Libro Segundo · Título V Capítulo II. Cedulas hipotecarias

A mortgage may be constituted to secure a credit represented by certificates without the need for a creditor to exist, and the certificates may be issued in favor of the owner of the mortgaged immovable himself.

If there are several mortgaged immovables, all of them shall jointly and severally secure the credit; and if they form a single body, they shall previously be unified in the register.

Properties that are held pro indiviso and those in which bare ownership and usufruct belong to different persons shall be admitted as security, provided that in the first case the co-owners expressly consent to the encumbrance of the entire property and in the second case the usufructuary expressly consents thereto.

Properties that are annotated or encumbered, nor those subject to suspensive, rescissory or resolutory conditions, shall not be admitted as security.

Territorial credit banks may issue mortgage certificates or mortgage bonds for a sum equal to the total amount of the loans on immovables that they grant.

The mortgage of cédulas shall be recorded in a public deed which shall contain the following special requirements:

1.The amount of the credit represented by the cédulas and the amount of each series, if several were issued;

2.The value and number of cédulas issued and the series to which they belong;

3.The interest rate and the time and place of payment;

4.The time limit for payment or the successive payments in case gradual amortizations are made;

5.Identification of the mortgaged property or properties and statement of the amount of the appraisal performed;

6.Designation of the person or institution that as financial agent is in charge of the debt service, payment of interest, commissions and amortizations;

7.The name of the person or institution in whose favor the issuance is made, in case it is not to bearer and that of the grantor itself if it is in its favor;

8.The specification of prior issuances, if any; and

9.If the issuance is divided into series, the order of preference for its payment, if established.

Upon verification of the registration of the mortgage in the Register, the cédulas shall be issued.

Each cédula shall be for the value of one hundred quetzales or any multiple of one hundred.

The amount of the issuance of mortgage bonds may not exceed seventy-five percent of the appraisal of the mortgaged immovable property, conducted by an authorized or bank appraiser and approved by the Ministry of Finance and Public Credit.

The certificates shall contain:

1.Order number and indication of the series to which they belong.

2.A summary of the pertinent provisions of the deed constituting the mortgage;

3.The number of coupons and their respective maturities;

4.Place and date of issuance of the certificates;

5.Signature of the financial agent;

6.Signature of the grantor of the mortgage; and

7.Signature and seal of the Registrar of Immovable Property.

Certificates issued by a banking institution shall be signed by the legal representative thereof, without the requirements set forth in subparagraphs 6 and 7.

If the credit bears interest and such interest has not been discounted, there shall be added to each bond as many coupons serving as bearer title for the collection thereof as there are interest payment periods.

Each coupon shall contain:

1.The denomination of mortgage coupon;

2.The number, series, place and date of the certificate;

3.The value and kind in which it must be paid;

4.Place and date of its payment;

5.The signature of the grantor of the mortgage; and

6.The seal of the Property Register.

The certificates and coupons shall be drafted in Spanish, shall be printed, engraved or lithographed, may contain translations into one or more foreign languages and shall not incur sealed-paper tax or stamp duty.

Matured certificates and coupons are instruments that carry execution and may be transferred by mere delivery if they are bearer instruments, or by endorsement if they are nominative instruments.

The endorsement does not make the endorser liable and shall be deemed authentic unless proven otherwise.

If the mortgaged property were to deteriorate in value and there were reasonable grounds to fear that it might come to not cover the mortgage liabilities, the holders of bonds representing at least 25 percent of the unpaid ones may request the judge to order the sale of the immovable property even if the time limit has not expired, unless the debtor extends the guarantee in accordance with the provisions of Article 845, of which the person in charge of the debt service shall be notified.

If the sale were carried out, payment of the credit shall be made with the price obtained, deducting prepaid interest and interest not yet due.

If the possessor of the mortgaged estate does not care for and attend to it as is proper, within prudent administration, the holders of twenty-five percent of the unredeemed certificates or the institution in charge of servicing the debt may request that the estate be placed under intervention. The judge, upon substantiation of the facts, shall appoint an administrator-in-charge.

When the auction price is insufficient to cover the entirety of the first mortgage, it shall be distributed pro rata among the certificates corresponding to such mortgage.

Expired certificates or coupons that are not presented for collection may be paid by consignment of their value before the judge.

In the same manner, unexpired certificates and coupons may be paid if the debtor wishes to cancel them before expiry.

The record of the approved consignment shall serve for the cancellation of the mortgage in the register.

The replacement of certificates or bonds shall be subject to that established for the replacement of securities or shares of corporations.

The mortgage of certificates shall be cancelled by one of the following means:

1º.By public deed executed by the issuer or by the intermediary if there be one. With the certified copy, the certificates to which the cancellation refers or the record of the consignment for the certificates and coupons not presented shall be submitted to the Register;

2º.By written request to the Register accompanying the certificates or record of deposit as applicable; and

3º.By final judgment.

The original certificates shall be kept in the Register, with the notation of having been cancelled; but it shall not be necessary to submit a copy thereof.

The provisions of the common mortgage are applicable to the cédulas mortgage provided that they do not contravene the provisions of this Chapter.