Civil Code (Real Rights as Security) (11) Revolving Mortgages and Registration

Since a revolving mortgage is also a type of real right in real property, it goes without saying that it cannot be asserted against a third party without registration, and it is naturally subject to the application of Article 177 of the Civil Code. The matters to be registered are detailed in the Real Property Registration Act, and they differ from those for an ordinary mortgage. Among those differences, what should be noted in particular is that in the case of a revolving mortgage, depending on the matter to be registered, there are many matters for which registration is a requirement for the effect to arise, meaning that registration is a condition precedent for effectiveness. Regarding this, rather than blindly memorizing which are requirements for effectiveness and which are not, I feel it is important to understand the common purpose behind why they are made requirements for effectiveness.

Article 398-4 [Change of Scope of Secured Claims and Obligor of Revolving Mortgage]
(1) Before the principal is fixed, the scope of claims to be secured by a revolving mortgage may be changed. The same applies to a change of the obligor.
(2) To make the change referred to in the preceding paragraph, it is not required to obtain the consent of a junior mortgagee or any other third party.
(3) If the change referred to in paragraph (1) is not registered before the principal is fixed, it is deemed that the change was not made.

Looking at paragraph 3, it stipulates that a change in the scope of secured claims or a change of the obligor takes effect by registration before the principal is fixed. If it were merely a matter of creating perfection, it would mean that even without registration, it would simply be unenforceable against a third party but valid between the parties; however, that is not the case when it is a requirement for effectiveness.

Taking the scope of secured claims as an example, it ultimately stems from the special nature of revolving mortgages. In a revolving mortgage, secured claims are constantly created and extinguished within the box of the maximum amount. If that is the case, more interested parties appear than in an ordinary mortgage, and I think the legal relationships become much more complex. If so, it would be undesirable to treat registration as a mere perfection requirement, creating a state where a change in secured claims is recognized in relation to one person but not in relation to another, as this would greatly complicate legal relationships. Therefore, for registration matters that could cause such a state, it was decided that they would have no effect at all without registration. This applies not only to changes in the scope of secured claims or the obligor, but also to changes in the fixed date, among others. I will discuss these points individually below, but the fact that this registration is a requirement for effectiveness seems to be a fundamental principle.