estate.

United Kingdom Small Flag United Kingdom

There are a variety of fees and expenses payable in relation to the registration of mortgages with appropriate registries but as a general rule they are unlikely to be significant enough to affect how the transaction should be structured, e.g. Land Registry fees on a scale of up to £250 per property for the registration of a mortgage and a Companies House fee of £15 for online filing of a charge.

There are no notarisation requirements or property taxes payable in relation to the creation of security over real estate. SDLT is not payable on the creation of security over real estate.

United States Small Flag United States

Yes in some states. Some states and municipalities impose a mortgage recording tax which is calculated as a percentage of the face amount of the mortgage and is paid by the borrower (see Q15). In all cases, in addition to its own costs, a borrower will be responsible for the lender's title insurance, legal fees, and due diligence costs as well as a de minimis recording charge.

Indonesia Small Flag Indonesia

Yes.

Fees under Regulation 128/2015

Government Regulation No. 128 of 2015 (“Regulation 128/2015”) provides the non-taxation fees applicable at the Land Office in relation to mortgage registration costs. Under Regulation 128/2015, mortgage registration fees at the Land Office are determined based on the value of the mortgage as follows. (For this purpose, we have assumed an exchange rate of USD1 = Rp14,000.)

Mortgage value

Land Office Fees per mortgage certificate

up to 250 million Rupiah (USD17,857)

Rp50,000 (USD3.50)

above 250 million Rupiah (USD17,857) up to 1 billion Rupiah (USD71,428)

Rp200,000 (USD14.20)

above 1 billion Rupiah (USD71,420) up to 10 billion Rupiah (USD714,285)

Rp2,500,000 (USD178.50)

above 10 billion Rupiah (USD714,280) up to 1 trillion Rupiah (USD7,142,857)

Rp25,000,000 (USD1,785.70)

above 1 trillion Rupiah (USD7,142,857)

Rp50,000,000 (USD3,571.40)

Note however that on top of the above land registration fees payable to the Land Office, fees are also payable to the Land Deed Official, typically including fees for the preparation of the deed of mortgage and its registration, so that the mortgage certificate can be issued over the security. Please see the explanation below.

Fees for Land Deed Officials

Fees for the Land Deed Official in the creation of mortgages are negotiable. Typically, the notary will charge 0.1 percent of the mortgage value. So, if the mortgage value is USD500,000, the Land Deed Official fee may be USD500. Where the mortgage value is high (for example, hundreds of millions of dollars), the parties will typically negotiate the fee down by up to half of the normal fees, but the amount will depend on negotiations with the notary on a case by case basis.

Morocco Small Flag Morocco

The registration of a mortgage generates substantial registration duties and land registry fees charged as follows (progressive rate):

  • Registration duties: the amount of the mortgage is subject to registration duties at the rate of 1.5%
  • Land registry fees: such fees vary depending on the value of the mortgage as follows:
    • lower than MAD 250,000: 0.5%;
    • between MAD 250,000 and 5,000,000: 1.5%
    • above MAD 5,000,000: 0.5%.

A fixed duty (per property) of MAD 100 also applies.

Updated: December 17, 2019