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Part Four of the series “Practical Guide to the Lebanese Code of Real Property”, covering Articles 117 to 173 of Decree No. 3339 of 12 November 1930 (Book V — Of Privileges and Hypothèques): the three exclusive real-property privileges, the general rules of the mortgage, the conventional mortgage, the legal mortgage in its five cases, the rights of the mortgage creditor, the effects of the mortgage vis-à-vis the debtor and the third-party acquirer, the extinction of the mortgage by cancellation, and the rule of forced sale with renvoi to the Lebanese Code of Civil Procedure.

Arabic original: الامتيازات والتأمينات العقارية ونزع الملكية الإجبارية في القانون اللبناني — الجزء الرابع من الدليل العملي لقانون الملكية العقارية.

French version: Les privilèges et l’hypothèque immobilière en droit libanais — Quatrième partie du Guide pratique du Code de la propriété foncière.

Introduction

In Part Three of this series we set out the regime of the gage immobilier — pledge by transfer of property (the vente à réméré in its Lebanese sense) and the conventional gage immobilier — which occupies Articles 91 to 116 of the Lebanese Code of Real Property (Decree No. 3339 of 12 November 1930, hereafter the CRP). The present Part moves to Book V of the same Decree (Articles 117 to 173), titled “Of Privileges and Hypothèques”.

Book V completes the architecture of real-property securities. The distinction with Book IV is structural. Book IV (pledge) is built on the transfer of property or of possession to the creditor: the vente à réméré operates a transfer of ownership, and the conventional gage immobilier contemplates the remise of the immovable to the creditor or to a third-party detainer. Book V, by contrast, organises real securities that effect neither transfer of ownership nor transfer of possession, and that are constituted — for the hypothèque — by the sole inscription on the Land Registry.

A note on terminology. The English-language statute translation of Decree 3339 renders the institution that the French version designates as hypothèque (Arabic: al-ta’mīn al-‘aqārī) predominantly as “security” in Articles 120-145, then switches to “mortgage” in Articles 146-158 (the effects on the property and the forced sale). The two terms designate the same institution. This commentary normalises on mortgage throughout, for two reasons. First, “security” in modern English usage covers a far broader range of collateral arrangements (personal-property security, equitable charges, floating charges) and risks losing the immovable-only specificity of the hypothèque. Second, having reserved gage for the Book IV institution in Part Three, “mortgage” for the Book V hypothèque preserves the architectural distinction the legislator drew between the two regimes. On the procedure that closes this Part, the statute translation uses “forced expropriation” to render nazʿ al-milkīya al-jabrīya / expropriation forcée. To avoid the homonymic collision with the unrelated concept of eminent-domain expropriation (Lebanese: istimlāk, governed by a separate statute), this commentary uses forced sale — the creditor-driven judicial sale of the encumbered immovable on default.

Book V unites two regimes distinct in their juridical source but convergent in their economic function:

• Chapter I (Articles 117 to 119): the real-property privileges. Rights of preference that the creditor derives from the specific quality of his claim, that is, directly from the law and not from any agreement between the parties. The legislator limits them to three cases, enumerated exhaustively.
• Chapter II (Articles 120 to 142): the real-property mortgages. Real rights on the immovable that arise either by the agreement of the parties (conventional mortgage) or by operation of law or judicial decision (legal mortgage). The common principle is without exception: the mortgage produces no legal effect until it has been inscribed at the Land Registry.
• Chapters III to VII (Articles 143 to 173): the rights of the mortgage creditor, the effects of the mortgage vis-à-vis the debtor and the third-party acquirer, the extinction of the mortgage by cancellation, and the rule that opens the forced sale of the encumbered immovable.

Three legislative strata postlate the 1930 drafting and must be flagged at the outset.

