On Mortgage of Immovable Property

The Law of the Republic of Kazakhstan dated 23 December, 1995

Unofficial translation

      Footnote. The form of act is amended; title is in the wording of the Law of the Republic of Kazakhstan dated 23 December, 2005 No. 107 (the order of enforcement see Article 2 of the Law No. 107).

      Footnote. Throughout the text Edict the words "place of residence (location)" is substituted by the words " place of residence (location)" in the relevant case of the Law of the Republic of Kazakhstan dated 3 June, 2003 No. 427;

      Throughout the text the word "Edict" is substitute by the word "the Law" of the Law of the Republic of Kazakhstan dated 23 December, 2005 No. 107 (the order of enforcement see Article 2 of the Law No. 107 ).

Chapter 1. General provisions

Article 1. Basic terms and definitions

      Terms and definitions, applied in this Law shall mean:
      1) an authorized person – a person, who conduct realization of mortgage without legal proceedings;
      2) pledger – a person, which immovable property or a lot in it shall be a subject of the mortgage;
      3) pledge holder – a person, which interests on basic obligation are provided by mortgage;
      4) mortgage of immovable property (mortgage) – the type of pledge, in which the mortgaged property or a lot in it is remained at the property and use of pledger or third party;
      4-1) mortgage organization – a legal entity, which exceptional type of activity shall be activity, provided by this Law;
      5) mortgage contract – agreement of the parties on establishment of mortgage in providing of basic obligations;
      5-1) mortgage loan – a bank loan, provided by mortgage of immovable property;
      5-2) mortgage housing loan – a mortgage loan, presenting in order construction of dwelling place or its buying and (or) repair;
      6) immovable property (real estate) – land plots, as well as buildings, constructions and other property, inseparable from land, in other words the objects, which placement is impossible without incommensurate detriment to its appointment;
      7) basic obligation – debt or other obligation, in whole or in part provided by mortgage;
      8) realization of mortgage – realization of property, being a subject of mortgage;
      9) an authorized body – National Bank of the Republic of Kazakhstan.
      Footnote. Article 1 as amended by the Laws of the Republic of Kazakhstan dated 03.06.2003 No. 427; dated 23.12.2005 No. 107(the order of enforcement see Article 2 of the Law No. 107); dated 05.07.2012 No. 30-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 2. Scope of application of this Law

      1. Relations, arising upon application of the mortgage of property as the method of securing obligations shall be regulated by this Law. General rules on pledge, contained in the Civil Code of the Republic of Kazakhstan, shall be applied to the mortgage of property, if other rules are not established by this Law. Regulations of this Law shall be applied in case of contravention between this Law and other legislative acts in a part of regulation of mortgage of property.
      2. Rules of this Law on mortgage, arising under contract, shall be applied correspondingly to the mortgage, arising on the ground of legislative act.
      3. Peculiarities of mortgage of land plots and rights in it may be provided by the land legislation.
      4. Requirements for mortgage organizations, linked with receiving of the licenses by them for carrying out of banking operations, provided by this Law, as well as by regulation of its activity, shall be established by the regulatory legal acts of authorized body.
      Footnote. Article 2 as amended by the Law of the Republic of Kazakhstan dated 23 December, 2005 No. 107 (the order of enforcement see Article 2 of the Law No. 107).

Article 3. Limits of securing of basic obligation by mortgage

      1. The mortgage shall secure the payment of principal of loan under contract of mortgage loan or other obligation, provided by the mortgage contract in whole or in a part to the pledge holder.
      The mortgage, established in security of the contract of mortgage loan, shall secure the payment of remuneration (interest) owing to a creditor for using of credit by them, unless otherwise provided by the contract.
      2. The mortgage shall secure requirements of pledge holder in that volume, which they shall have to the date of its satisfaction, unless otherwise provided in the contract, shall include:
      1) compensation of losses, caused by non-fulfilment, arrear or other improper performance of basic obligations;
      2) penalty (fine, late fee) for non-fulfilment, delay in performance or other improper performance of basic obligations;
      3) penalty for unlawful using of other people’s money, provided by the basic obligation or legislative acts.
      3. The mortgage shall provide as well:
      1) claim costs reimbursements and other expenses, caused by the foreclosure to the mortgaged property;
      2) compensation of expenses on realization of the mortgage.
      4. If the fixed overall amount of claims of pledge holder, provided by mortgage is specified in the mortgage contract, obligation of the debtor in the part exceeding this amount shall not be provided by mortgage, with the exception of the requirements provided by paragraph 3 of this Article and with Article 4 of this law.
      Footnote. Article 3 as amended by the Laws of the Republic of Kazakhstan dated 11 July, 1997 No. 154 Z970154; dated 3 June, 2003 No. 427.

Article 4. Hypothecation of additional expenses of pledge holder

      In the cases, when a pledge holder shall be obliged to incur expenses on its maintaining and protection or on extinguishment of debt of pledger on related with this immovable property of tax, fees or community charges in accordance with the conditions of mortgage contract or necessarily to secure maintaining of mortgaged property, compensation of these necessary expenses shall be secured to the pledge holder at the expense of mortgaged property.

Article 5. The mortgage of immovable property, being in common property

      1. The mortgage on immovable property, being in joint property, may be placed in existence of written consent of all holders on it.
      2. Holder of a share in common property may pledge its share in the right to the common property without consent of the other holders.

