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Foreclosure of Real Estate Mortgage

In order to fully understand the concept of “foreclosure of real estate
mortgage” it is proper to first discuss real estate mortgage, and the concept
of mortgage itself as the law defines it, as well as its scope.

Mortgage
The word “mortgage” is derived from two French words, “mort” and
“gage”. These are equivalent to the Latin terms mortuum uadium. The word
“mort” means “dead” and the term “gage” means “pledge.” Thus, mortgage
means a dead or unproductive pledge.1
Manresa defined mortgage as “a contract in which the debtor
guarantees to the creditor the fulfillment of a principal obligation, subjecting
for the faithful compliance therewith a real property in case of non-fulfillment
of said obligation at the time stipulated.2

Real Mortgage
According to our laws, immovable and alienable real rights in
accordance with the laws, imposed upon movables may be the object of a
contract of mortgage.3 Movables may however be the object of a chattel
mortgage. At the same time, real property may also be subjected to a chattel
mortgage when the parties thereto intended to considered and stipulated in
their contract that real property be treated as personal property, 4 this is
however a different topic to be discussed. As contemplated by the law, as

1
Sturpe v. Kopp, 201, No. 412, 99 S.W. 1903)
2
12 Manresa
3
Art. 2124. Only the following property may be the object of a contract of mortgage:

(1) Immovables;

(2) Alienable real rights in accordance with the laws, imposed upon immovables.

Nevertheless, movables may be the object of a chattel mortgage.
4
Associated Insurance and Surety Company vs. Iya, G.R. No. L-10837, May 30, 1958

well as the legal word usage, the word mortgage would then be construed as
only referring to real estate mortgage or the mortgage of real property, and
mortgages over movable or personal property are then called chattel
mortgages.

Real Property
The terms real property and immovable property are used
interchangeably and are considered by our laws as one and the same. Article
415 of the Civil Code of the Philippines gives us an extensive list of
immovable or real property.
The following are to be considered as immovable property:
- Land, buildings, roads and constructions of all kinds adhered to the
soil;
- Trees, plants, and growing fruits, while they are attached to the
land or form an integral part of an immovable;
- Everything attached to an immovable in a fixed manner, in such a
way that it cannot be separated therefrom without breaking the
material or deterioration of the object;
- Statues, reliefs, paintings or other objects for use or ornamentation,
placed in buildings or on lands by the owner of the immovable in
such a manner that it reveals the intention to attach them
permanently to the tenements;
- Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend
directly to meet the needs of the said industry or works;
- Animal houses, pigeon-houses, beehives, fish ponds or breeding
places of similar nature, in case their owner has placed them or
preserves them with the intention to have them permanently
attached to the land, and forming a permanent part of it; the
animals in these places are included;

5 They are classfied by nature as they cannot be carried from place to place. by analogy or when they are classified as immovable properties by provision of the law because they are regarded as united to the immovable property. Real mortgage is however binding upon the immediate parties whether registered or not so long as there are no third persons affected thereby. and servitudes and other real rights over immovable property. Docks and structures which. quarries. animal houses. 415. walls or fences. . Fertilizer actually used on a piece of land. thereby classifying mortgage being a real right over an immovable property as by itself a real property. like buildings. Mines. trees statues. and waters either running or stagnant. are intended by their nature and object to remain at a fixed place on a river. . while the matter thereof forms part of the bed. particularly paragraph 10 thereof. or coast. 5 Art. though floating. . and slag dumps. Civil Code of the Philippines . Contracts for public works. by incorporation as they are attached to an immovable in a fixed manner to be an integral part thereof. Characteristics of a Real Mortgage A real mortgage is a real right as a mortgage binds a purchaser who knows if its existence or if the mortgage was registered. by destination as when they are placed in an imovable for utility it gives for the activity to be carried thereon such as machinery installed in a building to meet the demands of the industry. of the Civil Code. lake. Article 415. included real rights over an immovable property as real property itself. .

