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. Mortgages are created through the execution of a private document and a public deed (before a notary public) between the obligor and the lender (or the corresponding security agent or trustee, as applicable), and are valid and perfected once registered. (While pledges must be registered only for perfection/enforceability, mortgages must be registered to be valid). Security interests over land and buildings must be registered in the relevant section of the Immoveable Property Register. Security interests over concessions must be registered in the Public Register of Concessions for the Exploitation of Public Services or, in the case of mining concessions, in the Mining Rights Register.
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. The Pledge Law expressly allows for the creation of pledges over machinery and equipment. A pledge is created through execution of a private agreement between the obligor and the lender (or the corresponding security agent). In order to register the pledge (which, although not necessary for validity, is nonetheless advisable for the purposes of enforcement), it must have been executed and granted as a public deed before a notary public. Perfection of the pledge and a higher level of publicity against third parties can be achieved through registration.
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. The Pledge Law expressly allows for the creation of pledges over receivables. A pledge is created through execution of a private agreement between the obligor and the lender (or the corresponding security agent). In order to register the pledge (which, although not necessary for validity, is nonetheless advisable for the purposes of enforcement), it must have been executed and granted as a public deed before a notary public. Perfection of the pledge and a higher level of publicity against third parties can be achieved through registration.
Alternatively, security may be granted over receivables through the execution between the obligor and the lender (or the corresponding security agent) of a conditional assignment of rights agreement, under which the rights will be assigned in favour of the lender should an enforcement trigger occur. This type of security may also be registered to achieve a higher level of publicity against third parties (in which case the agreement must be executed as a public deed before a notary public). For the purposes of enforceability, notice of the conditional assignment must also be issued to the assigned debtors.
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. The Pledge Law expressly allows for the creation of pledges over financial instruments (excluding cheques). A pledge is created through execution of a private agreement between the obligor and the lender (or the corresponding security agent). In order to register the pledge (which, although not necessary for validity, is nonetheless advisable for the purposes of enforcement), it must have been executed and granted as a public deed before a notary public. Perfection of the pledge and a higher level of publicity against third parties can be achieved through registration.
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. The Pledge Law expressly allows for the creation of pledges over cash deposits. A pledge is created through execution of a private agreement between the obligor and the lender (or the corresponding security agent). In order to register the pledge (which, although not necessary for validity, is nonetheless advisable for the purposes of enforcement), it must have been executed and granted as a public deed before a notary public. Perfection of the pledge and a higher level of publicity against third parties can be achieved through registration.
For enforceability purposes, notice of the pledge should also be given to the financial institution in which the cash deposits are held.
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. The Pledge Law expressly allows for the creation of pledges over intellectual property (eg, patents, author rights, invention rights, brands, commercial names). A pledge is created through execution of a private agreement between the obligor and the lender (or the corresponding security agent). However, in order to register the pledge (which, although not necessary for validity, is nonetheless advisable for the purposes of enforcement), it must have been executed and granted as a public deed before a notary public. Perfection of the pledge and a higher level of publicity against third parties can be achieved through registration.
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