Faced with an obligation, the debtor responds with all his present and future assets, but sometimes the creditor may consider that this solvency is not sufficient and demand additional guarantees to ensure compliance with the obligation. For this reason, we speak of personal guarantees, when a person other than the debtor is also required to respond to his obligation (guarantee or surety) or real guarantees, when certain assets are affected (pledge or mortgage) for its fulfilment.
In the In our previous post about guarantees when applying for a loan, we talked about «the Pledge» or Pledge. Next, we will discuss the “Mortgage Loan”.
What is a mortgage?
A chattel mortgage is a security interest whereby, through registration in the relevant registry, certain third-party movable assets that remain in the possession of their owner are subject to the payment of an obligation, regardless of who is in possession of them at the time of enforcement.
How does it differ from the garment?
Both being security interests, in the pledge the possession of the thing is transferred to the creditor, whereas in the mortgage the possessor of the thing remains the debtor.
However, there may be doubts when determining which assets are suitable for mortgaging in the form of a chattel mortgage, as opposed to those that are subject to a non-possessory pledge. The criterion followed distinguishes between those that can be identified in a similar way to real estate, which are therefore eligible for mortgages, and those that are more difficult to identify or whose rights are more difficult to enforce, which would fall under the category of non-possessory pledges, but replacing possession with the requirement of registration.
What assets are eligible for a mortgage?
Article 12 of the Law on Movable Mortgages and Pledges without Dispossession, dated 16 December 1954, expressly lists the only assets that may be subject to a movable mortgage. These are as follows:
- Commercial establishments
- Cars, motor vehicles, trams and railway carriages
- The aircraft
- Industrial machinery
- Industrial and intellectual property
What obligations can you guarantee?
A floating charge can secure any obligation, provided that the secured liability is quantified in monetary terms.
What happens in case of non-compliance with the obligation?
The Mortgage Law regulates summary legal proceedings and extrajudicial proceedings before a notary public to enforce the secured credit through public auction of the mortgaged assets.
Which parties are involved and what are the rights and obligations of each party?
- The mortgagor: Retains ownership and possession of the mortgaged property and is obliged to bear the costs of its proper maintenance and upkeep.
You may not sell the mortgaged property without the creditor's consent.
- The creditor: The credit may be assigned or transferred, in whole or in part, before maturity, provided that this is recorded in a public deed and that the debtor is notified of the assignment by means of a notarial deed.
In the event of foreclosure, you may request the sale of the mortgaged property either through the Civil Procedure Act or through summary or extrajudicial proceedings regulated by the Movable Property Mortgage Act.
In insolvency proceedings, mortgaged or pledged assets shall not be included in the estate.
Why request an independent expert valuation?
Given the nature of this type of guarantee, the creditor will normally require a valuation from an approved company to certify the value of the mortgaged property.