• Decree No. 102/LR of 6 August 1932 amended Articles 131, 136, and 158 — the structure of the legal mortgage (Article 131), the rule governing the immovables of public accountants and State debtors (Article 136), and the opening of the forced sale (Article 158). The texts reproduced below are in their post-1932 drafting.
• Decree No. 48/LR of 28 March 1933 abrogated twenty-two articles of Chapters VI and VII (Articles 152 to 157 and 159 to 173), that is, most of the detailed provisions on the cancellation of mortgage inscriptions and the operations of forced sale. These provisions did not survive within the Code of Real Property; they migrated to the execution legislation and are today found in the Lebanese Code of Civil Procedure at Book IX — Of Execution (Article 827 and following).
• Law No. 76 of 3 April 1999 abrogated Articles 140, 141, and 142, that is, the whole of Section IV of Chapter II (the deferred mortgages).

The practical outcome: of the fifty-seven articles of Book V, thirty-two remain in force. They carry the applicative weight of the Lebanese mortgage regime. The procedural rules of forced sale are no longer to be read in Decree 3339 but in the Code of Civil Procedure.

Scope of this Part: Articles 117 to 173 of the CRP, organised as follows:

• Articles 117 to 119: definition of the real-property privilege, exhaustive enumeration of the three privileged debts, and exemption from inscription;
• Articles 120 to 127: general rules of the real-property mortgage (definition, indivisibility, hypothecable assets, rank, conventional and legal varieties, plurality of mortgages);
• Articles 128 to 130: the conventional mortgage and the conditions of capacity;
• Articles 131 to 139: the legal mortgage in its five cases and the rules of inscription;
• Articles 143 to 145: rights of the mortgage creditor (cession and right of pursuit);
• Articles 146 to 149: effects of the mortgage on the debtor and on the third-party acquirer;
• Articles 150 and 151: extinction by cancellation and cancellation by consignation;
• Article 158: rule of forced sale and renvoi to the Code of Civil Procedure.

I. The Real-Property Privileges

Definition of the privilege

Article 117 of the CRP defines the real-property privilege in these terms:

A privilege, in matters of real property, is a real right accorded to the creditor by reason of the specific quality of his claim, conferring on him the right to be preferred to all other creditors, even to mortgage creditors.

Three essential characteristics emerge from this definition.

First — a real right. The privilege attaches to the immovable itself and follows it into the hands of any subsequent acquirer.

Second — its source is the law, not the agreement of the parties. The preference enjoyed by the privileged creditor flows from the quality of his claim as the law characterises it — not from any agreement between debtor and creditor. On this point the privilege differs radically from the conventional mortgage, which arises from the will of the parties.

Third — an absolute preference. The privileged creditor takes precedence over all other creditors, including mortgage creditors whose inscription antedates the privilege. This is the most consequential practical difference between the privilege and any mortgage, whether conventional or legal.

The three privileged debts — exhaustive enumeration

Article 118 limits the privileged debts to three, and three only:

1. The debt defined by Article 44 of Decree No. 186 of 15 March 1926;

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2. The juridical costs arising from the sale of the immovable and the distribution of its price;

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3. The transfer fees and the penalties imposed on false declarations relating to the sales price.

The formulation is exhaustive (three and three only), and the rule is structural. No new real-property privilege may be created by analogy or by case law. Any claim that does not fall within one of the three sub-paragraphs does not accede to the status of real-property privilege within the meaning of Article 117 — even though certain special statutes have conferred on other categories of creditors a form of general privilege, which operates under a distinct procedural mechanism.

The exemption from inscription and its real reach

Article 119 provides:

By derogation from the general principle laid down by Article 10 of the decree instituting the land register, these privileges are exempt from inscription.

The three privileges enumerated in Article 118 are therefore opposable to third parties without inscription at the Land Registry — an express exception to the rule of Article 10 of Decree No. 188 of 15 March 1926, which makes inscription the condition of opposability of real rights on the immovable as against third parties.

