reduced value. Where the mortgagor neither recovers the value nor provides any security, the mortgagee has the right to require the obligor to pay off the debts in advance.

Article 194 A mortgagee may abandon the mortgage right or the sequence thereof. A mortgagee and a mortgagor may, through negotiations, alter the sequence of the mortgage right or the amount of secured obligee's rights, etc., however, such alteration may not produce unfavorable influences on any other mortgagee without the written consent thereof.

Where an obligor creates the mortgage by its/his own properties, and the mortgagee abandons the mortgage right or the sequence thereof or alter such mortgage right, other security providers shall, within the scope for which the said mortgagee has lost the right to seek preferred payments, be exempted from the security liability, unless any of other security providers promises to provide the security all the same.

Article 195 When the obligor fails to pay its/his due debts or any circumstance as stipulated by the parties concerned for realizing the right to mortgage arises, the mortgagee may, upon negotiation with the mortgagor, convert the mortgaged property into money or seek preferred payments from the money generated from the auction or sale of the mortgaged property. Where the said agreement has injured the interests of any other obligee, the obligee may, within one year after he/it has known or should know the cause for cancellation, require the people's court to cancel such agreement.

Where no agreement on the means of realizing the mortgage right is achieved between the mortgagee and the mortgagor, the mortgagee may require the people's court to auction or sell off the mortgaged property.

When converting into money or selling off the mortgaged property, its marker price shall be referred to.

Article 196 As regards the mortgage created in accordance with Article 181 of the present Law, the mortgaged property shall be determined when any of the following circumstances arises:

(1) Upon expiration of the time limit for paying debts, the obligee's rights have not been realized;

(2) The mortgagor has been declared bankrupt or has been canceled;

(3) Other circumstances as stipulated by the parties concerned occur for realizing the mortgage right; or

(4) Any other circumstance seriously impacting the realization of obligee's rights.

Article 197 When the obligor fails to pay its/his due debts or any circumstance as stipulated by the parties concerned for realizing the mortgage right arises, and the mortgaged property is thus seized by the people's court in accordance with law, the mortgagee has the right to collect natural or statutory fruits of the mortgaged property as of the date of seizure, unless the mortgagee has failed to inform the subject liable to pay off statutory fruits.

As regards the "fruits" as referred to in the preceding paragraph, they shall be firstly used for paying the collection expenses thereof.

Article 198 The value exceeding the obligee's rights shall be attributed to the mortgagor, and the deficit shall be paid off by the obligor, after the mortgaged property has been converted into money, auctioned or sold off.

Article 199 In case the same property is mortgaged to two or more obligees concurrently, the money generated from the auction or sale of the mortgaged property shall be used for paying debts in light of the prescriptions as follows:

(1) In case all the mortgage rights to have been registered, the payments shall be made according to the registration sequence; and where the sequence is the same, the payments shall be made on the basis of the proportion of obligee's rights;

(2) The registered mortgage right shall be cleared off prior to the unregistered one; and

(3) In case no mortgage right has been registered, the payments shall be made on basis of the proportion of obligee's rights.

Article 200 The buildings newly constructed on the land after the mortgage of the right to use construction land may not belong to the mortgaged properties. Such newly-