A real mortage is also considered as indivisible and inseparable. It is a voluntary or conventional mortgage when it is created by the parties. such that when the principal obligation is considered void.6 It is a limitation on ownership. It is inseparable as it adheres to the property. voluntary or conventional mortgages. It is an accessory contract. 7 Supra. Nonetheless. 7 Furthermore. but it does not however end the ownership. . and it is a lien. Veloso. the principal contract of loan may still be valid. Registration A document evidencing real mortgage must be recorded in the Registry of Property. and equitable mortgages. the mortgage is also considered void. but nonetheless be forclosed. it is still binding between the parties who constituted the same. 8 Art 2125. 46 Phil. It is Equitable when it reveals an intent to make the property a security even if the contract lacks the proper formalities of a real estate mortgage. It is a legal mortgage when it is one required by law to guarantee performance. as it encumbers ownership. regardless of who the subsequent owner may be. 8 6 McCullough vs.. Civil Code. and the property cannot be appropriated when there is an existing mortgage. Kinds of Real Mortgages There are three main kinds of real mortgages namely. legal mortgages. Nonetheless when the document is not registered. 1. when a mortgage is void because it was not made by the owner of the property. in order for it to be validly constituted. it can secure all kinds of obligations.

whether registered or not. Cajucom. and the rents or income not yet received when the obligation becomes due. It must follow as a necessary consequence that registration must first be allowed and validity or effect litigated afterwards. but neither adds to its validity nor convert an invalid mortgage into a valid one between the parties.10 The legal presumption of sufficient cause or consideration supporting a contract.11 A mortgage. The validity and fulfillment of contracts cannot be left to the will of one of the contracting parties. the morgagor is understood to have given his consent to its registration. is binding between the parties.12 Scope of Mortgage Art 2127 of the Civil Code provides “The mortgage extends to the natural accessions. to the improvements. and to the 9 Ibid. registration. 10 Gonzales vs. If the purpose of registration is merely to give notice. registration being necessary only to make the same valid against third persons. the questions regarding the effect or invalidity of instruments are expected to be decided after.9 Once a mortgage has been signe in due form. .. registration only operates as a notice of the mortgage to others. By executing the mortgage. Basa 73 Phil. even if such cause is not stated therein cannot be overcome by a simple assertion of lack of consideration. L-13683 12 Ibid. and he cannot be permitted to revoke it unilaterally. In other words. The persons in whose favor the law establishes a mortgage have no other right than to demand the execution and the recording of the document in which the mortgage is formalized. not before. the mortgagee is entitled to its registration as a matter of right. 704 11 Samanilla v. growing fruits.

45 Phil. the mortgage constituted upon the land with the old house is covered by the same mortgage. the lien would be converted into a right in personam.R.17 A land with an old house which was latter replaced by a more expensive house. G. or in virtue of expropriation for public use. 14 Growing fruits should exclude those already harvested before the obligation falls due. Belando. in which it is constituted. whether the estate remains in the possession of the mortgagor. of the land mortgaged should not be applied to payment of the principal obligation unless there is a stipulation to that effect.15 Fruits already gathered. with the declarations. in the absence of express stipulation. itself. unless the houses are exempted by express stipulation. 61 Phil. 663 15 Afable v. 907 18 Philippine Sugar Estate Dev.amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged. Cu Unjieng.18 Forms 13 Ganzon v. 1983 14 Berkenkotter v. or it passes into the hands of a third person. 45 Phil. Co. NB.” A mortgage therefor attaches to all the other integral parts of the property.13 Some Rules A mortgage on the land includes present and future houses thereon. 56450. No. the mortgagee’s rights under the mortgage would be diminished. Naturally. the mortgage continues on said equipment. V. Campos. amplifications and limitations established by law. 36 Phil 85. 907 17 Serra vs NB. Sanco. A mortgage lien is considered inseparable from the property in as much as itis a right in rem.16 If equipment on a mortgaged land is temporarily removed. . If the mortgage be replaced by a surety bond. 55 Phil 64 16 Serra vs.