It is settled doctrine that this exemption is strictly limited to the three privileges of Article 118 and to them alone. Claims to which a special statute has conferred a privileged character — such as the claim of the National Social Security Fund under Article 48 of the Social Security Law, or the claim corresponding to the last year’s wages under Article 48 of the Labour Code — do enjoy a preferential rank, but do not benefit from the exemption of Article 119; they have no effect against creditors previously inscribed unless they too are inscribed at the Land Registry in accordance with Article 10 of Decree 188. The distinction is of major practical importance when establishing the order of creditors against a single immovable.

II. The Real-Property Mortgage: general rules

Definition

Article 120 defines the mortgage in these terms:

The mortgage is a real right on immovables affected to the guarantee of the performance of an obligation; it is by its nature indivisible and remains in its entirety on the immovables affected, on each of them, and on each portion of those immovables, and follows them into whatever hands they pass.

Three inseparable characters flow from this definition. First, the mortgage is an accessory real right — it bears on the immovable itself but does not stand independently of the claim it secures, being born with it and extinguished with it. Second, the mortgage is indivisible — it encumbers the immovable in its entirety and each parcel of it, is not diminished by partial payment of the debt, and is not divided across several immovables in proportion to their values. Third, the mortgage carries the right of pursuit — it accompanies the immovable into whatever hands it passes by sale, donation, or succession.

Hypothecable assets

Article 121 limits the assets susceptible of being mortgaged to four categories exhaustively enumerated:

1. Built and non-built immovables susceptible of being sold and purchased, together with all their accessories considered as immovables;

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2. The right of usufruct grevant the same immovables and accessories, for the duration of that right;

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3. The rights of idjaratayn and moukatava;

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4. The right of superficies.

Sub-paragraphs 3 and 4 refer to historical real-property regimes (the Ottoman idjaratayn and moukatava, and the right of superficies). Sub-paragraphs 1 and 2 constitute the cornerstone of the contemporary mortgage. The phrase “susceptible of being sold and purchased” in sub-paragraph 1 merits attention: assets of the public domain and the religious waqf are not hypothecable because they are not in commerce.

Mortgage on an undivided immovable

Article 122 provides:

The mortgage granted by a co-owner in indivision over an immovable held in indivision, without the consent of his coïndivisaires, is transferred after partition to the share that accrues to him in his lot. As for the sums that come to the constituent by reason of the equalisation of the values of the lots or by reason of the price of the immovable in case of sale among coïndivisaires, they are affected to the payment of the mortgage debt.

The rule is practically indispensable: a co-owner in indivision may mortgage his undivided share without requesting the agreement of his coïndivisaires, but the mortgage concentrates on his undivided share alone and does not extend to the immovable in its entirety. If a partition in kind subsequently occurs, the mortgage is transferred to the lot attributed to the constituent. If the immovable is sold among coïndivisaires, the share that comes back to the constituent is affected to the repayment of the secured debt.

Extension to constructions and improvements

Article 123 provides that:

The mortgage acquired extends to the constructions, plantations, and improvements brought to the mortgaged immovable.

The mortgage therefore extends ipso jure to additions and improvements posterior to the inscription. The creditor need not constitute a supplementary mortgage at each new construction or plantation.

Mortgage of interest

Article 124 authorises the creditor inscribed for a capital bearing interest or annuities to acquire, for his interests and annuities — for the year matured at the date of the request for execution and the current year, with a ceiling of two years — the same rank as the mortgage assigned to the capital, on three cumulative conditions: the right must arise from the contract itself, it must be inscribed, and the rate of interest must be expressly mentioned in the inscription. Omission of the rate of interest reduces the interest claim to the rank of an ordinary unsecured debt. It is settled doctrine that interest stipulated in the contract within the legal ceiling is due even if its mention has not been repeated in the writ of execution, provided it figured in the original mortgage instrument.

Preservation of rank without renewal

Article 125 provides that every mortgage regularly inscribed at the Land Registry preserves its rank and its validity without the need of any new formality, until the inscription, in the same register and in the same forms, of the deed of release. The mortgage does not lapse by the mere passage of time. No decennial renewal or supplementary inscription is required.