Chapter 1-1. The mortgage organization

      Footnote. The Law is supplemented by chapter 1-1 by the Law of the Republic of Kazakhstan dated 23 December, 2005 No. 107 (the order of enforcement see Article 2 of the Law No. 107).

Article 5-1. Establishing a mortgage organization

      1. The mortgage organization shall be established in the form of joint-stock company in accordance with the legislative acts of the Republic of Kazakhstan.
      2. The name of a mortgage organization shall contain the words “mortgage organization”.
      A legal entity, not registered in established by the legislation procedure of the Republic of Kazakhstan as a mortgage organization, may not be referred as a mortgage organization.
      3. A mortgage organization shall be a commercial organization, carrying out the separate banking operations, on the basis of a license issued by the authorized body.

Article 5-2. An activity of mortgage organization

      1. The basic activity of mortgage organization shall be extension of mortgage loan on the basis of a license of an authorized body for carrying out of banking borrowing operations.
      2. A mortgage organization shall have a right to carry out the following additional operations:
      1) trust operations:
      management of rights of demand on mortgage loans in the interests and under instruction of a grantor;
      2) factoring transaction:
      acquisition of rights of demand for payment from the customer of goods (works, services) with risk attachment of non-payment;
      3) forfaiting transactions (forfeiting): settlement of obligations of the customer of goods (works, services) by discount without recourse;
      4) leasing activity.
      3. The procedure of issuance, suspension and termination of a license of mortgage organization shall be established by the regulatory legal acts of the authorized body.
      4. A mortgage organization shall have a right to carry out the following types of activity:
      1) Investment activity in recognition of limitations, provided by paragraph 6 of this Article;
      2) realization of special literature on issues of mortgage lending on all types of information media;
      3) realization of own holding;
      4) realization of mortgaged property according to the procedure, established by the legislation of the Republic of Kazakhstan;
      5) provision of consulting services on issues, linked with its activity;
      6) issue and placement of securities, as well as obligations;
      7) realization of application software, using for automatization of activity of mortgage organizations;
      8) organization and conducting training in order of raising of qualification of specialists in the field of mortgage lending.
      5. A mortgage organization shall have a right to use the sources of financing, not prohibited by the legislation of the Republic of Kazakhstan for providing of its activity.
      6. Acquisition of a stake in the authorized capitals or stocks of legal entities shall be prohibited to the mortgage organization, except of the cases of acquisition of a stake in the authorized capitals or stocks of:
      1) financial organizations;
      2) legal entities, not being financial organizations, whose stocks are included in the list of the stock exchange, carrying out activity in the territory of the Republic of Kazakhstan, on the highest category of listing;
      3) legal entities, carrying out automatization of activity of mortgage organizations.
      Footnote. Article 5-2 as amended by the Laws of the Republic of Kazakhstan dated 12 January, 2007 No. 222 (shall be enforced upon expiry of six months from the date of its official publication).

Article 5-3. Competence of authorized body

      1. An authorized body in relation to the mortgage organizations shall exercise the following powers:
      1) shall issue a license to the mortgage organizations for carrying out banking operations, provided by this Law;
      2) shall maintain a register of mortgage organizations;
      3) shall establish prudential regulations and other compulsory to observation of regulations and limits by the mortgage organizations;
      4) shall issue mandatory regulatory legal acts by the mortgage organizations;
      5) shall establish the list, forms, terms and procedure of presentation of accounts by the mortgage organizations;
      6) independently or with the assistance of other organizations shall carry out inspection of activity of mortgage organizations;
      6-1) maintains the control over the mortgage organizations regarding their compliance with legislation of the Republic of Kazakhstan on combating legalization (laundering) of profits from crime and financing of terrorism.
      7) other functions, provided by this Law, other Laws of the Republic of Kazakhstan and acts of the President of the Republic of Kazakhstan.
      2. Procedure of application of enforcement of actions and sanctions shall be established by the regulatory legal acts of the authorized body.
      3. Upon non-performance of requirements of the authorized body by the mortgage organization, mentioned in written order, on updating of data in financial and (or) other reporting, calculation of prudential regulations shall be carried out by the authorized body on the basis of updated recording.
      Footnote. Article 5-3 as amended by the Laws of the Republic of Kazakhstan dated 19.02.2007 No. 230 (the order of enforcement see Article 2) dated 10.02.2011 No. 406-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2011 No 452-IV (shall be enforced from 13.10.2011).

Article 5-4. Enforcement actions, applied to the mortgage organizations, and grounds of its applications

