The past May 24th, the National Assembly of Nicaragua, unanimously approved the Law No. 741 "Law of reforms to the Law on Trust Agreement", which was published this Tuesday 6th of June, 2017 in the Official Gazette No. 105. The law on Trust Agreement regulates the use of the trust as a security, which established that in case of breach of the secured obligation by the debtor, the trustee had to pay the debt, and afterwards recover the amount paid with the result of the auction of the trusted assets, in accordance with the terms and conditions agreed by the parties in the trust agreement. The result of the auction shall be applied to pay the secured obligation, expenses and commissions and the remaining amount, if existed, to be returned to the trustor. This provision was an impediment to use the trust as a security; provided that it was not attractive for the trustee to provide this type of service and to take the risk.
With the reform to this law, it was clearly established that in case of "breach of the secured obligation, the trustee will proceed to auction or sell the goods or rights part of the trust, according to the terms and conditions established in the respective agreement, applying the product of the auction/sale to honor the secured obligation, expenses, taxes and commissions, including the corresponding fees and the remaining amount, if any, to be returned to the trustor. Before the auction or sale, the Trusteemust notify the debtor and the trustor of this process at least three days of anticipation, indicating the date, time and place of the same. The act of notification is not susceptible of later recourse."
The Law No. 950 came into force from its publication on June 6, in the Official Gazette.