Conventional or legal mortgage; plurality of mortgages

Article 126 provides that the mortgage is either conventional or legal, and that in both cases it produces effect only after inscription — a condition of effectiveness, not merely of proof. Article 127 then provides that several mortgages may be constituted on the same immovable and that, whether conventional or legal, their rank is determined by the date of their inscription at the Land Registry. This consecrates the principle “first inscribed, first in rank“. It is settled doctrine that the creditor of first rank may renounce his preference in order to put himself on parity with a subsequent creditor, or that a subsequent creditor may be preferred to an earlier one by a cession of rank; but these arrangements are opposable to third parties only from the date of their inscription.

III. The Conventional Mortgage

Capacity to dispose

Article 128 provides:

A conventional mortgage may be granted only by one who has the capacity to dispose of the immovable or of the right which he submits to the mortgage.

The mortgage is an act translative of part of the prerogatives over the immovable (right of pursuit and right of preference). It therefore requires the capacity to dispose, and not the mere capacity to administer. The minor, the person under judicial protection, and the agent holding a mere mandate of administration without a special power to mortgage — none of these may grant a valid conventional mortgage.

Minors, persons under judicial protection, and absentees

Article 129 provides:

No mortgage may be constituted on the rights of incapables, of minors, or of persons under judicial protection except for the causes and in the forms determined by the law governing their personal status. As for the rights of absentees, so long as a putting in possession is conferred on them only provisionally, the mortgage may encumber them only on judicial authorisation.

The principle is the protection of those who cannot defend themselves. Mortgages on their immovables are admitted only within the limits permitted by the special laws governing their legal incapacity, or — in the case of an absentee whose immovable has been the object of a provisional taking of possession — on express judicial authorisation.

Prohibition of mortgage on future assets

Article 130 provides:

No mortgage may be constituted on future assets.

To mortgage a thing that does not exist at the moment of the contract gives rise to no real right. The mortgage on an immovable that the constituent plans to acquire is not valid; the same applies to the mortgage on buildings yet to be erected. The rule is logical: the real right requires a present and determinate object.

IV. The Legal Mortgage

Definition and five cases

Article 131, in its drafting issued from the decree of 6 August 1932, begins with a definition:

A legal mortgage is one which is inscribed by force of law, whether with or without the consent of the owner of the immovable, in the cases enumerated below. This mortgage is always constituted in a determinate name.

The article then restricts the cases to five categories:

1. The rights and debts of minors and incapables — the legal mortgage is constituted on the assets of their guardians;
2. The rights and debts of the married woman — it is constituted on the husband’s immovables in guarantee of the dowry and of marital rights, and of the indemnity due in respect of obligations she has assumed on the husband’s behalf;
3. The rights and debts of the State, the municipalities, and the public administrations — it is constituted on the immovables of public accountants; likewise, the rights and debts of the State are secured on the immovables of its debtors;
4. The rights and debts of the seller, the exchanger, and the copartitioner — it is constituted on the immovable sold, exchanged, or partitioned, where no conventional mortgage has been reserved to guarantee the price of sale, the balance of exchange, or the soulte of partition;
5. The rights and debts of the creditors or legatees of a succession — it is constituted on the immovables of the succession in guarantee of the separation of the patrimonies of the deceased and of the heir.

It is settled doctrine that the legal mortgage constitutes a conservatory measure, and that it is not necessary for the decision ordering its inscription to be invested with executory force in order for it to take effect as an instrument of guarantee; that this mortgage remains efficacious so long as the merits of any contest against it have not been adjudicated; and that recourse against the decision ordering its inscription lies to the president of the execution department under the rules of forced execution, not to the court of the merits.

Designation of amounts and immovables

Article 132 requires that the legal mortgage always designate the amounts guaranteed and the immovables on which it bears. This is a requirement of substantial form: imprecision on either element opens the way to a challenge of the inscription.