THEREFORE. That: The MORTGAGOR is indebted unto the MORTGAGEE in the sum of _____________ (P__________). and a resident of _____________. with interest thereon at the rate of _____________ (______%) percent per (month/annum). payable to the order of the MORGAGEE without need of prior demand or notice within a period of _____________ (years/months/weeks/days). Philippine Currency. made by and between: _____________. (single / married / widow). of legal age. Philippines (hereinafter known as the MORTGAGEE). WITNESSETH. the . (single / married / widow). The real estate mortgage contract may be instituted in the form of the following document: REAL ESTATE MORTGAGE KNOW ALL MEN BY THESE PRESENTS: This Real Estate Mortgage. of legal age. for and consideration of the afore-mentioned indebtedness. and a resident of _____________. at _____________ (P__________) (monthly/weekly/daily) starting on _____________ and on every _____________ thereafter until fully paid.and - _____________. and to assure the performance of said obligation to pay. receipt of which is acknowledged by the MORTGAGOR upon the signing of this instrument. . NOW. Philippines (hereinafter known as the MORTGAGOR).

it shall subsist and remain in full force and effect and be subject to foreclosure in the manner and form prescribed by law. successors and as signs. this _____________ at _____________. more particularly described as follows: (Technical Description of Property) That it is the condition of this Mortgage that should the MORTGAGOR perform the obligation to pay the afore-cited indebtedness of _____________ together with accrued interest thereon. together with all the improvements found and standing thereon. MORTGAGOR does hereby convey and DELIVER by way of MORTGAGE unto the MORTGAGEE. IN WITNESS WHEREOF. the following parcel of land. Philippines. within the agreed term. this Real Estate Mortgage shall be discharged and shall at once become null and void and of no effect whatsoever. (his/her) heirs. otherwise. we have have hereunto set their hands. MORTGAGOR MORTGAGEE With my Marital Conformity: Mortgagor's Spouse SIGNED IN THE PRESENCE OF: _________________ __________________ (ACKNOWLEDGMENT) Foreclosure of Real Estate Mortgage .

modification and extinguishment shall be governed by the provisions of the Mortgage Law and of the Land Registration Law. which states that the property mortgaged shall be sold to the highest bidder. extent and consequences of a mortgage.21 How Instituted Foreclosure of real estate mortgage begins when the mortgagee files a complaint. Valdeheuza. There are some facts to be considered in the foreclosure of real estate mortgage. A stipulation in a contract which fixes an upset price at which the property sold at a foreclosure sale is null and void. The Civil Code provides that the form.19 It is therefore the Mortgage Law that governs the foreclosure of the mortgage. Civil Code 20 Bank of the Philippines vs. Rules of Court . The Rules of Court particularly Rule 68 thereof provides for the procedure for the foreclosure. The complaint shall state when and where the mortgage was executed. the names and corresponding residences of the morgagor and the mortgagee. as it violates rule 68 of the Rules of Court. documentary evidence of the obligation secured by the mortgage and the amount to be unpaid thereon. as long as no innocent third parties are involved. a description of the property mortgaged. The names and residences of all persons with interest in the property with a subordinate right to the holder of the mortgage shall also be included and shall be made defendants in the action. both as to its constitution. Yulo. 22 19 Art 2131. a mortgage is between the parties and the mortgagee has the right to foreclose the mortgage. L38745 22 Rule 68.20 Even if not registered in the Registry of Property. 31 Phil 472 21 Tan v. foreclosure being a mode of extinguishing the mortgage.

