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Court has confirmed that the prohibition to assign a claim secured by a third-party mortgage without the consent of the collateral provider is not absolute
Our team successfully represented the client in a dispute against the client’s debtor who disagreed with the assignment of the claim, challenged the validity of the mortgage on his property (3rd party mortgage) and the ongoing recovery.

The Vilnius Regional Court and the Lithuanian Court of Appeal dismissed the claim and acknowledged that the imperative nature of Paragraph 3 of Article 4.181 of the Civil Code does not per se waives assignment of claim, when consent of a 3rd party mortgage lender is not presented. An important interest protected by Paragraph 3 of Article 4.181 of the Civil Code exists when: 1) new creditor is interested in taking over the pledged property and not in the performance of the secured obligation and 2) the change of creditor worsen the legal position of mortgage lender. In this case, the assignment of claim to another creditor does not infringe rights 3rd party mortgage lender, because such creditor’s substitution does not restrict or extend the obligations of the debtor in the enforcement process.


As regards to the claim to void the mortgage the Civil Code does not have established rules for termination of a mortgage / pledge of a 3rd party lender in case of violation of Paragraph 3 of Article 4.181 of the Civil Code. In the event of an assignment of claim without the consent a 3rd party lender of mortgage / pledge and it is established that the creditor has essential values for the mortgagee / pledge lender, infringement of the Paragraph 3 of Article 4.181 of the Civil Code does not impose invalidity of such mortgage / pledge.


The team: Andrius Mažutis, Vita Sabalytė, Vytautas Sereika, Stanislav Papijanc

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