      1. Upon violation of requirements of regulatory legal acts of the authorized body by the mortgage organization, enforcement actions established by this Article may be applied to it. The limited enforcement actions and sanctions shall be regarded by enforcement actions.
      2. An authorized body shall have a right to apply the following limited measures to the mortgage organization as limited enforcement actions:
      1) to require a letter of commitment;
      2) to give mandatory written order;
      3) to render a written warning;
      4) to make up an agreement in writing with a mortgage organization.
      Letter of commitment of mortgage organizations shall contain the fact of recognition of existing deficiencies and guarantee of the chief of management of mortgage organization on its elimination in well-defined terms with specification of the list of planned measures.
      A written order of the authorized body – a notation of the mortgage organization on remedial measures, directed to elimination of identified deficiencies within the established period. An appealing of written order of the authorized body in a court shall not suspend its execution.
      A written order shall be a notification of the authorized body on possibility of application of sanctions, provided by paragraph 4 of this Article to the mortgage organization, in case of identified violation of mortgage organization of the legislation of the Republic of Kazakhstan by the authorized body or if the existing deficiencies are not eliminated within the established period by the authorized body.
      An agreement in writing shall be made between a mortgage organization and the authorized body on necessity of immediate elimination of identified deficiencies and on confirmation of high priority measures in this regard.
      A mortgage organization shall be obliged to inform an authorized body on performance of letter of commitment or written order at term, specified in the document.
      3. Procedure of application of limited enforcement measures shall be established by the regulatory legal acts of the authorized body.
      4. An authorized body shall have a right to apply the following measures to the mortgage organization as the sanctions:
      1) imposition and recovery of a penalty on the grounds, established by the legislative acts of the Republic of Kazakhstan;
      2) suspension or termination of a license on the grounds, established by the legislative acts of the Republic of Kazakhstan;
      3) temporary (for the term no more than three months) suspension from performance of official duties of chief executive officer of management of mortgage organization before consideration of this issue by the relevant body of mortgage organization on the following grounds:
      default in performance of obligations, linked with carrying out of activity, provided by this Law;
      non-performance of the letter of commitment and written order of the authorized body;
      violation of the requirements of the regulatory legal acts of the authorized body.
      5. An authorized body shall suspend or terminate a license for conducting of all or separate types of banking operations depending on the nature of violation.
      An authorized body shall publish information on adopted decision in the periodical printed publications in state and Russian language.
      6. Decision of the authorized body on application of enforcement measures to the authorized body, provided by this Article, may be appealed in a court.
      Footnote. Article 5-4 as amended by the Law of the Republic of Kazakhstan dated 12.01.2007 No. 222 (shall be enforced upon expiry of six months from the date of its official publication); dated 05.07.2012 No. 30-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Chapter 2. Mortgage contract

Article 6. The form of the mortgage contract

      1. A mortgage contract shall be concluded in written form, signed by the pledger and the pledge holder, as well as by the debtor, if the pledger is not a debtor (collateral guarantor).
      2. A mortgage contract shall be the ground for mortgage registry. The right of mortgage shall arise from the date of its registration.
      3. Notarial certification of mortgage contract shall be carried out at will of the parties.
      4. Rights of pledge holder may be confirmed (registered) by the issuance of mortgage certificate.
     Footnote. Article 6 as amended by the Law of the Republic of Kazakhstan dated 25.03.2011 No. 421-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 7. The content of a mortgage contract

      1. In the mortgage contract shall be specified:
      1) the name (name) and place of residence (location) of the pledger and pledge holder, as well as a debtor, if a pledger (collateral guarantor) is not be a debtor on the basic obligation;
      2) the subject of the basic obligation, its amount and performance periods;
      3) inventory and location of mortgaged property;
      4) description of a right, in which immovable property, being a subject of a mortgage, shall subject to the pledger (right of property, right of economic management and other);
      5) other conditions, on which upon application of any party in the mortgage contract, an agreement shall be reached and not prohibited by the legislation.
      2. If the basic obligation is executed in parts, in the mortgage contract shall be specified the terms or periodicity of relevant payments and its amounts or conditions, permitting to determine these amounts.
      Footnote. Article 7 as amended by the Law of the Republic of Kazakhstan dated 3 June, 2003 No. 427.

Article 8. Consequences of violation of rules on alienation of mortgaged property

      1. Upon alienation of immovable property, pledged on mortgage contract, with violation of rules, containing in paragraph 2 of Article 315 of Civil Code of the Republic of Kazakhstan, a pledge holder shall have a right to require:
      1) recognition of transaction on alienation of immovable property is invalid;
      2) early fulfilment of the basic obligation and foreclosure of mortgaged property independently from whether to whom it belong.
      In last case, if it is proved, that an acquirer of mortgaged property at the moment of its acquisition knew or should know that immovable property is alienated with violation of rules, this acquirer shall bear responsibility within the cost of the mentioned immovable property for non-fulfillment of the obligation, provided by mortgage jointly and severally with a pledger.
      2. Upon issuance of mortgage certificate by the pledger, alienation of mortgaged property shall not be allowed.
      Upon alienation of mortgaged property, consequences, provided by paragraph 1 of this Article shall apply.

Article 9. Transfer of rights on mortgage contract

      Transfer of rights on mortgage contract shall be carried out in compliance with rules on assignment of a claim, and in the case of issuance of mortgage certificate – according to the procedure, established by Article 16 of this Law, and shall subject to the state registration.

Article 9-1. Alteration of mortgage contract

      Alteration of basic obligation and (or) mortgage contract shall be executed by the conclusion of additional agreement to the contract on the basic obligation and to the mortgage contract by the pledger and pledge holder (other persons, signed a contract on the basic obligation and mortgage contract).
      Upon existing of the mortgage certificate, alteration of the basic obligation and (or) mortgage contract, intending alteration of its content, shall be the basic for alteration and (or) attachment to the mortgage certificate according to the procedure, provided by Article 13-1 of this Law.
      Footnote. Supplemented by Article 9-1 by the Law of the Republic of Kazakhstan dated 26 July, 2007 No. 311 (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 10. Prevention of the pledger on rights of third parties with a view to mortgage

      Upon conclusion of the mortgage contract the pledger shall be obliged to prevent the pledge holder on all rights of third parties known to him (her) with a view to mortgage to the moment of mortgage registry, even if these rights are not registered in accordance with the established procedure. Non-fulfilment of this rule shall grant the right to the pledge holder to require of early fulfillment of the basic obligation or alteration of the mortgage contract.
      Footnote. Article 10 as amended by the Law of the Republic of Kazakhstan dated 25.03.2011 No. 421-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 11. Annex to the mortgage contract

      The documents, specifying conditions of mortgage, and/or conditions, necessary for exercising of the rights of pledge holder on this contract may be enclosed to the mortgage contract.

