Maria Fedosova, Iusland Law Offices’ partner, commented on the article “When the order is not received. Competent answers to pressing questions of entrepreneurs”, published by the newspaper “Delovoy Petersburg”

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10.02.2020

Maria Fedosova, Iusland Law Offices’ partner, answered on “Can an individual entrepreneur take a loan for business development on the security of his apartment? Is the bank entitled to withdraw such housing if it is the only one for the borrower and his family, including minor children?”:

“The practice of lending individual business, secured by real estate, is widespread. At the same time, banks cautiously issue loans to individual entrepreneurs for residential premises, which are the only ones for borrowers and their families. The reason for this is the complex and lengthy enforcement mechanism.

Of course, the Civil Code of the Russian Federation and the Federal law on mortgages provide for foreclosure at the request of the lender, even when the apartment is the only housing of the debtor. And judicial practice testifies to the protection of the interests of banks in such a situation. However, significant time and other costs necessary to foreclose a mortgaged apartment are assessed by credit organizations as a blocking factor for the provision of these loans.

The collection of borrowed funds through the sale of mortgaged property can be carried out both in court and out of court. The borrower's chance to preserve the only housing encumbered with a pledge is negligible, this is possible only if the bank makes a bankruptcy petition in the bankruptcy case, which is initiated by the citizen himself”, Maria Fedosova.

The full article is available at: here