Legal Foundation of Real Estate Mortgages
Under the modern framework of the Code of Real Rights, specifically Article 305, no real right is legally constituted unless it is formally registered in the Land Registry. This principle is further reinforced by Article 278, which explicitly states that a real estate mortgage does not exist as a legal entity until the moment of its registration.
Registration as a Substantive Requirement
The registration of a mortgage is not merely a procedural formality for public notice; it is a substantive requirement for the creation of the right itself. Without registration, the mortgage agreement remains a mere personal obligation between parties and fails to create a 'real right' (in rem) that can be enforced against the property or third parties.
Protection of Creditors and Third Parties
This constitutive approach serves to protect the integrity of the financial system. By making registration the point of origin for the mortgage, the law ensures that any third party or potential buyer can rely entirely on the Land Registry to identify existing encumbrances, thereby fostering transparency and security in real estate transactions.