This is a hypothetical question.

Suppose I buy a house and have a mortgage. Later, the region my house is in is annexed by another country. Let's assume also that the mortgage I took out is based in the region's former owner.

As a home owner, I would love to ignore my creditors located across the border.

My question is, what could the bank do to collect payment across a border when tensions are high?

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    The title question is about law, and might be interesting if tidied up. the question in the body is political and off-topic.. Mar 21, 2017 at 11:05
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    Annexation and war are situations where law and ownership can and will be changed in unpredictable ways. The bank will try to negotiate with the new government, and it can freeze asserts belonging to the new government, or try to sell the mortgage to an entity which is closer to the new government. Some of these actions may be forbidden by the bank's government.
    – Peter
    Mar 21, 2017 at 14:57

2 Answers 2


The law applicable to immovables is the law of the situs (lex rei sitae), i.e. the law of the country where the immovable property is located. This is important because this law changed after the annexation. Therefore, the mortgage may not exist anymore as a security. The lex rei sitae in regard to immovables is usually not subject to a choice of law agreement. Consequently, the law of the country of the creditor, which applied to the mortgage agreement is not applicable.

As far as the loan is concerned, the courts in the new country have jurisdiction over a claim for payment under the loan agreement and may apply the law of the country of the creditor and order payment. If you are unable to make payments, your house maybe subject to insolvency rules and sold, the proceeds then paid to your creditors.

The country of the creditor may also have jurisdiction, if you are still a national of this country and nationality is a ground for jurisdiction in that country. Assuming the property is your only valuable asset, a judgment in favour of the creditor needs to enforced in the "new" country. Whether this actually happen, depends on the law of the "new" country, and most importantly probably on the relationship between the two countries after the annexation.

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    Is it still an immovable object if you can move it?
    – TripeHound
    Mar 21, 2017 at 13:37
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    @TripeHound a house may be movable. But the land is not Mar 21, 2017 at 13:41
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    @TripeHound: a mortgage is a security in land, which is immovable. On this land, however, there may be objects that are movable, but which are affixed to this land. For example, a building. Depending on the degree and purpose of this affixation, these movable objects are considered a part of the land and thus treated as immovables. Mar 21, 2017 at 13:52

The outcome would come down to a case by case basis resolution.

For example, the American Revolution was not held to invalidate private debts owed to British debtors (indeed, the U.S. Constitution was designed with constitutional protection for foreign creditors), but I am relatively confident that ISIS does not allow creditors from Syria or Iraq to enforce private debt obligations in the territory that it controls.

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    I'd argue the ISIS situation is different as it's an active war zone - I'm interested to hear what happened to mortgages in Crimea after the Russian annexation, as doubtless Ukrainian banks would have been involved. (I note that Russia claimed the civilian population of Crimea was in favour of annexation - perhaps because they wanted to invalidate their mortgages?)
    – Dai
    Mar 21, 2017 at 17:47
  • @Dai One good example of many. I certainly don't know the answer in the Crimean case.
    – ohwilleke
    Mar 22, 2017 at 0:42
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    @Dai Russian citizens in Creamea are obligated to pay all loans to Ukrainian banks. This is regulated by federal law no. 422 signed 2015-12-30. But there is a twist: by that law, Ukrainian banks have to declare their claims under Russian jurisdiction, which I doubt they will for obvious reasons. From Russian news and blogs I know for sure Creamean started to pay loans to Ukrainian banks even in 2014 (maybe at summer, or autumn) but I don't know on which legal basis Mar 22, 2017 at 2:25
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    Federal law no. 422 original text, and machine translation to English Mar 22, 2017 at 17:44

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