Common use of Disposal of the Collateral Clause in Contracts

Disposal of the Collateral. and realization of mortgage right 1. Under following conditions, the mortgagee has right to dispose collateral to realize mortgage right or to make up insurance premium. (1) The debtor breaches clauses under the main contract; (2) There is condition that the creditor can realize credit in advance; (3) The mortgager breaches the clauses under the contract; 2. As above article, the mortgagee has right to negotiate with mortgager to amortize with the collateral or gets compensation with money by auctioned or sold the collateral; if they can not get agreed, the mortgagee has right to sue to people’s court. 3. After the mortgagee disposes the collateral, if the mortgagee has made advances, money from disposing mortgagee will be used to liquidate all the credits guaranteed with the collateral; if the mortgagee does not make advances, the money from disposing the collateral will be transferred to the special cash deposit account that the mortgagee sets for the debtor’s external payment and as cash deposit when mortgagee make advances.