Competent authorities and the marriage contract

Article 133 attributes the determination of the basis, consistency, and conditions of the legal mortgage in favour of minors and incapables to the authority in charge of the supervision of tutelary administration under the applicable legislation. The rationale is unification of supervision: decisions on the patrimonies of incapables fall within a single regulatory framework.

Article 134 attributes the same determination, for the married woman’s mortgage, either to an express stipulation in the marriage contract drawn up before the competent authorities, or — in the absence of such contract or stipulation — to the civil court of the place of residence of the parties.

Article 135 then provides that, where the mortgage guarantees prove insufficient, the authority designated by Article 133 (for minors and incapables) or the court (for the married woman) may extend them; symmetrically, an excess of guarantee may be reduced. The guarantee is calibrated to the need.

Public accountants and State debtors

Article 136, in its post-1932 drafting, provides that the mortgage on the immovables of public accountants is required by decision of the Minister of Finance or of the official acting in his stead, and the same applies to the mortgage on the immovables of debtors of the State. The authority for inscription is administrative; no judicial intervention is required.

Seller, exchanger, and copartitioner

Article 137 recognises in the seller, the exchanger, and the copartitioner of immovables the right to stipulate, in the deed of sale, exchange, or partition, a mortgage on the immovables ceded, in guarantee of the payment of the price or of the soulte. Where no such stipulation has reserved a conventional mortgage, each of them may require a legal mortgage by a decision of the civil court of the place of situation of the immovables. The fallback protects the seller from being reduced — after transfer of ownership — to the rank of an ordinary unsecured creditor of an insolvent purchaser.

Six-month period for the separation of patrimonies

Article 138 sets out three closely connected rules:

Creditors and legatees may preserve their rights to the separation of patrimonies by means of a legal inscription to be taken within the six months following the opening of the succession. In default of inscription within that period, the right shall have no effect on the immovables.

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The inscription is made by virtue of a decision rendered in the chamber of council, on the petition of the interested parties, after requisition of the public prosecutor.

Three practical observations.

First, the period is peremptory. Six months from the opening of the succession — not from the date on which the creditor learns of the death. Expiry of the period without inscription deprives the claim of any effect on the immovables of the succession as against third parties.

Second, the decision is rendered in the chamber of council. This is a non-contradictory procedure, faster than the ordinary action, but which nevertheless requires requisition of the public prosecutor.

Third, the legal inscription benefits the whole body of creditors and legatees — including those who have not taken the initiative of the petition — provided they have not themselves been deprived of their right by failing to inscribe their own claims within the same six-month period; this extension creates no new instances of preference and does not affect the pre-existing rankings among them.

Conservatory inscription in case of urgency

Article 139 provides that, in the various cases of legal mortgage, the president of the court may, in case of urgency, order on petition the inscription of any necessary conservatory or prenotation inscriptions. The duration of this inscription is limited: it ends with the final decision whose inscription is required. If the final decision confirms all or part of the inscription, the mortgage takes rank from the date of the conservatory inscription, not from the date of the final inscription. The advantage is essential: the conservatory inscription freezes the chronological rank and shields the creditor from a subsequent mortgage inscribed between the petition and the final decision.

Note on Section IV. Law No. 76 of 3 April 1999 abrogated Articles 140, 141, and 142 — the whole of Section IV of Chapter II (the deferred mortgages). The current text of the Code of Real Property contains no provision relating to deferred mortgages.

V. Rights of the Mortgage Creditor

Cession of the right subject to the debtor’s consent

Article 143 provides:

The mortgage creditor may not cede his right to a third party except with the express consent of the debtor, unless a clear stipulation of the contract authorises him to do so (for example, the inscription to the effect that the mortgage is granted “to order”).

The rule is the inverse of that governing the ordinary cession of claim under the Code of Obligations and Contracts. The mortgage confers on the creditor extensive prerogatives over the debtor’s immovable; it is not admitted that these be ceded to a third party without the debtor’s express consent, save where this faculty has been expressly stipulated in the mortgage instrument (for example, the “mortgage to order” clause).

