Reform of Property Pledge System in Lithuania had been introduced by the Lithuanian government in 2002. The guarantee for the culmination of a creditor’s demand on the debtor’s obligatory default is called pledge, that is, pledge depends upon the agreement between the creditor and debtor regarding the disposal of property.
The Lithuanian government introduced property pledge system reform as a part of its economic reform program.
The Lithuanian government proposed a centralized mortgage registry to protect the direct and indirect buyers’ and creditors’ interests.
To run an effective and reliable property pledge system the government minimized the cost of borrowing and increased the loan amount and period. It also helped to protect the interest of the creditors.
The government encouraged the competitiveness among the companies. Also, it helped the companies to minimize their production costs and to apply new technologies.
The government focused on the integration of pledge registry into the movable properties’ and real estate’s registry so that it could form a transparent credible pledge and property registration system. A single registry was able to annul the overlapping functions and thus, advanced the registration process of the pledge and property purchase. Moreover, this system simplified the mortgage and property registration process and improved the registry’s transparency and credibility, therefore it was very easy then, to get access of the information regarding pledge.
To enhance the functions of the mortgage registration system the government removed the market constraints and abolished the barriers of using the immovable and movable properties.
Another aim of the Lithuanian government was to determine the boundaries of properties ownership. The government also started to simplify the pledge registration process.
Several attempts had been made by the government to form a stable credit and finance system. The government built a single database and a legal basis of pledge, for without this, it was difficult to measure whether a property, that had been used as a loan security, was pledged before or not.
Last Updated on : 26th June 2013