All Mortgage Deeds to Become Electronic
Finnish Parliament has accepted an amendment to the Real Estate Code making traditional written mortgage deeds history as of 2020. It has already been possible to obtain mortgage deeds in electronic format since 2013, but the amendment makes them the only alternative in the future.
All new or renewed mortgage deeds will be solely in electronic format as of June 2017. Old written mortgage deeds may still be used to establish a right of lien for new loans until the end of 2019 whereafter only electronic mortgage deeds can be used. The old written mortgage deeds will still remain valid for old loans granted before 2020 until such loans have been repaid.
What Is an Electronic Mortgage Deed?
When using an electronic mortgage deed, the right of lien on a property is proven with an electronic mortgage holder entry in the Finnish title and mortgage register. The right of lien can be nullified by removing the entry from the register or assigned to a new holder by a new holder entry. No written mortgage deed is issued. Also foreign banks active in the Finnish market should adjust their procedures in this respect.
The majority of Finnish banks already have systems and procedures in place to accept electronic mortgage deeds.
How Does It Work in Practice?
A new electronic mortgage deed can be applied for by the owner of the property from the National Land Survey of Finland ("NLS"). The application can be made in the electronic Property Transaction Service (www.kiinteistoasiat.fi) by using the Katso identification system or with a written application submitted to the NLS. The owner may ask the mortgage deed to be directly entered to the holder such as a bank. If no holder is mentioned in the application, the owner will be entered as the holder of the mortgage deed.
The mortgage deed is transferred to a new holder with an application by the previous holder of the mortgage deed through the Property Transaction Service or with a written application. The transfer application must always be made or signed by the previous holder, not the property owner or the new holder of the mortgage deed. The NLS makes the entry in accordance with the application, unless it is clear that the application is unfounded.
When using traditional written mortgage deeds, the right of lien was assigned by assigning the mortgage deed to the possession of the lender or its security agent. When using an electronic mortgage deed, the assignment application may be filed electronically in connection with the signing of the relevant agreement, or the assignment may be secured by handing over a pre-filled assignment application signed by the previous holder to the lender or the security agent.