Effects When after trial. the court shall order the property sold. The auction shall be held firstly if there is a stipulation as to place. The court will then order the mortgagor to pay the mortgagee or to pay to the court the sum due to the latter within a period not less than 90 days nor more than 120 days from the entry of judgment. otherwise the property foreclosed shall be sold at a public auction to satisfy the judgment. also upon motion. Such sale shall not affect the rights of persons holding prior encumbrances upon the property or a part therof. Judicial Sale The sale shall be made within the province in which the property sold is situated. it shall be made in the municipal building of the municipality in which the property or a part therof is situated. the place stipulated. and if there be none. If the mortgagor fails to pay. It shall also compute and include the interes and other charges as approved by the court. The mortgagor will however be given a period to redeem the property foreclosed. the court finds for the plaintiff or the mortgagee. it shall operate to dives the rights in the property of all the parties to the action and to vest their rights in the purchaser. . and when confirmed by an order of the court. the court shall ascertain the amount due to the mortgagee upon the debt or obligation.Where Instituted The complaint shall be filed at the Regional Trial Court of the province or municipality wherein the property subject of the mortgage is situated.

The debtor or the mortgagor may then ask. for the order of possession to be set aside. and where there shall be any balance. the balance shall be paid to . If the writ of possession is issued it shall be issued immediately. by filing a bond with the court. unless there is a stipulation in the contract that he may not. The sale shall be made at a public auction. between 9 a. if the property is worth more than four hundred pesos. and shall be under the direction of the sheriff of the province. Any person with interest in the property directly related to the mortgagor may redeem the property within one year from and after the date of sale. The creditor or mortgagee shall be allowed to participate. if he believes that the mortgage or the contract within which it is constituted is not violated. to 4 p. Proceeds of sale The proceeds of the sale shall be given to the person foreclosing the mortgage. the notice shall also be published once a week for three consecutive weeks in a newspaper of general circulation in the municipality or city.m. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated.m. the Judge. Possession of Property The highest bidder. or the purchaser would then have the right to ask for the possession of the property during the redemption period.

the court upon motion shall render judgment against the mortgagor for any balance where he may be held liable to the plaintiff. If there is no right of redemption. the certificate of title in the name of the mortgagor shall be cancelled. If there is a deficiency in the amount after applying the proceeds of the sale. If the person who purchased the property used it as his own dwelling or used gainfully. After 23 Act 3135 as amended by Act 4119 . and a brief memorandum thereof shall be made by the registrar of deeds on said certificate of title. the interest of one percent per month. Such confirmation retroacts to the date of the auction sale. and a new one issued in the name of the purchaser.23 If the sale has been confirmed by the court. If the property is redeemed. there can be no redemption. If there is a right of redemption. the mortgagor shall be entitled to deduct from the redemption price any rentals the purchases may have collected in case the property was rented to a third person.the junior encumbrancers. The court shall certify the final order confirming the sale. if there be none. the title would not be cancelled but a certificated and the order confirming the judicial sale shall be registered and a memorandum shall be made on the title. the redeemer may deduct from the price. the deed of redemption shall be registered with the registry of deeds. and shall be registered in the registry of deeds. then to the mortgagor or his agent or any person entitled to the balance. Redemption When the property is redeemed after the purchaser has been givem possession.

his successor-in-interest or any judicial creditor of said debtor-mortgagor or any person having a lien in the property subsequent to its mortgage or deed of trust under which the property is sold to redeem the property within one (1) year from the registration of the sheriff’s certificate of foreclosure sale.26 Other Things to Remember in Real Estate Mortgage Co-possessors of a parcel that is mortgaged must be made parties to foreclosure proceedings. IAC. Divinagracia. 1988 26 De Castro v. the previous owners lose any right they have had over the property. otherwise. 1988 27 Concha v. they cannot be deprived of possession of that portion of the land actually possessed by them. IAC L-73859. L53620 25 Limpin v. L-270242 1981 . the rights are in turn vested on the purchaser of the property. Right of redemption is the right granted to the debtor-mortgagor. 24 Equity of Redemption and Right of Redemption Equity of redemption refers to the right of the mortgagor to redeem the mortgaged property after his default in the performance of the conditions of the mortgage but before the sale of the mortgaged property. L-70897.confirmation. Equity of Redemption is the right of the defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the amount fixed in the decision of the court within ninety (90) to one hundred twenty (120) days after entry of judgment or even after the foreclosure sale but prior to its confirmation.25 Right of Redemption refers to the right of the mortgagor to purchase the property within a certain period after it was sold for the purpose of paying the mortgage debt.27 24 Lozame v. Amores.

