Mortgage (“Hypothèque”) in France: Strength, Enforcement, and Insolvency Rules

A practical legal guide for creditors securing or recovering debts with real estate collateral

A French mortgage (hypothèque) is a real security interest over real estate. It allows a creditor to secure an obligation by charging an immovable asset without taking possession from the owner (French Civil Code, Article 2385). For debt recovery, the mortgage is valuable because it provides (i) priority payment from the sale proceeds and (ii) the ability to pursue the property even after it changes hands.

This article explains:

1. the legal effects of the mortgage (priority and follow-the-asset),

2. how a mortgage is validly created and structured, including the central role of the notary,

3. rechargeable mortgages, and

4. what changes once collective proceedings (insolvency) are opened.

1. The legal strength of a French mortgage

1.1 The debtor remains owner and keeps control of the property

A mortgage charges an immovable asset as security while leaving ownership and use with the mortgagor (French Civil Code, Article 2385). The debtor (or any person who grants the mortgage) remains free to manage the property, including granting leases.

Leases can be enforceable against the mortgage creditor, provided that:

• the initial duration is under 12 years, and

• the lease acquired a certain date (most often via registration) before any mortgage enforcement begins (Decree No. 55-22 of 4 January 1955, Article 30).

A mortgage does not prevent the property from being sold, and it does not block the creation of additional real security interests over the same property (Cass. Civ. 3rd Chamber, 18 June 2008, No. 07-15129). Where several mortgages exist, their ranking depends on the date of registration at the land registry (fichier immobilier) (French Civil Code, Article 2418).

A mortgage may secure one or several claims, whether present or future, provided future claims are determinable (French Civil Code, Article 2415).

1.2 Types of mortgages

French law recognizes three principal sources:

• legal mortgages (French Civil Code, Article 2392),

• judicial mortgages (French Civil Code, Article 2401),

• contractual mortgages (French Civil Code, Article 2409).

1.3 Mortgage ≠ suretyship (no personal undertaking)

Mortgage security must be distinguished from suretyship (cautionnement). If someone grants a mortgage to secure a third party’s debt without personally undertaking to pay, this is not suretyship, and suretyship rules do not apply.

As a result, a person who grants a company a mortgage over their real estate to secure another company’s debt cannot obtain release of the mortgage by invoking Civil Code Article 2314 (Cass. Civ. 3rd Chamber, 12 April 2018, No. 17-17.542). Article 2314 is reserved for sureties and concerns discharge when subrogation becomes impossible due to the creditor’s fault.

2. The creditor’s priority right (“droit de préférence”)

2.1 Voluntary sale: priority on the sale price and “amicable discharge”

If the debtor voluntarily sells the mortgaged property, the mortgage creditor may enforce its priority right over the sale price. In practice, creditors and buyers often reach a negotiated settlement to avoid formal enforcement.

French law expressly recognizes an amicable mortgage discharge mechanism: when registered creditors agree with the debtor to allocate the sale price to pay all or part of their claims, they exercise their priority over the price and may assert it against any assignee and any creditor seizing the price claim (French Civil Code, Article 2463).

2.2 Forced sale: payment from auction proceeds

If the mortgage is enforced through real estate seizure, the property is sold by auction following the specific (and often complex) mortgage enforcement procedure. The creditor is paid from the auction proceeds up to the amount stated in its mortgage registration (French Code of Civil Enforcement Procedures, Article L. 331-1).

3. The creditor’s follow-the-asset right (“droit de suite”)

3.1 The mortgage follows the property into the hands of a buyer

When the mortgaged property is transferred, the mortgage remains attached to it. The third-party buyer becomes liable, within the limits of registrations, for the secured debt in principal and interest, regardless of the total amount (French Civil Code, Article 2454).

This “follow-the-asset” right allows the creditor to seize the property even when it is held by someone other than the original debtor. It is a real right enforceable against all, including buyers (Cass. Civ. 3rd Chamber, 6 November 2002, No. 01-11.882).

Because notarial due diligence reveals registered mortgages, buyers are generally aware of them. This often encourages amicable settlement and negotiated clearance of mortgage rights from the sale price. Failing agreement, the creditor may serve a formal demand for payment to preserve and exercise its priority.

3.2 Mortgaged property sold under a business transfer plan

When assets are transferred through a sale plan in liquidation, the mortgage burden is transferred to the purchaser, who must pay the loan instalments due after the transfer of ownership (French Commercial Code, Article L. 642-12, paragraph 4). However, this transfer does not create novation by substitution of debtor; the original company remains liable, while the creditor preserves its mortgage and may enforce it against a defaulting purchaser for unpaid post-transfer instalments.

If the loan is notarial, the bank holds an enforceable instrument and may seize the land from the purchaser who fails to pay (Cass. Com., 20 March 2019, No. 17-29.009).

