Hipoteki

Hipoteki are a form of real estate security used to guarantee the performance of an obligation, most commonly a loan. They are rights in rem that attach to a property rather than to a person, giving the creditor a priority claim against the property if the debtor fails to meet the obligation. In many civil-law systems, including Poland, a hipoteka is created by a contract and entered into a public registry to take effect against third parties.

The secured claim typically covers the loan amount, interest, costs, and any other amounts agreed in the mortgage agreement, up to a specified limit. The debtor remains the owner and usually retains possession of the property, but the creditor’s right encumbers the property until the debt is satisfied or the mortgage is released.

If the debtor defaults, the creditor may pursue enforcement through a court order to sell the property, usually at a public auction. Proceeds from the sale first satisfy the secured claim, with any surplus returned to the debtor. The lender’s rights under a hipoteka generally survive transfers of ownership and remain attached to the property until the debt is paid or the mortgage is discharged.

Discharge occurs when the secured obligation is fulfilled and the mortgage is canceled in the land records. In practice, hipoteki are a common mechanism for lenders to manage risk in real estate lending, providing a legally recognized and enforceable claim on the property used as security.