Mode of transfer

Article 144 provides two modes of transfer:

• inscription of the cession at the Land Registry or in the mortgage register;
• or endorsement of the certificate of inscription — subject to the cedent’s signature being officially certified in accordance with Articles 59, 60, and 61 of Decree No. 188 of 15 March 1926.

It is settled doctrine that the mere notification of the transfer — before its inscription at the Land Registry — does not confer on the cession its effect against third parties and does not invest the cessionary with the right of pursuit and the right of preference before the execution department.

Right of pursuit

Article 145 provides:

The creditors holding a mortgage over an immovable follow it into whatever hands it passes, and receive the amount allocated to them, each according to the rank determined by the inscriptions.

This is the consecration of the real-right character of the mortgage: the mortgage follows the immovable, not the patrimony. The mortgage creditor recovers his claim on the price of the immovable according to the rank of his inscription, whatever the hand in which the immovable currently rests.

VI. Effects of the Mortgage vis-à-vis the Debtor and the Third-Party Acquirer

The debtor’s power of disposition

Article 146 provides:

The debtor or the possessor disposes freely of the mortgaged immovable and may, according to the rules set out hereafter, free himself from his obligation before the term, without the authorisation of the mortgage creditors.

The mortgage does not freeze the immovable. The debtor retains the power to sell it, lease it, or constitute other real rights upon it — but the mortgage follows the immovable into the hands of the third-party acquirer.

The third-party acquirer’s option

Article 147 provides:

Where the debtor has sold the immovable or the mortgaged right subsequently to the constitution of the mortgage, the third-party acquirer brought into the suit has an option:

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– either to pay the pursuing creditor his capital in principal, interest, and costs;

– or to undergo the operations of forced sale engaged by the creditor.

Three practical rules.

First, the condition of being brought into the suit. The option is open only in the course of the execution proceedings, and only after the third-party acquirer has been duly called into them.

Second, the choice to pay extinguishes the proceedings. If the third-party acquirer chooses to pay the claim in full — principal, interest, and costs — the forced-sale proceedings come to a halt, and the third-party acquirer is subrogated to the creditor’s rights against the original debtor under the general rules.

Third, the choice to undergo. The third-party acquirer may instead allow the procedure of forced sale to run its course, in which case he receives the price of sale net of the amount paid to the creditor.

Damage to the immovable and the insurance indemnity

Article 148 governs the case of deterioration of the mortgaged immovable in two paragraphs.

First paragraph. Where the immovable is damaged to the point of becoming insufficient as security, the creditor may require either immediate restitution of his claim on a judicial decision to that effect, or a supplementary security. Insurance indemnities are in principle affected to the restoration of the immovable, provided they are sufficient to return it to its previous state; the restoration and the use of the funds proceed under the supervision of the creditor under the conditions agreed with the debtor, and in default of agreement, the judge decides.

Second paragraph. Where the insurance indemnities are insufficient for restoration, or where the debtor renounces the restoration, the amount is distributed among the privileged and mortgage creditors admitted to the distribution, each according to the rank of his claim, and the debtor loses the benefit of the term to that extent.

The practical reach is clear: the insurance contract is not a “private” contract of the proprietor. The insurance indemnity has a real-property destination — its primary finality is the payment of the mortgage claims on the immovable, and it returns to the proprietor only after their settlement.

Modification of the consistency and action for damages

Article 149 provides that, where the third-party acquirer effects modifications to the consistency of the immovable under mortgage, the deteriorations that result from his act or his negligence and that cause prejudice to the mortgage creditors open to them the right to bring an action for damages against him. In return, the third-party acquirer may claim the reimbursement of expenses he has deemed necessary to engage for the preservation and maintenance of the immovable.

The rule is balanced: the third-party acquirer retains the powers of disposition over the immovable but answers for its material integrity to the mortgage creditors; in exchange, he is entitled to recover his necessary preservation expenses.