4. Appropriation of the property by the creditor (pacte commissoire immobilier)

4.1 Contractual appropriation (except the debtor’s main residence)

Unless the mortgaged property is the debtor’s principal residence, the mortgage agreement may provide that the creditor becomes owner of the mortgaged property in case of default (French Civil Code, Article 2452). This “real estate pacte commissoire” is strictly supervised: an expert valuation is required, appointed by agreement or judicially.

If the property value exceeds the secured debt, the creditor must pay the difference to the debtor; if other mortgage creditors exist, the surplus must be deposited (French Civil Code, Article 2453, paragraph 2).

4.2 Insolvency blocks pacte commissoire in safeguard and reorganization

The opening judgment of safeguard or judicial reorganization prevents both the conclusion and the implementation of such appropriation (French Commercial Code, Article L. 622-7, I, paragraph 3 and Article L. 631-14).

4.3 Judicial attribution (when no appropriation clause exists)

If the mortgage agreement does not provide appropriation, the unpaid mortgage creditor may request judicial attribution of the property (other than the debtor’s principal residence), at the value fixed by a court-appointed expert (French Civil Code, Articles 2451 and 2453).

5. Creating and enforcing a mortgage

5.1 Which assets can be mortgaged?

A mortgage may charge:

• any immovable property, and

• any real rights in immovables (e.g., usufruct, building right/superficies, emphyteutic lease), provided the right is marketable (dans le commerce) (French Civil Code, Article 2388).

The mortgage extends to improvements affecting the mortgaged property and to accessories treated as immovable (French Civil Code, Article 2389).

Since 1 January 2022, a mortgage may also be granted over future assets (French Civil Code, Article 2414).

Indivision (co-ownership)

A mortgage over an indivisible property remains effective regardless of how partition ends if all co-owners granted it. If not, the mortgage remains effective only if the granting co-owner receives the property in the partition or if the property is sold and the price is allocated to that co-owner (French Civil Code, Article 2412). Creditors typically seek the participation of all co-owners to avoid partition uncertainty.

Community property between spouses

Where spouses are under a community regime, both spouses must consent to mortgage a common immovable (French Civil Code, Article 1424).

“Immovables by destination” (fixtures used for the business)

The mortgage may cover immovable accessories. Certain business equipment may be treated as immovable by destination, such as fixed machinery, industrial equipment, vehicles used for the business, and even office furniture in an industrial enterprise, provided the owner of the immovable owns the items and has allocated them to the service/exploitation of the business (French Civil Code, Article 524). This status disappears only upon actual removal; mere intent is not enough (Cass. Civ. 1st Chamber, 7 April 1998, No. 95-20.504).

Family home protection

Regardless of the matrimonial regime, a mortgage granted by only one spouse over the family home is void under Civil Code Article 215, paragraph 3—even if the property is personally owned by that spouse (Cass. Civ. 1st Chamber, 17 December 1991, No. 90-11.908). An ex-spouse who has left the family home cannot bring the nullity action on that basis (Cass. Civ. 1st Chamber, 3 March 2010, No. 08-13.500).

Emphyteutic lease

A creditor may mortgage an emphyteutic lease, but the mortgage ends upon lease expiry. Renewal does not automatically preserve the mortgage because the renewed lease is distinct from the original (Cass. Civ. 3rd Chamber, 7 October 2009, No. 08-14.962).

Case law on mortgages granted by companies

• Mortgage by a SARL over its land to secure a parent company’s loan may be valid even without direct consideration and even if it risks realizing the SARL’s only asset (Cass. Com., 12 May 2015, No. 13-28.504).

• Mortgage by a SCI securing a shareholder’s loan may be challenged if contrary to corporate interest and likely to endanger the company’s existence; however, where property value exceeds the loan and enforcement would not wipe out the SCI’s entire assets, the mortgage may remain valid (Cass. Civ. 3rd Chamber, 21 December 2017, No. 16-26.500; Cass. Civ. 3rd Chamber, 7 June 2018, No. 17-11.875).

• Conversely, a SCI manager may jeopardize the company by contracting a major loan secured by a mortgage on the SCI’s only property; such acts, contrary to corporate interest, may not bind the company even if they fall within the corporate purpose (Cass. Civ. 3rd Chamber, 11 January 2023, No. 21-22.174).

6. The notary’s central role

A notarial deed is required for a valid contractual mortgage (French Civil Code, Article 2409). The notary has a monopoly in this area and corresponding liability. The notary ensures drafting quality and completes the land registration formalities, and must check whether the property value is sufficient.

The parties must define: the secured claims, the charged property, and the registration amount. The mortgage must always specify a determinate capital amount, on pain of nullity (French Civil Code, Article 2417). The mortgage also extends to interest and accessories of the secured claim (French Civil Code, Article 2390).

Practical consequences:

• Speed matters: priority depends on the date of registration at the land registry; registration also makes the mortgage enforceable against third parties.

• Cost: fees are proportional to the registered amount and are commonly charged to the debtor in contractual mortgages.