the right of redemption may be exercised only by paying to DBP all the amount owed by borrower on date of sale with interest on total indebtedness at rate agreed upon in the obligation from said date unless bidder has taken material possession of the property or unless this has been delivered to him. West Negros College Inc. 152359. but not after. 2002. No. This rule applies whether the foreclosed property is sold to DBP or to another person at public auction. the latter are allowed to exercise the right of redemption only “until. No. This special protection to the DBP is not accorded to judgment creditors in ordinary civil actions.29 The rule was held by the Supreme Court in response to the General Banking Law of 2000. Where real property is mortgaged to and foreclosed judicially or extrajudicially by DBP. in which case proceeds of the property shall compensate interest.M. 28 Development Bank of the Philippines v. G. that the property was mortgaged to DBP.R. the registration of the certificate of foreclosure sale” and in no case more than three months after foreclosure. 29 A.Redemption Price When DBP is Mortgagee Redemption of Properties mortgaged with the Development Bank of the Philippines and foreclosed either judicially or extrajudicially is governed by special laws which provide for payment of all amount owed by debtor. provided.28 With regards to juridical persons. 99-19-05-0 . whichever comes first. Where the property is sold to persons other than mortgagee. the procedure is for DBP in case of redemption to return to the bidder the amount it received from him as a result of the auction sale with corresponding interest by the debtor.

ACT NO. the provisions of the following election shall govern as to the manner in which the sale and . 3135 – AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL- ESTATE MORTGAGES SECTION 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation.Appendices Appendix A.

may participate in the bidding and purchase under the same conditions as any other bidder. his successors in interest or any judicial creditor or judgment creditor of said debtor. At any sale. SECTION 4. the justice or auxiliary justice of the peace of the municipality in which such sale has to be made. whether or not provision for the same is made in the power. or other persons authorized to act for the creditor. in addition to his expenses. the creditor. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated. who shall be entitled to collect a fee of five pesos each day of actual work performed. trustee. between the hours or nine in the morning and four in the afternoon. and in case the place within said province in which the sale is to be made is subject to stipulation. and if such property is worth more than four hundred pesos. SECTION 5. such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city. The sale shall be made at public auction. and shall be under the direction of the sheriff of the province. or any person having a lien on the property subsequent to the mortgage or deed of trust . Said sale cannot be made legally outside of the province in which the property sold is situated. SECTION 2.redemption shall be effected. the debtor. or a notary public of said municipality. SECTION 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to. such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated. SECTION 3. unless the contrary has been expressly provided in the mortgage or trust deed under which the sale is made.

SECTION 8. order that a writ of possession issue. furnishing bond in an amount equivalent to the use of the property for a period of twelve months. addressed to the sheriff of the province in which the property is situated. in so far as these are not inconsistent with the provisions of this Act. collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six. of the Code of Civil Procedure. and in each case the clerk of the court shall. upon approval of the bond. and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six. but not later than thirty days after the purchaser was given possession. who shall execute said order immediately. or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law. may redeem the same at any time within the term of one year from and after the date of the sale. SECTION 7. to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated. inclusive. The debtor may. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered. upon the filing of such petition. and the court shall. petition that the sale be set aside and the writ of possession .under which the property is sold. in the proceedings in which possession was requested. or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code. to give him possession thereof during the redemption period. as amended by Act Numbered Twenty-eight hundred and sixty-six. In any sale made under the provisions of this Act.

