Security interest law

Security Interest

A security interest is a limited real right that entitles the secured creditor to satisfy their claim — if not fulfilled in a timely manner — from the value of a specific asset (collateral), regardless of who owns it. The owner of the collateral (the debtor) is obligated to tolerate this right.

The rules governing security interests also apply, as appropriate, to the transfer of ownership for the purpose of securing a claim, as well as to other legal forms of securing claims through assets or rights, unless otherwise stipulated by law.

Object of Security (Art. 298)

A security interest may encumber:

A specifically identified movable or immovable asset that can be monetized (including an ideal share),

A specific proprietary right from which the creditor may obtain satisfaction,

Multiple immovable properties collectively, as a single unit (so-called simultaneous mortgage),

Appurtenances to the asset, unless otherwise agreed,

Fruits of the asset (e.g. rent, lease income), as independent collateral.

Special rules apply to pledges on ships and aircraft, unless regulated otherwise by specific laws.

Inseparability of the Security Interest (Art. 299)

The security interest is inseparable from the asset it encumbers. A buyer of the asset automatically assumes the burden of the security interest. It cannot be transferred from one asset to another unless explicitly permitted by law.

Secured Creditor (Art. 300)

A security interest is established in favor of the creditor of a specific claim, for the purpose of securing its satisfaction.

Connection Between Claim and Security Interest (Art. 301)

A security interest secures:

The satisfaction of a specific monetary claim, including existing, future, or conditional claims,

In addition to the principal claim, it also secures payment of interest, collateral maintenance costs, and collection expenses.

A joint mortgage allows the creditor to freely choose from which property to seek satisfaction, unless otherwise provided by law or agreement.

Priority of Satisfaction (Art. 302)

A security interest gives the creditor priority in collection over other creditors whose claims are not secured by a security interest. If multiple security interests exist on the same collateral, the priority is determined by the time of creation of the respective rights.

Priority rules, especially for mortgages, are governed by land registry law.

Transferability of Security Interests (Art. 303)

A security interest may:

Be transferred and inherited, but only together with the secured claim,

Be encumbered by a sub-pledge, to which the relevant provisions on pledges apply.

Mortgage as a Special Type of Security Interest (Art. 304)

A mortgage is a security interest established without delivering the asset into the creditor’s possession. It may be established exclusively on immovable property, and also on movable property or rights registered in public registries, in accordance with special laws (so-called registered mortgage).

Special legal provisions apply to mortgages, while general rules on security interests apply subsidiarily.

Creation of Security Interests (Art. 305)

A security interest may arise based on:

Legal transaction – voluntary security interest,

Court decision – judicial security interest,

Statute – statutory security interest.

The right arises once all legal requirements are fulfilled.

Legal Assistance

If you need a lawyer specialized in mortgage law, drafting or reviewing mortgage agreements, claim security agreements, or other contracts related to real estate and security interests, our legal team is at your disposal.