• Promise to mortgage: a private deed promise is valid in principle, but the debtor must still sign the authentic mortgage deed; otherwise, only damages may be awarded (Cass. Civ. 3rd Chamber, 7 April 1993, No. 91-10.032).

• Mortgage survives cancellation of sale and loan: in a VEFA context, even if sale and loan are rescinded for non-delivery, the bank may keep the mortgage until full repayment of sums owed (Cass. Civ. 3rd Chamber, 26 October 2022, No. 21-12.765).

7. The “rechargeable” mortgage (professional use only)

A rechargeable mortgage, available only for professional purposes (individuals or legal entities), can later secure additional professional claims beyond those named in the original deed, provided the original deed expressly allows it.

Within the maximum amount stated in the initial deed, the mortgagor may “offer” the same mortgage as security not only to the original creditor but also to a new creditor—even if the first creditor has not yet been paid.

The recharge agreement must be notarial and published, otherwise it is unenforceable against third parties. Publication determines ranking among beneficiaries of the same rechargeable mortgage (French Civil Code, Article 2416).

8. Mortgages and collective proceedings (insolvency)

8.1 No new mortgage registrations after opening judgment

After the opening judgment of collective proceedings (safeguard, reorganization, or liquidation), mortgages can no longer be registered (French Commercial Code, Article L. 622-30, paragraph 1). This applies to all mortgages except those authorized by the supervising judge (juge-commissaire) (French Commercial Code, Article L. 622-7).

Suspect period: mortgages granted after cessation of payments for prior debts

Any contractual mortgage created after the date of cessation of payments, to secure debts contracted before that date, is void. The court sets the cessation date. This nullity applies even if the mortgage was preceded by a promise granted before cessation of payments (Cass. Com., 12 November 1997, No. 95-14.900).

Community property complications

A mortgage over a common immovable cannot be registered after the opening judgment of one spouse’s reorganization (Cass. Com., 20 May 1997, No. 94-10.997). A mortgage granted over a common immovable after cessation of payments of one spouse to secure an earlier debt is void in full (Cass. Com., 2 April 1996, No. 93-20.562).

Civil party claim arising from criminal offense

Even where the deadline for filing a claim runs from the final criminal conviction determining the amount (French Commercial Code, Article L. 622-24), that does not allow the civil party to register a mortgage after the opening judgment (Cass. Com., 27 November 2019, No. 13-21.068).

8.2 How mortgage creditors get paid after opening (safeguard/reorganization)

If the creditor already held a mortgage registration at opening, individual enforcement and execution measures are prohibited (French Commercial Code, Article L. 622-21, II). If the property had not been definitively auctioned before the reorganization opening, the real estate seizure must be stopped (Cass. Com., 4 March 2014, Nos. 13-10.534 and 13-17.216).

The mortgage creditor must file its proof of claim.

If an immovable is sold during the observation period, the price is paid to the Caisse des dépôts et consignations. The supervising judge may order provisional payment of all or part of the secured claim, subject to the creditor providing a bank guarantee. The debtor or administrator may also propose replacing the mortgage with equivalent security (e.g., a bank guarantee); failing agreement, the judge may order substitution (French Commercial Code, Article L. 622-8, paragraph 2).

In a safeguard or reorganization plan, the mortgage creditor may be subjected to “uniform” payment deadlines similar to unsecured creditors (French Commercial Code, Articles L. 626-18 and L. 631-19). A plan may also decide the sale of the mortgaged asset, with the relevant portion of the price paid to the Caisse des dépôts et consignations, and the mortgage creditor paid after super-priority employee claims (French Commercial Code, Articles L. 626-22 and L. 631-19).

8.3 Liquidation: sale process and return of enforcement rights

In liquidation, sale of immovables is ordered by the supervising judge. The default is auction under real estate seizure rules, but the judge may authorize an amicable auction or private sale under determined conditions (French Commercial Code, Article L. 642-18, paragraph 3). Price distribution follows French Commercial Code Articles R. 642-22 to R. 642-37-1.

A mortgage creditor who filed its claim regains the right to individual enforcement if the liquidator has not undertaken liquidation of the mortgaged property within three months of the liquidation judgment (French Commercial Code, Article L. 643-2, paragraph 1).

Suspect period example: mortgage and payment annulled

A mortgage granted during the suspect period to secure prior debts is void (French Commercial Code, Article L. 632-1), and payment received under it is also void (Cass. Com., 10 July 2019, No. 18-17.820).

Indivision after divorce and enforcement

Where a mortgage predates insolvency and concerns property that becomes indivisible after divorce, the mortgage creditor may seize indivisible assets without first applying to the supervising judge, under Civil Code Article 815-17 (Cass. Civ. 1st Chamber, 24 May 2018, Nos. 16-26.378 and 17-11.424).

Conclusion: Why mortgages matter for debt recovery in France

A French mortgage provides two decisive advantages: priority on sale proceeds and the ability to pursue the property in the hands of third parties. However, effectiveness depends on proper notarial execution, correct registration strategy, and insolvency-aware enforcement planning.

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