if the purchaser occupied the property as his own dwelling. but the order of possession shall continue in effect during the pendency of the appeal. because the mortgage was not violated or the sale was not made in accordance with the provisions hereof. When the property is redeemed after the purchaser has been given possession. it being rural property. it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six. and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six. 1924 . the redeemer shall be entitled to deduct from the price of redemption any rentals that said purchaser may have collected in case the property or any part thereof was rented. SECTION 10.cancelled. Approved: March 6. it being town property. specifying the damages suffered by him. and if it finds the complaint of the debtor justified. SECTION 9. This Act shall take effect on its approval. the redeemer may deduct from the price the interest of one per centum per month provided for in section four hundred and sixty- five of the Code of Civil Procedure. or used it gainfully.

or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold. entitled "An Act to regulate the sale of property under special powers inserted in or annexed to real-estate mortgages. the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated. SECTION 1. Appendix B ACT 4118.AN ACT TO AMEND ACT NUMBERED THIRTY-ONE HUNDRED AND THIRTY-FIVE. Section six of Act Numbered Thirty-one hundred and thirty-five. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to. furnishing bond in an amount equivalent to the use of the property for a period of twelve months. inclusive. The following three sections are hereby inserted after section six of said Act Numbered Thirty-one hundred and thirty-five: "Section 7. his successors in interest or any judicial creditor or judgment creditor of said debtor." SECTION 2." is hereby amended to read as follows: "Section 6. and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six. ENTITLED “AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL ESTATE MORTGAGES. of the Code of Civil Procedure. in so far as these are not inconsistent with the provisions of this Act. Such . In any sale made under the provisions of this Act. may redeem the same at any time within the term of one year from and after the date of the sale. to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. the debtor. to give him possession thereof during the redemption period.

in the proceedings in which possession was requested.petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered. addressed to the sheriff of the province in which the property is situated. or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code. or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law. and the court shall. specifying the damages suffered by him. it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. the redeemer shall be entitled to deduct from the price of redemption any rentals that said purchaser may have collected in case the . and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six. upon approval of the bond. and if it finds the complaint of the debtor justified. and in each case the clerk of the court shall. but not later than thirty days after the purchaser was given possession. upon the filing of such petition. but the order of possession shall continue in effect during the pendency of the appeal. collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six. When the property is redeemed after the purchaser has been given possession. who shall execute said order immediately. because the mortgage was not violated or the sale was not made in accordance with the provisions hereof. "Section 9. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six. order that a writ of possession issue. The debtor may. petition that the sale be set aside and the writ of possession cancelled. "Section 8. as amended by Act Numbered Twenty-eight hundred and sixty-six.

it being town property. This Act shall take effect on its approval. 1933 . December 7. if the purchaser occupied the property as his own dwelling. Approved. SECTION 4.property or any part thereof was rented. the redeemer may deduct from the price the interest of one per centum per month provided for in section four hundred and sixty- five of the Code of Civil Procedure. it being rural property. The number of the present section seven of said Act Numbered Thirty-one hundred and thirty-five is hereby changed. making it section ten. or used it gainfully." SECTION 3.

if any. and costs. RULE 68 FORECLOSURE OF REAL ESTATE MORTGAGE SECTION 1.—In an action for the foreclosure of a mortgage or other encumbrance upon real estate. all of whom shall be made defendants in the action.—If upon the trial in such action the court shall find the facts set forth in the complaint to be true. the names and residences of the mortgagor and the mortgagee. the complaint shall set forth the date and due execution of the mortgage. 2. a statement of the date of the note or other documentary evidence of the obligation secured by the mortgage. (1a) SEC. Complaint in action for foreclosure. a description of the mortgaged property.Appendix C. it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation. its assignments. Judgment on foreclosure for payment or sale. including interest and other charges as approved by the court. and shall render judgment for the sum so found due and order that the same be paid to the court or to the judgment obligee within a period of not less than ninety (90) days nor more than one hundred twenty (120) . the amount claimed to be unpaid thereon. and the names and residences of all persons having or claiming an interest in the property subordinate in right to that of the holder of the mortgage.

