Security measures for the fulfilment of civil obligations are understood as measures prescribed by the law to promote the complete fulfilment of obligations by parties and, in the event of a breach of obligations, the aggrieved party has the right to deal with the secured property or request the fulfilment of civil liability for the breach. In the following article, TNTP will provide an overview of 09 security measures as stipulated in the Civil Code 2015.
1. Pledge of property
A pledge of property means the delivery by one party (hereinafter referred to as the pledgor) of property under its ownership to another party (hereinafter referred to as the pledgee) as security for the performance of an obligation.
2. Mortgage of property
Mortgage of property means the use by one party (hereinafter referred to as the mortgagor) of property under the ownership of the obligor as security for the performance of an obligation to the other party (hereinafter referred to as the mortgagee) without transferring such property to the mortgagee. The mortgagor shall hold the mortgaged property. The parties may agree to deliver the mortgaged property to a third person to hold.
A deposit is an act whereby one party (hereinafter referred to as the depositor) transfers to another party (hereinafter referred to as the depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract.
Upon a contract being entered into or performed, any deposited property shall be returned to the depositor, or deducted from the amount of an obligation to pay money. If the depositor refuses to enter into or perform the contract, the deposited property shall belong to the depositary. If the depositary refuses to enter into or perform the contract, it must return the deposited property and pay an amount equivalent to the value of the deposited property to the depositor, unless otherwise agreed.
4. Security collateral
Security collateral is an act whereby a lessee of a movable property transfers a sum of money or precious metals, gems or other valuable things (hereinafter referred to as security collateral property) to the lessor for a specified time limit to secure the return of the leased property.
In cases where the leased property is returned, the lessee shall be entitled to reclaim the security collateral property after paying the rental; if the lessee does not return the leased property, the lessor shall be entitled to reclaim the leased property; if the leased property is no longer available for the return, the security collateral property shall belong to the lessor.
5. Escrow deposit
Escrow deposit is an act whereby an obligor deposits a sum of money, precious metals, gems or valuable papers into an escrow account at a credit institution to secure the performance of an obligation.
In cases where the obligor has failed to perform or has improperly performed an obligation, the obligee shall be entitled to receive payment and compensation for damage caused by the obligor from the bank where the escrow deposit is affected, after deducting the bank service charges.
6. Title retention
In a sale contract, the ownership of the property of the seller may remain until the buyer pays the purchase price in full. Title retention must be made in a separate document or included in the sale contract. The title retention shall take effect against a third party from the time of registration.
Guarantee means an undertaking made by a third person (hereinafter referred to as the guarantor) to an obligee (hereinafter referred to as the creditor) to perform an obligation on behalf of an obligor (hereinafter referred to as the principal debtor) if the obligation falls due and the principal fails to perform or performs incorrectly the obligation.
The parties may agree that the guarantor shall only be obliged to perform the obligation if the principal debtor is incapable of performing it.
8. Fidelity guarantees
A socio-political organization at the grassroots level may provide a fidelity guarantee so that poor individuals and households can borrow sums from banks or other credit institutions for purposes of production, business or provision of services in accordance with the regulations of law.
A loan guaranteed by a fidelity guarantee must be made in writing with certification of a socio-political organization in terms of the conditions and circumstances of the borrower.
The agreement on fidelity guarantee must specify the loan amount, the purpose of the loan, the term of the loan, the interest rate, and the rights, obligations and responsibilities of the borrower, the lending bank or credit institution and the guarantor organization.
9. Lien on property
Lien on the property means that the obligee (hereinafter referred to as the lienor) who is legally possessing the property being an object of a bilateral contract is entitled to retain the property when the obligor fails to perform the obligations or has performed the obligations not strictly as agreed upon.
This article, “Types of security for performance of obligations as stipulated by civil law” is provided by TNTP for your reference. If you have any issues or questions, please contact TNTP for timely assistance.