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Parliament is debating two new legal mechanisms proposed to be introduced in civil legislation: reverse mortgage and spousal exclusive ownership rights.
The bill proposing amendments to the Civil Code of Armenia and related laws was presented in the first reading during the June 18 session of Parliament by Nane Ghazaryan, Deputy Head of the Cadastre Committee.
She said a reverse mortgage is a new type of credit agreement that will be enshrined in the Civil Code.
Under the new regulation, citizens who have reached retirement age and own residential property will be able to enter into an agreement with a bank, a credit organization, or a third party. Under this agreement, the citizen will pledge their property and, in return for its assessed market value, will receive regular monthly payments.
“The citizen will have no obligation to make payments to the bank during their lifetime. The contractual relationship will terminate upon the person’s death,” Ghazaryan explained.
According to her, after the citizen’s death, heirs will have six months to approach the bank and repay the obligations assumed by the deceased. If they choose not to do so, ownership of the property will be transferred to the bank, credit organization, or another entity specified in the contract.
The bill also proposes introducing the institution of spousal exclusive ownership rights. Under current regulations, property acquired during marriage is considered joint marital property. After the death of one spouse, half of the property belongs to the surviving spouse, while the other half is included in the inheritance estate and distributed among legal heirs.
Under the proposed regulation, spouses will be able, by mutual agreement, to assign a special status to property, which will be registered with the Cadastre Committee as spousal exclusive ownership rights.
“After the death of one spouse, the surviving spouse will have the opportunity to become the sole owner of the entire property. The property will be included in the inheritance estate only after the death of both spouses,” Ghazaryan said.
The bill was endorsed by the Financial-Credit and Budgetary Affairs Committee earlier.
MPs emphasized that clear protective mechanisms should be in place to safeguard the interests of pensioners.
MP Tsovinar Vardanyan, Chair of the Committee, particularly addressed the potential risks associated with the regulation of reverse mortgages.
She called for the creation of a platform where citizens could submit their suggestions, which could stimulate competition among banks, resulting in better terms being offered to citizens.