Legal Regulation of Mortgage in Uzbekistan

A mortgage, as a special form of securing obligations, occupies a key place in civil transactions. It ensures a balance of interests between the creditor and the debtor, creating guarantees of repayment and financial stability. The Law of the Republic of Uzbekistan “On Mortgage” (No. ZRU-58, 2006) defines the main legal mechanisms regulating mortgage relations, establishes the procedure for concluding and registering mortgage agreements, and regulates the protection of the parties’ rights.

Definition and Nature of Mortgage

According to the law, a mortgage is a pledge of immovable property whereby the creditor (mortgagee) acquires the right of priority satisfaction of their claims from the value of the pledged property over other creditors of the debtor.
The mortgage is accessory in nature, meaning its existence depends on the main obligation and terminates upon its fulfillment.

A mortgage may arise:

• by contract (contractual mortgage);
• by law (statutory mortgage).

The rules governing contractual mortgages also apply to statutory mortgages unless otherwise provided by law.

Objects of Mortgage

The following can be objects of a mortgage:

• Buildings, structures, apartments in multi-apartment buildings;
• Enterprises and other property complexes;
• Land plots not intended for agricultural purposes, owned by legal or natural persons.

It is prohibited to establish a mortgage over property withdrawn from civil circulation, as well as over objects whose privatization is prohibited or restricted.

Rights and Obligations of the Parties

Mortgagor (Debtor or Property Guarantor)

Rights:

• To possess and use the mortgaged property;
• To receive products, fruits, and income from the property;
• To lease or grant easement rights over the property (with restrictions).

Obligations:

• To maintain the property in proper condition;
• To insure the property against loss or damage;
• To notify the mortgagee of threats or changes in the property’s condition;
• Not to dispose of the property without the creditor’s consent (unless otherwise provided by the contract).

Consequences of Violations:

• Early recovery of the debt upon the mortgagee’s demand;
• Foreclosure on the property;
• Invalidation of an unauthorized transaction of alienation;
• Joint liability with the purchaser of the property.

Mortgagee (Creditor)

Rights:

• To inspect the condition of the property;
• To satisfy claims from the value of the pledged property;
• To demand early fulfillment of the obligation in case of a threat of property loss;
• To receive insurance compensation in case of property loss or damage.

Obligations:

• To accept proper fulfillment of the obligation;
• To return the mortgage deed or make a note of mortgage termination after the obligation’s fulfillment;
• To ensure the debtor’s rights are respected during foreclosure proceedings.

Consequences of Violations:

• Loss of the right to insurance compensation if the loss occurred due to the mortgagee’s fault;
• Liability for abuse of rights (for example, unjustified demand for early performance).

 

State Registration of Mortgage

A mortgage agreement is subject to notarial certification and state registration. Without these procedures, the agreement is considered invalid. Registration is carried out in the real estate pledge register, and the mortgage acquires legal force from the moment of registration.

Creditor’s Guarantees

The law provides a mechanism for satisfying the creditor’s claims through:

• Sale of the mortgaged property;
• Insurance compensation in case of loss or damage;
• Recovery of additional expenses (penalties, court costs, and enforcement expenses).

Liability and Consequences of Violations

If the mortgagor violates the rules of property preservation, misuses the property, or disposes of it without the creditor’s consent, the mortgagee has the right to:

• Demand early repayment of the debt;
• Request that the transaction be declared invalid;
• Seek foreclosure on the mortgaged property in court.

Objects Eligible and Ineligible for Mortgage

Category	Permitted for Mortgage	Prohibited for Mortgage
Real Estate	- Buildings and structures; - Apartments in multi-apartment buildings; - Enterprises and other property complexes; - Unfinished construction objects (if legally built).	- Property withdrawn from circulation (e.g., military facilities); - Real estate not subject to alienation.
Land Plots	- Land plots not intended for agriculture and owned by natural or legal persons; - Land for individual housing construction; - Land for dehkan (smallholder) farming; - Lease rights to land plots (if not prohibited by law or contract).	- Agricultural land (not subject to mortgage); - Land withdrawn for state needs.
Property Rights	- Tenant’s rights to real estate (building, apartment); - Lease rights to land plots; - Servitude rights (in limited form).	- Rights restricted by law or requiring mandatory consent (e.g., state or owner consent).
Special Objects	—	- Objects whose privatization is prohibited or restricted (strategic enterprises, property); - Objects of historical, scientific, artistic, and cultural value (as determined by the Cabinet of Ministers).

Thus, a mortgage can only be established over property that:

• is in free civil circulation,
• may be alienated or transferred, and
• is duly registered in accordance with the law.