The Constitutional Court of Ukraine declared the provisions of Article 23.1
of the Law of Ukraine on Mortgage to be constitutional
The Constitutional Court of Ukraine adopted the Decision in the case upon the constitutional complaint of Andrii Dermenzhy, declaring the provisions of Article 23.1 of the Law of Ukraine on Mortgage dated June 5, 2003 No. 898 - IV (hereinafter referred to as the Law) as such that comply with the Constitution of Ukraine.
In his application, A. Dermenzhy challenged the provisions of paragraphs one and two of Article 23 of the Law, which determine the consequences of the transfer of ownership of a mortgage to a third party.
The author of the complaint noted that as a result of the application by the courts of Ukraine of the disputed provisions of the Law, "his right to own and dispose his property, including the right to receive prior and full compensation in case of forced alienation" had been violated.
In resolving the issues raised in the constitutional complaint, the Constitutional Court of Ukraine proceeded, in particular, from the fact that a mortgage is a specific type of security for real estate, which remains in the possession and use of its owner, who has limited authority to dispose the mortgage. That is, the mortgage restricts such an element of property rights as the right to dispose real estate, which is the subject of the mortgage agreement.
The peculiarity of this type of security is that the encumbrance of the property occurs regardless of the change of owner of such property, so for each subsequent owner of the mortgage property there are risks of liability to the mortgagee for default by the debtor, including foreclosure on the mortgage, which is emphasised in the Decision.
The Court points out that the purchaser of the subject of the mortgage is not deprived of the opportunity to obtain information about the encumbrance of the property by the mortgage alone or with the assistance of third parties to protect themselves from the negative consequences of acquiring the status of mortgagor. Although encumbrance of property by mortgage affects the ability of the purchaser of mortgage property to exercise his constitutional right of ownership due to the limited right to dispose the subject of the mortgage, interference with such a right is minimal and is aimed at taking into account the interests of all subjects.
Based on the above, the Constitutional Court of Ukraine held that the provisions of Article 23.1 of the Law do not contradict the Constitution of Ukraine.
In addition, A. Dermenzhy raised the question before the Constitutional Court on compliance of the provisions of Article 23.2 of the Law with the provisions of paragraphs one, two, four, five of Article 41 of the Constitution of Ukraine, but did not substantiate the allegations of their unconstitutionality. Therefore, the Constitutional Court of Ukraine decided to terminate the constitutional proceedings in the case on the constitutionality of Article 23.2 of the Law on the basis of Article 62.4 of the Law of Ukraine on the Constitutional Court of Ukraine, i.e. inadmissibility of the constitutional complaint.
The decision of the Constitutional Court of Ukraine is binding, final and may not be appealed.
