Expropriation of real property as a collateral for an usurious loan

Abstract

Expropriation of real property as a collateral for a loan agreement was in practice used to exploit the debtor's coercive position or to mislead the debtor. Certainly, the real goal of the debtor was not to divest themselves of their assets or their only house or flat, but merely to obtain a loan. However, the enormous costs of the loan, over and above the interest only, deceitfully concealed from the debtor at the time of entering into a loan agreement, made it simply impossible to repay the loan and resulted in the loss of the debtor's house or flat. This huge social problem would not have transpired if not for the jurisprudence of courts of law or decisions of notaries or court en-forcement officers who often accepted non-equivalence of considerations of both the parties to a contract. Therefore, in 2020, the lawmaker rightly introduced a law whereby a greater part of such agreements is invalid. Furthermore, the so-called Usurious Loans Act of 2022 will eliminate abuses in the loan market by introducing, inter alia, a precise limit on non-interest costs and supervision to be exercised by the Polish Financial Supervision Commission (KNF).

Keywords

• real property
• expropriation of property as a collateral
• loan
• usury
• creditor
• debtor