Making of a Procuration to Sell Together with a Credit Contract for a Collateral Object

Abstract

Issuance of the procuration to sell together with the credit agreement is basically contrary to Article 20 Paragraph (2) Mortgage Right Law. In the elucidation of Article 20 Paragraph (2) of the Mortgage Law it is explained that in the event that a sale through a public auction is not expected to produce the highest price, by deviating from the principle referred to in Paragraph (1) it is given the possibility of carrying out execution through private sales, provided that this is agreed upon by the grantor and the holder of the Mortgage Right, and the conditions specified in Paragraph (3) are met. His possibility is intended to accelerate the sale of Mortgage objects with the highest selling price. This means, selling under the hand is an alternative provided by Mortgage Law if ready execution is estimated to be no more profitable than private sales. As for the legal consequences of issuing a deed of power of attorney to sell contrary to Article 20 Paragraph (2) Mortgage Right Law as stipulated in Article 20 Paragraph (4) Mortgage Right Law is null and void. Thus, the deed of power of attorney issued by a Notary together with the credit agreement is null and void. This means that the deed of power of attorney to sell is deemed to have never existed, so it cannot be used as a basis for private sales.