Chapter 3. Mortgage certificate

Article 12. Definition of the mortgage certificate

      1. A mortgage certificate shall be an order security, certifying the right of its legal holder:
      1) on getting of execution on the basic obligation;
      2) on foreclosure to the mortgaged property in order to getting of execution on the basic obligation;
      2. A mortgage certificate shall be drawn up in one copy and transferred to the pledge holder. A mortgage certificate may be supplemented by annex, which shall be executed in the form of extra sheets, being its integral part.
      3. A note on issuance of the mortgage certificate shall be made on all copies of the mortgage contract.
      4. Drafting more than one mortgage certificate in relation to the same immovable property, being a subject of mortgage on mortgage housing loan, or its part shall not be allowed.
      Footnote. Article 12 as amended by the Law of the Republic of Kazakhstan dated 3 June, 2003 No. 427; dated 26 July, 2007 No. 311(shall be enforced upon expiry of ten calendar days after its first official publication).

Article 13. The content of a mortgage certificate

      1. A mortgage certificate shall contain:
      1) the word “A mortgage certificate”, included in the title of the document;
      2) the name (name) and place of residence (location) of the pledger;
      3) the name (name) and place of residence (location) of the pledge holder;
      4) the name (name) and place of residence (location) of the debtor, if a debtor is not a pledger on the basic obligation;
      5) the date and place of mortgage contract;
      6) indication of amount of the basic obligation and size of remuneration, if its subject to payment;
      7) indication of the date of payment of amount of the basic obligation and remuneration, if its subject to payment, and if this amount and/or remuneration is subject to payment by parts – terms or periodicity of relevant payments and amount of each of them or condition, permitting to determine it;
      8) inventory and location of mortgaged property;
      9) description of a right, in which immovable property, being a subject of a mortgage, shall subject to the pledger;
      10) indication thereon if there is immovable property, being a subject of mortgage, or on the part of this property, other mortgage certificates, except of mortgage certificates on the contracts of mortgage housing loan, whether this immovable property or its part is granted by lease, encumbered or unencumbered it otherways;
      11) the sign of a pledger;
      12) the date of issuance of mortgage certificate;
      13) an annex to the mortgage certificate.
      2. Non-compliance with the requirements, established by paragraph 1 of this Article, as well as existence of expurgation and corrections shall make a mortgage certificate void.
      Footnote. Article 13 as amended by the Law of the Republic of Kazakhstan dated 3 June, 2003 No. 427; dated 26 July, 2007 No 311(shall be enforced upon expiry of ten calendar days after its first official publication).

Article 13-1. Introduction of amendments and (or) additions in a mortgage certificate

      1. Introduction of amendments and (or) additions and a mortgage certificate shall be carried out by annex of extra sheets to the mortgage certificate after introduction of amendments and (or) additions in the basic obligation, contract of mortgage loan and (or) the mortgage contract.
      The number and date of conclusion of additional agreement to the basic obligation, contract of mortgage loan and (or) the mortgage contract, as well as a subject of introduced amendments and (or) additions to the mortgage contract shall be specified in the annex to the mortgage certificate.
      2. The holder of mortgage certificate shall have a right to require introduction of amendments and additions to the mortgage certificate and its state registration from a pledger.
      3. Upon replacement of a pledger and (or) debtor, information (the name) and place of residence (location) of a new pledger and (or) debtor, as well as a sign of a new pledger shall be specified in the appendix to the mortgage certificate, if a debtor is not a pledger by the basic obligation.
      4. Replacement of a pledge holder shall be carried out according to the procedure, provided by this Law.
      Footnote. Is supplemented by Article 13-1 by the Article of the Republic of Kazakhstan dated 26 July, 2007 No. 311 (shall be enforced upon expiry of 10 calendar days after its first official publication).

Article 14. Condition of execution of rights and fulfilment of obligations on the mortgage certificate

      1. Upon execution of its rights, provided by this Law or mortgage contract, the holder of mortgage certificate shall be obliged to present it to the pledger.
      2. A pledger, discharging the basic obligation, shall have a right to require the transfer of mortgage certificate to him (her). A pledger, partly discharging the basic obligation, shall have a right to require the notes on the mortgage certificate on discharging of relevant part of obligation, which shall be carried out by the pledge holder (holder of the mortgage certificate) on written application of the pledger. Upon transfer of the mortgage certificate to the new holder, the note on partial performance shall be carried out in compulsory manner.
      3. Placement of the mortgage certificate at its legal holder or deficiency of note on the mortgage certificate on partial performance of the basic obligation shall certificate, unless otherwise provided, that this obligation or correspondingly its part is not performed.
      4. Placement of the mortgage certificate at a pledger shall certificate, unless otherwise provided, that obligation, provided by mortgage is performed.
      5. Performance of obligation on mortgage certificate shall be carried out in accordance with the civil legislation of the Republic of Kazakhstan in recognition of peculiarities, provided by paragraph 6 of this Article.
      6. Legal holder of mortgage certificate, transferring a right on mortgage certificate by execution of endorsement (endorsement), shall not bear responsibility for execution of a right on mortgage certificate in case, if until the state registration on mortgage certificate exception “without recourse” is performed by him (her).
     Footnote. Article 14 as amended by the Law of the Republic of Kazakhstan dated 3 July, 2003 No. 427; by the Law of the Republic of Kazakhstan dated 26 July, 2007 No. 311 (shall be enforced upon expiry of 10 calendar days after its first official publication).

