The last lender privilege, is a guarantee very close to the mortgage guarantee. However, can borrowers who have opted for this guarantee make a consolidation of real estate loans?
Last Lender Privilege : What is it?
The lender is a guarantee that works on the same principle as the mortgage. That is, it allows the lender (bank, credit institution) to seize the property and sell it by court if the borrower fails to repay his monthly payments. The lender guarantee is a real guarantee taken on the property to be financed. Admittedly, it is very close to the mortgage, but it has some differences from it. First, as its name indicates, it is a privilege granted to a lending institution that will have priority over other potential creditors. Then, it is less expensive than the mortgage since it is not subject to the payment of the land registration tax. Finally, only already built property and land can be the subject of a lien of last lenders. As a result, credits for the construction of real estate or works are totally excluded.
Setting up, cost
Like the mortgage, the last lender privilege must imperatively be the subject of a notarial deed, it must also be registered to the mortgage retention. In other words, its implementation requires the drafting of a notarial deed registered in the mortgage office within two months of financing or sale. Thus, it ranks on the date of sale or financing, that is to say, it will take priority over all other guarantees (mortgage, bond) that will be taken on the property. Namely that this guarantee can not be used to cover a credit which must finance the construction of a real estate, nor the financing of a sale in future state of completion. On the cost side, the lender’s lien charges are borne by the borrower, the PPD is exempt from the property tax. Thus, its cost is much lower than that of a conventional mortgage. Moreover, like the mortgage guarantee, the PPD generates a charge of release in case of early repayment of the loan, that is to say in case of consolidation of real estate loans.
Consolidation of real estate loans with lender guarantee
The consolidation of real estate loans consists in taking out a new loan to prepay the initial loans. As the holder of a mortgage guarantee, that of a lender’s last lien can also opt for an early repayment and hence a pooling of credits. However, in the event of early repayment, extinguishment of the lender’s last lien generates a cost, the cost of release. Namely that these fees are identical, whether it is a mortgage or a lender’s last lien .