Removal of encumbrance from movable property

Removal of an encumbrance from movable property is a process that requires a clear sequence of actions and compliance with legislative norms, in particular the Law of Ukraine “On securing creditors’ claims and registration of encumbrances”. One of the important stages is the execution of the court decision. If the lender refuses to lift the restriction after fulfilling the obligations or other obstacles arise, the owner can apply to the court to enforce the decision. You can learn more about the procedure from the article “Enforcement of the court decision“, which will help you understand how to act in case of problems during the removal of restrictions.

What is an encumbrance of movable property?

An encumbrance is a legal restriction that affects the ability of the owner to fully dispose of his movable property. Such a restriction is often imposed in connection with a pledge agreement, an outstanding loan or other financial obligations. While there is an encumbrance, the owner of the property cannot sell it, gift it or otherwise alienate it without the consent of the creditor.

Encumbrance most often concerns the following types of property:

• Vehicles: cars, motorcycles, trucks;

You can learn more about the procedure for removing the seizure from the TK from the article.

• Specialized equipment: construction, agricultural;
• Trade and production equipment;
• Other valuable assets.

The imposition of restrictions is a common practice in financial transactions, especially during the conclusion of pledge agreements or loan processing.

How to remove encumbrances from movable property?

The main goal of the procedure is to return to the owner the opportunity to freely dispose of his property, such a possibility is specified in the Constitution of Ukraine.

Main stages:

• Fulfillment of obligations.

First of all, the owner must fulfill all the obligations that caused the encumbrance. It can be repayment of a loan, payment of a deposit or other financial settlements. After the completion of these actions, the creditor is obliged to remove the encumbrances.

• Obtaining consent.

The creditor, after full fulfillment of obligations by the debtor, must issue the appropriate consent for the removal of restrictions. This document is necessary for further actions.

• Submission of an application for the removal of encumbrance.

The owner of the property/his representative submits an application to the registration body. The following documents are attached with the application:

1. Documents confirming the fulfillment of obligations;
2. Creditor’s consent;
3. Passport data and identification code of the property owner.

• Encumbrance removal registration.

After reviewing the documents, the registration authority amends the Register of Encumbrances, and restrictions on the property are officially lifted. The owner receives confirmation in the form of a certificate or extract from the register.

Grounds for relief

Encumbrance removal can be carried out on several legal grounds:

• Full repayment of obligations.

The most common case of removal of restrictions is associated with full fulfillment by the debtor of his financial obligations to the creditor. In this case, the creditor is obliged to remove the restrictions.

• Cancellation of the contract.

If the pledge agreement or credit agreement was canceled by agreement of the parties or a court decision, the encumbrance is also subject to cancellation.

• Expiry of the contract.

Sometimes restrictions can be removed automatically after the contract expires.

• Court decision.

If the encumbrance was imposed illegally or by mistake, it can be removed on the basis of a court decision.

Documents for relief of encumbrance

In order to initiate the process of removing restrictions, the owner must prepare a package of documents:

1. Application for removal of encumbrance. It is submitted to the registration body.
2. Documents confirming the fulfillment of obligations. These can be bank statements, loan payment receipts, as well as other financial documents.
3. Creditor’s consent. A document confirming the creditor’s consent to the lifting of restrictions.
4. Credit agreement or pledge agreement. These documents are required to confirm the legitimacy of the claims.
5. Passport and identification code of the owner.

It is also important to ensure that all documents are completed correctly. Incorrectly filling in or missing one of them may be the reason for refusing to remove the restriction.

Actions in case of refusal by the creditor

If the creditor refuses to remove restrictions from the property after fulfilling all obligations, the owner has the right to go to court. In such a situation, it is necessary to provide the entire package of documents. After that, the court, after considering the evidence of repayment of the debt, will make a decision on the removal of the creditor’s encumbrance.

It should be understood that the creditor’s refusal must be justified. After all, wrongful refusal gives the owner the opportunity to defend his rights in court. For such cases, it is important to provide yourself with qualified legal support.

Legal assistance can be obtained not only offline in a lawyer’s office, but also online, which is especially convenient in modern conditions. You will find more detailed information about such consultation in the article “Online consultation and assistance of a lawyer“.