Article 15. Registration of a mortgage certificate.

      Issuance of a mortgage certificate, introduction of amendments and (or) additions to the mortgage certificate and its subsequent transfer to other holders shall subject to the state registration at its location of immovable property, being a subject of a mortgage, according to the procedure, established for registration of rights for immovable property.
      Footnote. Article 15 as amended by the Law of the Republic of Kazakhstan dated 26 July, 2007 No. 311 (shall be enforced upon expiry of 10 calendar days after its first official publication).

Article 16. Transfer of rights on a mortgage certificate

      1. Transfer of rights on mortgage certificate shall be carried out by execution of endorsement on it to the advantage of another person and transfer of mortgage certificate to this person.
      In the endorsement shall be exactly and fully specified the name (name) of person, to whom the rights on mortgage certificate is transferred. Blank endorsement on mortgage certificate shall be considered as invalid.
      An endorsement shall be signed by specified pledge holder in the mortgage certificate, and if this endorsement is not the first of holder of mortgage certificate, named in the previous endorsement.
      2. Transfer of rights on mortgage certificate to other person thereby shall signify the transfer of rights on the basic obligation to the same person.
      All rights subsequent from its content, including rights of the pledge holder and rights of the creditor on the basic obligation shall reside to the legal holder of a mortgage certificate.
      3. The holder of a mortgage certificate shall be considered as a legal, if his (her) rights to the mortgage certificate shall be based on succession of existing on it endorsements.
      The holder of a mortgage certificate shall be considered illegal, if it is proved, that it is withdrew from the ownership of some of persons, made an endorsement, in the result of stealing or otherwise beyond this person’s will, on which the holder knew or should know upon acquisition of a mortgage certificate.
      4. Endorsements on a mortgage certificate, prohibiting its subsequent transfer to other persons is invalid.
      Footnote. Article 16 as amended by the Law of the Republic of Kazakhstan dated 26 July, 2007 No. 311 (shall be enforced upon expiry of 10 calendar days after its first official publication).

Article 17. Restoration of rights on lost mortgage certificate

      1. Restoration of rights on lost mortgage certificate shall be carried out by court according to the procedure, established by the procedural legislation.
      2. Rights on a mortgage certificate, which is transferred to the third party by the pledge holder, may be restored, if all endorsements, made on the lost mortgage certificate shall be established.
      3. Upon a decision of a court the pledger shall issue a duplicate of a mortgage certificate with a note “a duplicate” on it.

Article 18. Pledge of a mortgage certificate

      1. Pledge of a mortgage certificate as a security of fulfilment of obligations of a legal holder of the mortgage certificate shall be carried out in accordance with the Civil Code of the Republic of Kazakhstan.
      2. Upon non-fulfilment of obligations, provided by a pledge of a mortgage certificate, a pledge holder of a mortgage certificate shall have a right to require transfer of rights to him (her) on the basic obligation according to the procedure, on condition and with consequences, provided by Article 16 of this Law. Upon refusal to transfer these rights, a pledge holder may require transfer such rights to himself (herself) in a judicial procedure.
      3. A pledge holder of a mortgage certificate, to whom the rights on mortgage certificate are transferred or transferred by court, shall have a right to foreclose on the mortgage property in accordance with the conditions of mortgage certificate and basic obligation.
      Liquidation value in the result of realization of mortgage shall be applied to the pledge holder of mortgage certificate in discharge of debt, and remaining sum is transferred to the person, pledged a mortgage property, in recognition of requirements of Article 36 of this Law.
      4. Special hypothecary endorsement, granting a right to the pledge holder to sell a mortgage certificate upon expire of specified period in order to keep the amount of obligation off from collected funds, provided by the pledge of mortgage certificate may be made on mortgage certificate by agreement of pledge holder of mortgage certificate and pledger of mortgage certificate.
      Footnote. Article 18 as amended by the Law of the Republic of Kazakhstan dated 3 June, 2003 No. 427.

Article 19. Termination of a mortgage certificate

      1. Effect of a mortgage certificate shall be terminated:
      1) upon carrying out of subsequent rights from it;
      2) upon its voluntary transfer to the pledger;
      3) if the requirements subsequent from it are not specified to the debtor on the basic obligation until the date of the month after ensuing of the period of performance of the basic obligation;
      4) in case of loss of the mortgage property.
      2. Rights of a holder of mortgage certificate on discharging of a basic obligation shall be reserved upon termination of a mortgage certificate on the grounds, provided by subparagraph 3 and 4 of paragraph 1 of this Article.

Chapter 4. Realization of a mortgage

Article 20. Methods of realization of a mortgage

      In case of non-fulfilment of basic obligation by a debtor, a pledge holder shall have a right to satisfy their requirements by:
      1) realization of a mortgage in a judicial procedure;
      2) realization of a mortgage without legal proceedings, unless otherwise provided by the legislative acts or in a mortgage contract, or subsequent agreements of the parties;
      3) appropriation of a mortgaged property in case of announcement of void tenders according to Article 32 of this Law.