after paying off the mortgage debt due. (4a) . then to the mortgagor or his duly authorized agent. be paid to the person foreclosing the mortgage. The said purchaser or last redemptioner may secure a writ of possession. upon motion. or to the person entitled to it. it shall operate to divest the rights in the property of all the parties to the action and to vest their rights in the purchaser. the same shall be paid to junior encumbrancers in the order of their priority. 3. if any. also upon motion. the purchaser at the auction sale or last redemptioner. effect.—The amount realized from the foreclosure sale of the mortgaged property shall. shall be entitled to the possession of the property unless a third party is actually holding the same adversely to the judgment obligor. the court. after deducting the costs of the sale. after being directed to do so as provided in the next preceding section. (3a) SEC.—When the defendant. and when there shall be any balance or residue. 4. Sale of mortgaged property.days from the entry of judgment. or if there be no such encumbrancers or there be a balance or residue after payment to them. Disposition of proceeds of sale. (2a) SEC. Upon the finality of the order of confirmation or upon the expiration of the period of redemption when allowed by law. fails to pay the amount of the judgment within the period specified therein. to be ascertained by the court. and that in default of such payment the property shall be sold at public auction to satisfy the judgment. upon motion. Such sale shall not affect the rights of persons holding prior encumbrances upon the property or a part thereof. subject to such rights of redemption as may be allowed by law. shall order the property to be sold in the manner and under the provisions of Rule 39 and other regulations governing sales of real estate under execution. from the court which ordered the foreclosure. and when confirmed by an order of the court.

Where a right of redemption exists. the certificate of title in the name of the mortgagor shall not be cancelled.—A certified copy of the final order of the court confirming the sale shall be registered in the registry of deeds. In the event the property is redeemed. upon motion. (6a) SEC. otherwise. the court. Registration. 7. the certificate of title in the name of the mortgagor shall be cancelled. but the certificate of sale and the order confirming the sale shall be registered and a brief memorandum thereof made by the registrar of deeds upon the certificate of title. 5. and the entire debt and costs shall be paid. the sale shall terminate. How sale to proceed in case the debt is not all due.SEC. the plaintiff shall be entitled to execution at such time as the balance remaining becomes due under the terms of the original contract. the whole shall be ordered to be sold in the first instance. as often as more becomes due for principal or interest and other valid charges. the deed of redemption shall be registered with the . on motion. and afterwards. But if the property cannot be sold in portions without prejudice to the parties. (5a) SEC. as soon as a sufficient portion of the property has been sold to pay the total amount and the costs due. order more to be sold. he may be personally liable to the plaintiff. If no right of redemption exists. Deficiency judgment. there being a rebate of interest where such rebate is proper. upon which execution may issue immediately if the balance is all due at the time of the rendition of the judgment. the court may. shall render judgment against the defendant for any such balance for which.—If upon the sale of any real property as provided in the next preceding section there be a balance due to the plaintiff after applying the proceeds of the sale. if the proceeds of the sale be sufficient therefor.— If the debt for which the mortgage or encumbrance was held is not all due as provided in the judgment. and a new one issued in the name of the purchaser. by the record of the case. 6. which time shall be stated in the judgment.

32 and 34 of Rule 39 shall be applicable to the judicial foreclosure of real estate mortgages under this Rule insofar as the former are not inconsistent with or may serve to supplement the provisions of the latter.—The provisions of sections 31. the final deed of sale executed by the sheriff in favor of the purchaser at the foreclosure sale shall be registered with the registry of deeds. 8. (n) SEC. Applicability of other provisions. whereupon the certificate of title in the name of the mortgagor shall be cancelled and a new one issued in the name of the purchaser.registry of deeds. If the property is not redeemed. (8a) . and a brief memorandum thereof shall be made by the registrar of deeds on said certificate of title.