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Asset classes used as collateral for security

Real estate

Can security be granted over real estate? If so, what are the most common forms of security granted over real estate and what is the procedure?

Yes, security can be granted over real estate. The most common form of security over this asset class is a mortgage.

In principle, the establishment of a mortgage requires the execution of a mortgage agreement or mortgage statement in the form of a notarial deed (subject to certain statutory exceptions) and registration in the relevant land and mortgage register.

Land and mortgage registers in Poland are maintained by the divisions of the district courts with jurisdiction over the area in which the real estate is located.

Machinery and equipment

Can security be granted over machinery and equipment? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security can be granted over machinery and equipment. The most common forms of security over this asset class are pledges and security transfers of ownership.

The establishment of a pledge requires the execution of a pledge agreement and, in the case of a registered pledge, registration of the registered pledge in the pledge register.

There are no statutory requirements relating to an agreement for the security transfer of ownership. However, in order to be effective against the bankruptcy estate of a security provider, it should be executed in written form with the date certified by a notary.

Receivables

Can security be granted over receivables? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security can be granted over receivables. The most common forms of security over this asset class are pledges and security assignments.

The establishment of a pledge requires the execution of a pledge agreement and, in the case of a registered pledge, registration of the registered pledge in the pledge register.

With regard to security assignment, the Civil Code provides that if the receivable is confirmed in writing, its assignment must also be confirmed in writing. However, in order to be effective against the bankruptcy estate of a security provider, the security assignment agreement should be executed in written form with the date certified by a notary.

Financial instruments and cash

Can security be granted over financial instruments? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security can be granted over financial instruments. The most common form of security over this asset class is financial collateral (however, it may be granted only in favour of regulated entities listed in the Act on Certain Financial Collateral).

Financial collateral may take the following forms:

  • transfer of the right to financial instruments;
  • financial pledge over financial instruments (non-registrable security instrument); or
  • the blocking of accounts recording financial instruments.

In order to establish a financial collateral, a relevant agreement must be executed in written form. The Act on Financial Collateral also states that the financial collateral should be recorded – the manner of which depends on the financial instrument over which the financial collateral is established.

The other common type of security over a financial instrument is a registered pledge. The establishment of a registered pledge requires the execution of a registered pledge agreement and the registration of the registered pledge in the pledge register.

Can security be granted over cash deposits? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security can be granted over cash deposits. The most common forms of security granted over this asset class are a cash blockade, a power of attorney to a bank account and a cash deposit.

A written form of a document creating the abovementioned security interest is sufficient.

Intellectual property

Can security be granted over intellectual property? If so, what are the most common forms of security granted over this kind of property and what is the procedure?

Yes, security can be granted over IP rights, provided that they are transferable. The most common form of security granted over this asset class is a pledge.

The establishment of a pledge requires the execution of a pledge agreement and, in case of a registered pledge, registration of the registered pledge in the pledge register.

A pledge over industrial property rights must also be disclosed in the register kept by the Polish Patent Office.

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