Article 208 — Requirements for immovable property collateral
- Immovable property shall qualify as eligible collateral only where all the requirements laid down in paragraphs 2 to 5 are met.
- The following requirements on legal certainly shall be met:
- a mortgage or charge is enforceable in all jurisdictions which are relevant at the time of the conclusion of the credit agreement and shall be properly filed on a timely basis;
- all legal requirements for establishing the pledge have been fulfilled;
- the protection agreement and the legal process underpinning it enable the institution to realise the value of the protection within a reasonable timeframe.
- The following requirements on monitoring of property values and on property valuation shall be met:
- institutions monitor the value of the property on a frequent basis and at a minimum once every year for commercial immovable property and once every three years for residential property. Institutions carry out more frequent monitoring where the market is subject to significant changes in conditions;
- the property valuation is reviewed when information available to institutions indicates that the value of the property may have declined materially relative to general market prices and that review is carried out by a valuer who possesses the necessary qualifications, ability and experience to execute a valuation and who is independent from the credit decision process. For loans exceeding EUR 3 million or 5 % of the own funds of an institution, the property valuation shall be reviewed by such valuer at least every three years.
Institutions may use statistical methods to monitor the value of the immovable property and to identify immovable property that needs revaluation.
- Institutions shall clearly document the types of residential property and commercial immovable property they accept and their lending policies in this regard.
- Institutions shall have in place procedures to monitor that the immovable property taken as credit protection is adequately insured against the risk of damage.