VII. Extinction of the Mortgage and Cancellation

Causes of cancellation

Article 150 provides:

The mortgage is extinguished by cancellation. Cancellation occurs:

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1. by the extinction of the obligation that the mortgage was securing;

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2. by the renunciation by the creditor of his right.

Two routes to extinction of the mortgage, which always converge on a single administrative step: cancellation at the Land Registry. Before cancellation, the inscription remains effective even if the underlying claim has been extinguished at the merits. It is settled doctrine that the claim is the principal obligation and the mortgage the accessory obligation that follows it; the extinction of the claim by prescription or by payment entails the extinction of the mortgage, but the practical effect at the Land Registry is acquired only on inscription of the cancellation or on a judicial decision pronouncing it.

Cancellation by consignation of the amount

Article 151 provides:

The inscriptions are cancelled by the agreement of the parties having the requisite legal aptitude, or by virtue of a decision having acquired the force of res judicata. They may also be cancelled without the creditors’ consent if the amount of the debt is consigned after a real tender has been made to the creditors and refused by them.

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The consignation of the amount of the debt after a real tender discharges the debtor, and stands in place of payment as regards him if the tender was made in due form; and the amount or thing thus consigned remains at the creditor’s custody and at his risk.

This is a mechanism of fundamental protection for the debtor: if the creditor refuses to receive payment, the debtor does not remain hostage to that refusal; he proceeds to a real tender of the debt (generally through a notary), and on refusal, he consigns the amount and may then require cancellation of the inscription. The risk on the consigned amount passes to the creditor, interest ceases to run, and the immovable is freed of the mortgage inscription.

VIII. Forced Sale

The rule of Article 158

Article 158, in its drafting issued from the decree of 6 August 1932, provides:

In case of non-payment at the maturity of the secured amounts, any mortgage creditor, whatever his rank, may pursue the sale of the immovable or of the mortgaged right by way of forced sale.

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The gagiste creditor, or the buyer in the vente à réméré or in the sale with right of exploitation, may use the same right, but only on the condition that the debtor has conferred on him an irrevocable and permanent power of attorney to that effect.

Three essential rules. First, any mortgage creditor may pursue, whatever his rank. It is not necessary to await the initiative of the creditor of first rank; the creditor of second or third rank may open the procedure, with each prior creditor preserving his rank in the distribution of the price. Second, the gagiste creditor — in the conventional gage immobilier — does not proceed directly to forced sale; as seen in connection with Article 107 of the CRP (Part Three of this series), the gagiste may pursue only where the debtor has granted him an irrevocable and permanent power of attorney by prior deed. Third, the buyer in the vente à réméré or in the sale with right of exploitation — though qualified as a proprietor rather than a gagiste creditor — may pursue forced sale only on the same condition: an irrevocable and permanent power of attorney granted by the seller.

Renvoi to the Code of Civil Procedure

By the effect of the abrogation of Articles 159 to 173 of the CRP by Decree No. 48/LR of 28 March 1933, the whole structure of the procedure of forced sale has migrated to the execution legislation, and is today codified in the Lebanese Code of Civil Procedure at Book IX (Article 827 and following). Four structural rules anchor the application of Article 158:

• The competent organ. A department of execution is instituted at the tribunal of first instance, directed by the single judge of the relevant district (Article 827 CCP); the president of the department renders the decisions and orders relating to execution and rules on the merits of execution difficulties on an urgent footing (Article 829 CCP).
• Territorial competence. Competence lies with the execution department instituted at the tribunal of first instance that adjudicated the case judged, or at the court of appeal where applicable (Article 830 CCP).
• The executory title. No forced execution may be pursued except on an executory title — judgments, judicial orders, executory arbitral awards, authentic and private deeds, and any other document that the law declares directly executory (Article 835 CCP).
• The right of priority in execution. The creditor holding a privilege, a gage, or a mortgage over one or some of the debtor’s assets is not bound to pursue execution first on those assets (Article 858 CCP). The mortgage creditor retains the liberty to choose the direction of his recovery, and is not constrained to engage forced sale on the encumbered immovable before acting on the other assets of the debtor.

