Guarantees and Collateral in Law: A Comprehensive Guide
General Ideas: Guarantees are legal instruments designed to strengthen credit. They can be obligational, involving personal activity, or real, involving a tangible thing. Personal guarantees include:
- Bond: A third party agrees to pay if the debtor defaults.
- Aval exchange: A type of bond included in a bill of exchange.
- Clause criminal: The debtor agrees to pay a specific amount if they fail to fulfill their obligation.
- Clause economic stabilization: A payment module adjusted for potential devaluation, ensuring contract balance.
- Obligational solidarity: Multiple debtors share responsibility for the entire debt.
- Sure: A contract where a party guarantees the debtor’s solvency.
Real guarantees include:
- The garment: Movable property delivered to the seller as collateral.
- Pledge without displacement: Movable property, difficult to identify, remains in the debtor’s possession.
- Mortgage interest: Similar to pledge without displacement, but for clearly identified movable property.
- Home mortgage: Involves a property where the debtor retains possession.
- Antichresis: The fruit of a building, as security, may or may not remain with the debtor.
- Arras: A pre-contractual payment ensuring contract completion. The defaulter loses the amount, while the non-defaulter receives double the amount.
- Retention of title: The seller retains ownership of a sold item until full payment.
Freezing of assets involves holding the debtor’s real or personal property to secure future debt payments.
Common Characteristics of Warranty Rights
Warranty rights are:
- Incidental: Created to ensure the fulfillment of a primary obligation.
- Indivisible: Remain in full until the secured obligation is extinguished.
- Security interests: Protect the free disposal of property by its owners.
- Losing the primary obligation: The mortgagee or pledgee must sell the secured property to cover the debt.
- Real rights: Grant the holder immediate power over the property and the ability to sue anyone.
The Right of Pledge
The right of pledge allows the realization of the value of a movable item delivered to the creditor as security. It is a real right, conferring immediate power over the property. It is also indivisible, translational, and possessory.
The personal elements are the creditor and the debtor. The real element is the pledged item, which must be movable, tradeable, and susceptible to possession. The garment can be replaced by a notification to the debtor.
Rights of the Creditor
- Right to hold the pledged item.
- Right to reimbursement for conservation expenses.
- Right to interest.
- Right to pursue actions as the owner of the garment.
- Right to sell the pledged item.
- Preemptive rights.
This means that if multiple creditors have claims on the same movable property, the creditor holding the garment has priority.
Obligations of the Debtor
- Keep the pledged item in good condition.
- Not use or dispose of the item.
- Be responsible for loss or deterioration due to negligence.
- Return the item after fulfilling the primary obligation.
Termination of the Right of Pledge
The right of pledge can be extinguished by:
- Extinction of the primary obligation.
- Loss of the pledged item.
- Resignation of the creditor.
- Delivery of the pledge to the debtor.
Real Estate Mortgage Law
A real estate mortgage is a real right of value realization, guaranteeing the performance of a monetary obligation. It is ancillary, indivisible, and registered, and applies directly to property that can be sold while remaining in the owner’s possession.
It is a guarantee of a monetary obligation, indivisible, and established through registration. It applies to property that can be sold and remains in the owner’s possession. It does not involve dispossession.
The personal elements are the creditor (mortgage holder) and the owner of the mortgaged property. The mortgagor must be the owner of the property and an adult.
Real Elements
- The guaranteed obligation.
- The mortgaged property.
- Formal elements: public deed and property registration.
Types of Mortgages
- Voluntary: Originating from the will of individuals through legal business.
- Court: Established by judicial decision, often referred to as”embargo notations”
- Laws: Established by law to protect specific interests, either expressly or impliedly.
Rights of the Mortgagee
- Right to be informed of abusive acts on the property.
- Right to request an extension of the mortgage.
- Right to transfer all or part of the mortgage.
- Right to value realization.
- Right of preference over other creditors.
Rights of the Owner
- Right to possess, use, and enjoy the property.
- Right to maintain the same assessment.
- Right to encumber the property with successive mortgages.
The mortgage is extinguished when the primary obligation is fulfilled, requiring cancellation in the register. Other causes of extinction include agreement between creditor and owner, cancellation, termination, or rescission of the mortgagor’s right, loss of the property, statute of limitations, and judicial sale of the property.
Other Mortgages
- Mortgages for future or conditional obligations.
- Endorsable mortgage securities.
- Mortgages to secure a specific management or a maximum amount.
Non-Possessory Pledge or Mortgage
This type of guarantee involves the debtor retaining possession of the property, which is immobilized and cannot be used as it normally would. This can be detrimental to both the debtor and the creditor.
The personal elements are the creditor, the debtor of the lien or mortgage, and the debtor of the primary obligation.
Real Elements
- Goods that can be mortgaged.
- Goods that can be pledged without possession.
Formal Elements
- Deed involving an agent of change or exchange, or a broker.
Contents
Debtor’s Obligations
- Take care of the property as a depositary.
- Enjoy the right to use and enjoy the value.
- Not dispose of the mortgaged property without the creditor’s consent.
- Not establish new guarantees on already mortgaged or seized goods.
- Not establish real rights over the property.
Creditor’s Rights
- After the primary obligation is fulfilled, proceed with the realization of the economic value of the mortgaged property.
- Not be charged additional interest beyond the main interest for the last two years.
- Sell or give away their credit or related forms.
- The mortgage extends to legal compensation received by the debtor.