FORECLOSURE ON TRUST PROPERTY IN LOAN OBLIGATIONS

Abstract

The article analyzes the consequences of a debtor’s breach of loan obligations in the context of protection of the creditor’s violated rights by way of foreclosure on a trust property. The author distinguishes the grounds for foreclosure on the trust property: delay; non-payment of interest by the debtor; non-fulfillment or improper fulfillment by the debtor of the obligation to return the thing defined by generic characteristics; transfer by the debtor of the trust property for use by third parties without the creditor’s permission; operation by the debtor of the trust property in a manner that threatens to significantly reduce its value or destroy it; failure to fulfill the obligation to insure the trust property, etc. The author analyzes the legislative requirements for mandatory foreclosure by a creditor on a trust property object. The author concludes that, taking into account the above obligation of the creditor to foreclose on the debtor’s property on the grounds not directly related to the debtor’s failure to fulfill or improper fulfillment of its obligations, the trust property has a special legal nature which is atypical for the methods of ensuring the fulfillment of obligations. The author analyzes the procedure for foreclosure on a trust property object. It is established that foreclosure on a trust property is characterized by a simplified procedure for implementation through the mechanism of indisputable alienation. The creditor’s claims may be satisfied both by foreclosure on the trust property and by acquiring the creditor’s private property right to this property. The author analyzes the procedure for determining the sale price of a trust property, and the procedure for exercising the debtor’s preemptive right to acquire property in respect of which the creditor has decided to foreclose. The cases of fulfillment of the debtor’s obligation by a third party (assignment of performance) are highlighted. The author identifies the peculiarities of exercising the right to foreclose on such trust property as housing.