Real Estate Lien 
Real estate lien is a right on the real estate that secures the repayment of a receivable.
Use
In the event of a default by the borrower, a real estate lien gives the beneficiary (lender), the right to use payments from the income on the real estate. This income can be from forced administration or proceeds of enforced sale of the real estate. You can distribute the income in the ranking order of the claims in the real estate. The standard system supports the following business requirements for real estate liens:
Master data specific to real estate liens
● Classification
If you specify a collective charge on a real estate lien, you must assign all the individual charges to the real estate lien. You can however, use the amount for only one of the charges. The system considers all the remaining charges as prior charges on the collateral agreement.
● Interest
You can maintain the interest rate, frequency at which the interest must be calculated, the start date for calculating the interest as well as the duration for interest calculation. In the event of a default by the borrower, the beneficiary of the real estate lien can use the interest payments, to recover dues and legal expenses in an enforcement scenario.
If interest is specified, you can add the interest component to the collateral right value for the collateral agreement. In such a scenario, the assessment amount would be equal to the sum of nominal value and the interest amount.
● Enforcement
You can maintain the details for the different levels of enforceability for the real estate lien. You can specify the type of enforceability, the enforcement amount and the rank of the enforcement (such as first, middle and last). You can also specify if the enforcement title is transferred on the name of the beneficiary (such as in the scenario for assignment of the real estate lien or merger of the beneficiary bank).
● Date of disclosure
You can enter the date of disclosure to the real estate lien to third parties. You can enter the date of disclosure for each business partner assigned to the real estate lien. For example, you create a charge on a real estate in the land register, you may need to disclose the charge to third parties such as insurance agencies.
Business scenarios for estate liens
● Special arrangements
You can use special arrangements to enhance the collateral value of real estate liens. The standard system supports the business scenarios for special arrangements such as notary declaration, encumbrance exemption declaration and trust order. For detailed information, see
● Global land charge
If a land charge has a global declaration of purpose, you can use the land charge to collateralize the existing and future receivables of a business partner. Further, assignments to receivables can be generated automatically in the system using certain superior criteria.
● Mortgage
Mortgages can be created only on existing receivables and therefore, must have a narrow declaration of purpose.
● Pension charge
A pension charge is global by nature and therefore the system allows automatic links to receivables. This real estate lien type is not commonly used in business.
You can create different types of real estate liens to support your business requirements. For detailed information on the structure of a collateral agreement, see