The forced sale — with its successive phases of order setting the minimum price, publicity of the announcements, public auction, decision of adjudication, and distribution of the price — constitutes an autonomous execution regime warranting separate treatment. For present purposes, Article 158 opens the gate and refers implicitly to the Code of Civil Procedure for the procedural implementation.

It is settled doctrine that the decision of adjudication in a forced sale does not constitute a regular title for the purposes of the abridged acquisitive prescription unless it bears on an immovable that was effectively in the patrimony of the debtor; where the immovable did not belong to the debtor, the adjudication decision does not transfer ownership, and the action in nullity remains receivable until the expiry of the ordinary acquisitive prescription.

IX. Conclusion and outlook for Part Five

This Part has covered Articles 117 to 173 of the CRP — Book V on Privileges and Hypothèques — accounting for the three legislative strata that have remoulded the original 1930 drafting (the modifying Decree 102/1932, the abrogating Decree 48/1933 that removed twenty-two articles, and Law 76/1999 that abrogated Section IV on deferred mortgages). The thirty-two articles still in force carry the applicative weight of the Lebanese mortgage regime.

The essential points are the following.

• The three real-property privileges of Article 118 are exhaustive. No new real-property privilege may be created by analogy or by case law. Even where a special statute confers a “privileged” character on a claim (Social Security, unpaid wages of the last year), it does not benefit from the exemption of Article 119: such claims must be inscribed at the Land Registry to be opposable to previously inscribed creditors.
• Inscription is the condition of effectiveness of the mortgage, not merely of proof (Article 126). Rank is determined by the date of inscription, with no distinction between the legal and conventional varieties (Article 127).
• The legal mortgage is a conservatory measure. Its inscription does not presuppose an executory title; recourse against the inscription lies to the president of the execution department, not to the court of the merits. The six-month period of Article 138 for the separation of patrimonies is peremptory and runs from the opening of the succession, not from the creditor’s knowledge of the death.
• The insurance indemnity has a real-property destination (Article 148). It is affected first to the restoration of the immovable, then — if insufficient or where restoration is renounced — to the distribution among privileged and mortgage creditors according to their rank, with the debtor losing the benefit of the term to that extent.
• The procedural regime of forced sale has migrated to the Code of Civil Procedure (Article 827 and following). Article 158 opens the gate; the structure of the procedure is to be read in the Code of Civil Procedure, not in Decree 3339.

In Part Five of this series, we move to the acquisition of real rights by prescription (Articles 204 to 219 of Decree 3339), the promise of sale and the buyer’s option (Articles 220 to 227), the right of pre-emption (Articles 238 to 254), and acquisitive prescription proper (Articles 255 to 266). These are among the matters most productive of litigation in Lebanese real-property practice, with the load-bearing distinction between the Lebanese-statutory pre-emption right (a post-sale unwinding remedy) and the common-law right of first refusal (a pre-contractual privilege).

Practical tool: to compute the registration fees for any real-estate transaction (sale, mortgage, mortgage release, constitution of a usufruct), see Lebanese Real Estate Registration Fees Calculator and our complete guide to real-estate registration fees.

Related Posts in This Series

This series covers the Lebanese Code of Real Property in eight parts.

• Part One — Definition of Real Property and Types of Ownership
• Part Two — Real-Property Easements
• Part Three — The Immovable Pledge and the Vente à Réméré
• Part Four — Privileges, the Mortgage, and the Forced Sale (you are here)
• Part Five — Promise of Sale, Right of Pre-emption, and Acquisitive Prescription
• Part Six — The Land Registry
• Part Seven — Land Delimitation and Registration Works
• Part Eight (final) — Condominium Ownership of Built Immovables