Legal Status of the Transmission of the Mortgaged Property or Its Benefits by the Mortgager

The mortgaged property will be handed to the mortgager after seizure. Consequently, the mortgager may do transmissions on this property that result in its transfer. Does the owner have the right to do such occupations on the mortgaged property or not? If the answer is negative then what will enforce the prohibition? Invalidity or Lack of Influence? If the answer is positive, then, is the application of this right absolute or it is bounded to the rights of the mortgager? The answer to these questions lies in the dimension of the mortgager possession to the mortgaged property. The Iranian legislator declares the scope of this possession in the Articles 793 and 794 of the Civil Code. However, the Civil Code does not propose a clear scale for the issue. Article 793 suggests “loss” as the only legal obstacle to the mortgager to do so. At the meantime, Article 794 states that the “benefit” in the mortgage is an essential factor for the possession. Therefore, apparent contradiction between these two Articles and lack of a uniform scale in interpreting the terms of “loss” and “benefit” in the mentioned Articles, raise various and
contradictory opinions among the judges of the courts and legal scholars. The present paper tries to find answers to the questions and to clarify the ambiguities of the era.