Article 21. Realization of a mortgage in judicial procedure

      1. Realization of a mortgage in judicial procedure shall be carried out in accordance with a court decision at the suit of a pledge holder. By this a property sale, being a subject of a mortgage, shall be carried out by public sale according to the procedure, established by the procedural legislation.
      2. In foreclosure to property, pledged by a mortgage contract may be refused, if the committed violation of the basic obligation by a debtor is extremely minor and the amount of requirements of the pledge holder therefore clearly disproportionate to the value of the mortgaged property.
      3. Accepting decision in execution upon property to the immovable property, pledged by a mortgage contract, the court shall determine and specify in the decision:
      1) all amounts payable to the pledge holder from the value of the mortgaged property, except of the expenses of amount on the protection and realization of the immovable property, which shall be determined at the end of its realization. For the amounts, calculated in a percentage rating, shall be specified the amount on which remuneration is charged, the amount of remuneration and period for which they subject to charge;
      2) being a subject of a mortgage of immovable property, from the value of which the requirements of a pledge holder are satisfied;
      3) primary sale price of a mortgaged property upon its realization;
      4) measures to ensure protection of immovable property before its realization, if they necessary.
      4. At the request of the pledger, the court in existence of valid reasons shall have a right to adjourn realization in decision of foreclosure on a mortgaged property for the term up to one year in cases, when:
      1) a pledger shall be a citizen, independent of which an immovable property, pledged by them on the mortgage contract, on condition that a pledge is not linked with carrying out of entrepreneurial activity by this citizen;
      2) a subject of a mortgage shall be a plot of land from among agricultural lands.
      Adjournment of realization of a mortgaged property shall not involve the rights and obligations of the parties on the basic obligation and shall not release a debtor from compensation of losses increased during adjournment of a creditor, owing a remuneration and penalty to him (her).
      If a pledger within presented to him (her) by adjournment the time satisfy requirements of a pledge holder, the court on application of a pledger shall recall a judgment.
      5. An adjournment of realization of a mortgage shall not be allowed in the following cases:
      1) if it may involve a major deterioration of financial status of a pledge holder;
      2) if in relation to the pledger or pledge holder the proceedings on recognition his (her) as a bankrupt is instituted.
      Footnote. Article 21 as amended by the Law of the Republic of Kazakhstan dated 3 July, 2003 No. 427.

Article 22. Termination of realization of a mortgage

      A debtor and (or) a pledger, being a third party (collateral guarantor), shall have a right to terminate a foreclose to him (her) and its realization, in any time before the sale of the subject of a pledge took place, complied with the requirements of a pledge holder in that volume, which they shall have to the date of its satisfaction in accordance with conditions of a mortgage contract. An agreement limiting this right is void.
      If before the date of the first publication of advertisement of tenders without legal proceedings a debtor - an individual and (or) a pledger, being a third party (collateral guarantor), shall offer to the pledge holder the buyer's candidacy, the buying price of the subject of a pledge which shall cover the requirements of a pledge holder in that volume, which they shall have to the date of its factual satisfaction of requirements of a pledge holder, this person shall have a right of preemptive buying. In this case a pledge holder shall not refuse in realization of the subject of a pledge.
      Upon non-payment by person, having a right of preemptive buying of the subject of a pledge, suggested by them the buying prices, a pledge holder shall conduct the non-judicial tenders according to the procedure, established by this Law during ten business days from the date of suggestion to the pledge holder its candidacy as a buyer.
      Footnote. Article 22 is in the wording of the Law of the Republic of Kazakhstan dated 10.02.2011 No. 406-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 23. Compensation of expenses, linked with realization of a mortgage

      Expenses of the pledge holder, linked with realization of a mortgage, shall be compensated to him (her) from the value of the mortgaged property.

Article 24. The procedure of realization of a mortgage without legal proceedings

      1. Realization of a mortgage without legal proceedings shall be carried out by holding the tenders on mortgaged property, organized by authorized body.
      2. An authorized body shall be determined by the parties in the mortgage contract. In case if in the mortgage contract an authorized body is not determined, he (she) shall be appointed by the pledge holder.
      3. Satisfaction of requirements of a pledge holder shall not be allowed without legal proceedings in the cases, when:
      1) for the mortgage of immovable property the consent of other person or body is required and such consent shall not be obtained;
      2) a subject of a mortgage shall be an immovable property, having significant historical, artistic or other cultural values for society;
      3) a subject of a mortgage shall be an immovable property, being in common property and any of its owners shall not give a written consent to the satisfaction of requirements of a pledge holder without legal proceedings;
      4) there is a written refusal of the pledger on mortgage housing loan, being an individual from conducting of realization of the mortgaged property without legal proceedings, registered by body, where the mortgage contract shall be registered, and presented in terms, established by subparagraph 7-1) of Article 26 of this Law;
      5) a subject of a mortgage shall be a dwelling and (or) land plot with dwelling located on it, being an ensuring under contract on granting a microcredit (credit), concluded by the individual with microfinance organization (credit cooperative).
      In specified cases of foreclose on the mortgaged property shall be applied only by court decision.
      Footnote. Article 24 is in the wording of the Law of the Republic of Kazakhstan dated 10.02.2011 No. 406-IV (shall be enforced upon expiry of ten calendar days after its first official publication); as amended by the Law of the Republic of Kazakhstan dated 26.11.2012 No. 57-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 25. Requirements for holding of non-judicial tenders

