Real Estate Collateral

Regardless of your credit history, obtaining funds secured by existing real estate is always easier and more advantageous, which should not be forgotten. Properties that may serve as collateral under current law include apartments, land parcels, any buildings and structures, even unfinished ones, provided they belong fully to the borrowers.

In some cases loans are also issued against leased real estate, but more conditions must be met in such cases, and the loan amount will certainly be low.

If a loan to a small business in Moscow is issued secured by real estate, as with individuals, the agreement must be registered with the state, otherwise it simply will not be considered valid.

You should sign the pledge agreement especially carefully, since it usually contains a clause that the bank has certain rights regarding the disposition of the property received – protect yourself from risks.

In addition, a loan secured by real estate must necessarily be provided only after appraisal measures have been carried out, and the fact of the appraisal, as well as the description of the property's value, must be reflected in the loan agreement; the appraisal is usually conducted at the bank's expense.

At present, the legislation of the Republic of Belarus defines special features of pledging land plots. According to Article 89 of the Land Code of the Republic of Belarus, land plots that are in private ownership of citizens of the Republic of Belarus or in the ownership of legal entities of the Republic of Belarus may be the subject of a pledge only as material security for the timely repayment of a bank loan.

In the Republic of Belarus, by letter of the Ministry of Justice dated February 29, 2000 No. 08-2-10-2506, which was given in response to a letter from the Association of Belarusian Banks, and by letter of the State Committee on Land Resources, Geodesy and Cartography of the Republic of Belarus dated February 14, 2000 No. 01-15/227 addressed to the Ministry of Justice*, it is also clarified that if the land is in the possession of the pledgor, then buildings and structures are pledged without pledging the land or rights to it.