Unit 9- Security Rights- pledge and hypothec

Question 1

what are real security rights governed by?

Answer 1

the law of property

Question 2

what are real security rights key to?

Answer 2

they are key to commercial activity

Question 3

what do real security rights allow a creditor to do?

Answer 3

they give the creditor a limited real right to settle the debt if the debtor fails to do so.

Question 4

which Act applies to new mortgage agreements?

Answer 4

LCCI-Act 2019.

Question 5

within the LCCI act what are the 3 steps to be taken when the borrower does not repay their debt?

Answer 5

step 1- termination of the agreement
step 2- the lender must warn the borrower that they will claim the full repayment of the loan if they do not pay within a month.
step 3- if the borrower still fails to repay the lender can ask the court to sell the object through an auction.

Question 6

what is subrogation?

Answer 6

the change of the lender institution (changing banks)

Question 7

what is novation?

Answer 7

the change of the terms and conditions of the mortgage with the same lender.

Question 8

what do real security rights give the creditor?

Answer 8

a right of preference over the debtor’s property.

Question 9

how does security of an object work?

Answer 9

where the debtor is unwilling to repay, the creditor can claim the proceeds from the sale of the object before any other creditor.

Question 10

what are the 2 most important types of real security rights?

Answer 10

the hypothec and the pledge.

Question 11

what is the right of pledge most commonly used by?

Answer 11

corporations

Question 12

what are future debts?

Answer 12

debts that do not yet exist.

Question 13

what is a pledge?

Answer 13

a limited real right in which one person acquires a security in another person’s movable property to secure the payment of a debt. it is used to secure the performance of an obligation.

Question 14

what are the objects of the right of pledge?

Answer 14

movable assets.

Question 15

what are the requirements of the right of pledge?

Answer 15

the pledge requires the agreement between the parties; and in Catalan law the agreement must be drafted in a public deed.

Question 16

what is it possible to establish a right of pledge on?

Answer 16

future debts (pledge of future debts).

Question 17

what are the requirements for the pledge of credits?

Answer 17

it must be constituted in a public document and the debtor must be notified.

Question 18

what is a double pledge?

Answer 18

a pledged asset may be pledged again. this happens where the parties want to create a new obligation.

Question 19

in the case of a double pledge, what happens if when the second pledge has been established, the first debt has not yet been paid?

Answer 19

the creditor can retain the asset until both credits are satisfied.

Question 20

what is a common pledge/shifting pledge?

Answer 20

the object goes from the power of the debtor to the control of the creditor.

Question 21

what is a non-shifting pledge?

Answer 21

the debtor still has the object under their control. there must be a public deed.

Question 22

where are pledges of credit common?

Answer 22

in corporations.

Question 23

which amendment allowed second pledges in spain?

Answer 23

the 2020 amendment.

Question 24

what is required for a hypothec (mortgage) to be created?

Answer 24

the parties must agree to create a hypothec that will be registered at the land registry.

Question 25

what is the limited real right of hypothec?

Answer 25

a limited real right which falls on immovable property. they can also be created on the right to erect a new floor.

Question 26

what are reverse hypothecs?

Answer 26

a special type of hypothec for people aged 70+ and for those with disabilities.

Question 27

what is a floating hypothec?

Answer 27

a special type of hypothec where you can only have 1 hypothec/mortgage.

Question 28

what is the role of the public notary in a hypothec?

Answer 28

the notary will explain to the parties the legal obligations arising out of the contract.

Question 29

what does the hypothec indicate?

Answer 29

that the debtor owes the creditor a fixed sum of money; and the debtor will repay this sum of money in instalments.

Question 30

which article governs the first registration of each property in the property register?

Answer 30

Article 7 LH

Question 31

which article provides the requirements for the valid acquisition from a transferor who is not the owner to a 3rd party in good faith?

Answer 31

Article 34 LH.

Question 32

what is Dacio en pago?

Answer 32

Giving the creditor something in order to pay a debt, instead of paying with money. However, the bank is not forced to accept this form of payment because the value of the object used to pay may be less than the money owed.

Question 33

what does the right of hypothec not grant the creditor?

Answer 33

title or possession.

Question 34

under the right of hypothec, when does the right to seize the property become operative?

Answer 34

upon the non-payment of the debt.

Question 35

what happens to the mortgage when natural accessions are added to the property which add value?

Answer 35

the mortgage will extend to include these new reforms.

Question 36

what article includes the lapsing of the right of hypothec?

Answer 36

article 128 LH.

Question 37

what is a foreclosure action?

Answer 37

it is used when the lender seeks to seize the property used as security when the borrower fails to pay.

Question 38

under article 128 LH, when does the foreclosure action expire?

Answer 38

20 years from the moment the mortgage/hypothec is made.