WEEK 5

Security interests
Paritas creditorum rule: value of the available assets distributed to all the creditors equally in the
insolvency proceedings > creditors aim to protect their claims through security interests
a) Personal security interests: contractual, creditor may exercise his personal claim towards a specific object.
E.g. suretyship, guarantee, letter of comfort (granting payment of the losses, should the debtor be incapable of
repaying the debt)
b) Property security interest (real security): proprietary, grants a priority right, because property rights have
priority over personal rights. E.g. everything that will be talked about in this summary now
- All rights connected to the object: accessority rule (existence of the right subject to the debt), expect
Grundschuld

Types of security rights

Civil law Common law
France The NL Germany England
Pledge Yes, Yes, Yes, Yes
‘Limited property right on a Art 2333 Art 3:236 BW §1204 BGB
movable object that is given for CC
security for the fulfilment of a
payment of a debt and is liable
for forfeiture in the even of
insolvency’
- movables
Possessory pledge
‘Pledge with dispossession of
the object from the debtor to
the creditor (factual control)’
Non-possessory pledge Yes, Yes, No, No,
‘Pledge, that doesn’t require Art 2333 Art 3:237 BW (Instead But corresponding
dispossession’ CC fiduciary Charge
transfer of
- deed and registration ‘[insert definition of pledge]’
ownership) >
required - doesn’t require possession
- in writing + registration
Fixed charge
- charge on specific object
- movables & immovables
- charge on land = charge by the
way of legal mortgage =
mortgage
(> except that charge is a limited
property right, mortgage transfer
of ownership)
Pledge on claims Yes, Yes, Yes, Floating charge
Created by: both both but only 2) - charge on a class on assets that
1) deed + registration changes in value over time
2) notification (about/of the - movables & claims
debtor who they [claims] owe - only on companies
money to) - becomes a fixed charge if point
of crystallization (insolvency)
- combination with fixed charge
possible > fixed charge priority
over floating charge
 Fiduciary transfer of Yes Maybe, Yes, ??
ownership Art 3:84(3) Debtor [clarify]
‘Transferring ownership from fiduciary ban, fremd-
the debtor to the creditor for but Sogelase besitzer,
security purposes’ –case ruled Creditor
- movables & claims that possible Eigen-besitzer
if transfer for
more than
just security
purposes
Retention of ownership/title Yes, Yes, Yes, Yes,
‘Reserving ownership for But Traditio brevi No formal requirements
security purposes’ requires manu >
- ownership not transferred in a a requires a
sale, but reserved written bilateral
- seller remains the owner until agree- agreement
payment given in full ment
- when paid, ownership
transferred to the buyer who in
possession
Hypothec/Mortgage Yes, Yes, Yes, Yes,
‘Limited property right on a Art 2393 Art 3:227 BW §1113 BGB Mortgage and charge by the
immovable object that is given CC and also way of legal mortgage
for security for the fulfilment of Grund- (discussed earlier)
a payment of a debt and is schuld
liable for forfeiture in the even Like
of insolvency’ hypothec,
- immovables but non-
- document in writing (deed) + accessory
registration (DE&NL) §1191 BGB

Short recap by country and object

France The NL Germany England

Immovables 1) Hypothec 1) Hypothec 1) Hypothec 1) Mortgage
2) Grundschuld 2) Charge by way
of legal mortgage
Movables 1) Possessory 1) Possessory 1) Possessory 1) Possessory
pledge pledge pledge pledge
2) Non- 2) Non-possessory 2) Fiduciary 2) fixed charge
possessory pledge transfer 3) floating charge
pledge 3) Fiduciary
3) Fiduciary transfer maybe
transfer
Claims 2) Pledge by 2) Pledge by 2) Pledge by 1) Floating charge
registration & registration & notification
notification notification 2) Fiduciary
2) Fiduciary 2) Fiduciary transfer
transfer transfer maybe