      1. Before holding of tenders shall be performed the following procedures:
      1) an authorized person shall compile notification on non-fulfilment of the basic obligation, register it in the body, where the mortgage shall be registered, and present it to the pledger. Upon impossibility of direct transfer of notification it shall be given by registered letter to the pledger on his (her) address, specified in the mortgage contract;
      2) upon dissatisfaction of requirements subsequent from notification on non-fulfilment of the basic obligation, and nonpresentation on the mortgage housing loan by the pledger, being an individual of a written refusal from conducting of realization of a mortgage without legal proceedings, registered in the body, where the mortgage shall be registered, but not less than thirty calendar days from the date of serving or sending of specified notification to the pledger in accordance with subparagraph 1) of this paragraph, an authorized body shall compile notification on tenders for the mortgaged property, register it in the body, where the mortgage shall be registered, shall present or send it to the pledger by registered letter at address, specified I the contract of a pledger, as well as to the pledge holder and officially publish an advertisement of tenders in accordance with Article 28 of this Law;
      3) all transactions in relation of immovable property, put in trading shall be prohibited from the date of first publication of advertisement of tenders, and if the transactions are made, they shall be held invalid;
      4) from the date of first publication of advertisement of tenders and until its carrying out shall pass not less than ten days.
      2. A pledger shall have a right to seize the court with suit on absence of grounds for realization of mortgage on receipt of the notification on nonfulfillment of the basic obligation.
      A pledger shall have a right to seize the court with application on granting of deferral in realization of a mortgage on conditions, provided by paragraph 4 of Article 21 of this Law.
      Application with suit (statement) to the court shall suspend duration, provided by subparagraph 2 of paragraph 1 of this Article.
      Footnote. Article 25 as amended by the Laws of the Republic of Kazakhstan dated 03.06.2003 No. 427; dated 10.02.2011 No. 406-IV(shall be enforced upon expiry of ten calendar days after its first official publication); dated 25.03.2011 No. 421-IV (shall be enforced upon expiry of ten calendar days after its first official publication); dated 05.07.2012 No. 30-V(shall be enforced upon expiry of ten calendar days after its first official publication).

Article 26. Content of notification on nonfulfillment of obligations

      Notification on nonfulfillment of obligations shall contain the following information:
      1) name (the name) and place of residence (location) of a pledger;
      2) name (the name) and place of residence (location) of a pledge holder;
      3) summary of nonfulfillment obligations;
      4) total explanation of basic obligation;
      5) total explanation of all other collections, costs and expenses, which shall be paid by the pledger until the possible sale of mortgaged property;
      6) suggestion on payment in full of all debts during thirty days from the date of receipt of notification;
      7) prevention on possible bidding on immovable property, being a subject of the mortgage;
      7-1) condition on right of a pledger on mortgage housing loan, being an individual, to represent a denial letter of conducting realization of mortgage without legal proceedings, registered in the body, where the mortgage contract was registered, during twenty five calendar days from the date of service or send of notification by registered letter;
      8) name (the name) and place of residence (location) and telephone number of authorized person.
      Footnote. Article 26 as amended by the Laws of the Republic of Kazakhstan dated 03.06.2003 No. 427; dated 10.02.2011 No. 406-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 27. Content of notification on bidding

      Notification on bidding shall content the following information:
      1) name (the name) and place of residence (location) of a pledger;
      2) name (the name) and place of residence (location) of a pledge holder;
      3) summary of nonfulfillment obligations and total amount of all debts of a pledger before the pledge holder, subject to satisfaction a the expense of realization of a mortgage;
      4) the name, description and specification of immovable property, being a subject of the mortgage and submit for biding;
      5) time and place of bidding;
      6) name (the name), place of residence (location) and telephone number of authorized person.

Article 28. Advertisement of bids and its publication

      1. An authorized person shall publish an advertisement to bids on Kazakh and Russian languages in periodical print publications, distributed in the territory of region, city of republican significance, the capital city of the Republic of Kazakhstan on location of immovable property not less than ten calendar days until bidding.
      2. Advertisement of bids shall contain the following information:
      1) the name, description and specification of immovable property, submit for bidding;
      2) exact location of immovable property;
      3) the sum of margin of a participant in a bidding process, if it is prescribed conditions of bidding;
      4) the procedure and date of payment of sales price;
      5) time and place of bidding;
      6) name (the name) and place of residence (location) of an authorized person, holding tenders, his (her) telephone number for references and payment requisites.
      One copy of advertisement of bids shall be posted, if it is possible and there are no obstacles for that, on conspicuous place on immovable property, submitted to bidding, not later than ten days from the date of its holding.
      Footnote. Article 28 as amended by the Laws of the Republic of Kazakhstan dated 03.06.2003 No. 427; dated 10.02.2011 No. 406-IV (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 29. Organization and bidding

      1. An authorized person shall organize and hold bidding.
      2. Bidding shall be held in inhabited locality (city, district, rural settlement, village) on location of property.
      3. Bidding shall be announced for any day of week for the time from 9 to 18 hours.
      Footnote. Article 29 as amended by the Constitutional Law of the republic of Kazakhstan dated 03.07.2013 No. 121-V (shall be enforced upon expiry of ten calendar days after its first official publication).

Article 30. Participants in a bidding process

      Any legal entities and citizens, including a pledger and pledge holder shall have a right to participate in bidding.
      An authorized body shall not participate in bidding.

