Parties' Rights in Mortgages Property after ECJ Rulings on Mortgage Enforcement Proceedings

Abstract

This paper discusses a series of ECJ judgments on national mortgage enforcement proceedings in light of the Directive on Unfair Terms in Consumer Contracts. According to the Court, national courts must be able to provide interim measures suspending mortgage enforcement proceedings, thereby allowing the debtor to retain ownership of the property while the (un)fairness of clauses in the loan agreement is assessed. This in turn enables national courts to strike out these clauses if they are found to violate the Directive, thereby altering the relationship between debtor and creditor. Consequently, rights in the property held by the debtor, creditor, and third parties such as a second mortgage holder are directly affected by the ECJ’s intervention in national mortgage enforcement proceedings. This paper clarifies exactly how the parties’ rights in the property are affected and what these judgments mean for the protection of private home ownership in the ungoing economic crisis.