Article 31. Margin and payment of sales price

      1. An authorized person shall have a right to require contribution of margin or other evidence of his (her) possibility to pay the supposed sales price in full from the participant of bidding before starting of bidding. An authorized person shall have a right to require from participant in a bidding process, suggested an ultimate price, an immediate contribution of this sum by cash money in full, in the form of bank cheque or other payment method, established by the legislation of the Republic of Kazakhstan, or require the evidences of his (her) possibility to pay the nominated price after terminating of bidding by the methods and terms, specified in advertisement of bidding.
      2. Upon refusal of vendee to execute an immediate payment or upon absence of evidences of possibility to pay in terms, provided by advertisement of bids, he (she) shall be eliminated from the list of participants in a bidding process, and they shall be considered as continued. The new bidding, which is hold according to the procedure, established by this Law, shall be announced upon impossibility of its continuation, as well as in case of non-payment of purchased property in bidding.
      3. A pledge holder, participating in bidding, shall be released from contribution of margin, as well as in case of winning of trade – from payment of sales price within the sum of the basic obligation.
      4. Margins of participants shall subject to reimbursement on termination of bidding. A margin of participant, won bidding, shall be counted against sales price.
      A margin of participant, who won bidding, but not paid the sales price, shall be remained in disposition of authorized body and shall be used by him (her) according to the procedure, established by Article 36 of this Law.

Article 32. Advertisement of bids is considered as failed

      1. An authorized person shall announce bidding as failed in the cases, when:
      1) less than two vendees appeared in bidding;
      2) a person, who won bidding, did not pay the sales price in the established term.
      2. Bidding shall be announced as failed on the next day after any of the circumstances mentioned in paragraph 1 of this Article were in process.
      3. Upon announcement of bidding as failed due to participation of not less than two vendees in it, a pledge holder shall have a right to appropriate the mortgaged property on his (her) current assessed amount established by court decision or an authorized person on the ground of conclusion of individuals and legal entities, having a license for carrying out of activity on assessment of property, or to require invitation to bidding.
      A pledge holder shall have a right to obtain the mortgaged property by conclusion of contract of sale during ten days after announcement of bidding as failed on the ground, provided by subparagraph 2 of paragraph 1 of this Article.
      In this case a mortgage contract shall be terminated.
      4. Announcement of new bidding shall be published in accordance with Article 28 of this Law.
      Footnote. Article 32 as amended by the Law of the Republic of Kazakhstan dated 8 November, 2000 No. 96 Z000096; dated 3 June, 2003 No. 427.

Article 33. Right to petition in court

      A pledger, as well as a debtor on basic obligation, if he (she) is not be a pledger, shall have a right to contravene the results of bidding in a court on location of immovable property in case of breaches of procedures of its holding during three months.
      Filing a claim does not suspend the performance of actions arising from the results of bids.

Article 34. Transfer of immovable property to the vendee

      After termination of bidding and contribution of ultimate price by vendee and all other required payment from him (her), an authorized person shall hand in a document to him (her) on acquisition of immovable property in bidding, which shall contain the following information:
      1) ground for bidding;
      2) place and time of its holding;
      3) the name, description and specification of property, acquired in bidding, its location;
      4) name (the name) and place of residence (location) of a pledger – previous property owner;
      5) name (the name) and place of residence (location) of a vendee;
      6) sales price, paid by vendee;
      7) name (the name) and place of residence (location) of an authorized person, who held bidding.
      A document on acquisition of immovable property in bidding shall be indorsed by signature of an authorized person.
      If an authorized person is a legal entity, the signature of his (her) representative shall be certified by the seal of this legal entity; if the authorized person is an individual, his (her) signature shall be certified according to the notarial procedure.

Article 35. Refusal of a pledger from transfer of immovable property

      A vendee shall have a right to seize the court on location of property in case of refusal of a pledger to transfer of immovable property to the vendee, acquired in bidding by him (her), including unwillingness to vacate the housing unit.
      All court costs, arising in such a case shall be refunded by a pledger at the expense of funds, obtained from realization of mortgage.

Article 36. Revenue distribution from bidding

      An authorized person shall distribute revenue from bidding in the following order of precedence:
      1) on cover the costs and expenses of the bidding;
      2) on payment of basic obligation, provided by the mortgage;
      3) on payment of overdue liabilities, provided by secondary mortgaging and surcharges, as well as other encumbrances of immovable property in the order of precedence, established by the legislative acts;
      4) on refund of remaining sum to the pledger.

Chapter 5. Termination of mortgage

Article 37. Ground of termination of mortgage

      1. The mortgage shall be terminated on the grounds, provided by Article 322 of Civil Code of the Republic of Kazakhstan, unless otherwise provided by this Law. State registration of termination of mortgage of immovable property in connection with execution of basic obligation, foreclosure on the mortgaged property and other grounds shall be carried out according to the procedure, established by the legislation on state registration of rights on immovable property.
      2. The basic obligation shall be terminated upon foreclosure sale, providing the basic obligation in full as of the date of conclusion of mortgage contract, from bidding without legal proceedings at the price less than the sum of the basic obligation, as well as upon passing of such property into the ownership of a pledge holder simultaneously with termination of the mortgage.
      Footnote. Article 37 as amended by the Law of the Republic of Kazakhstan dated 3 June, 2003 No. 427; dated 26 July, 2007 No. 311(shall be enforced upon expiry of 10 calendar days after its first official publication).

Article 38. Effect of this Law

      This Law shall enter into force from 1 January, 1996.

      The President
      of the Republic of Kazakhstan