Property Rights, Security Interests, and Land Registration: A Comparative Overview

Property Rights, Security Interests, and Land Registration

Security Interests

Hypothec

A hypothec is a limited real right granted to a creditor, securing a debt with the debtor's movable or immovable property. It uses an immovable object as subject matter and does not require dispossession of the hypothecated asset. In case of default, the lender must first take possession of the security and then sell it.

Pledge

A pledge uses a movable object as subject matter and requires dispossession of the pledgor. The pledgee retains possession until the debt is repaid.

Mortgage

A mortgage can involve movable and immovable property and entails the transfer of ownership. It creates a charge against immovable property (anything attached to the earth).

Other Property Rights

Right of Retention

The right of retention allows the possessor of a movable object to hold it until a claim against the object or its owner is satisfied. This is similar to a lien in common law.

Drain

The right to drain allows a property owner to require other owners to grant permission to install a drain under their property.

Traditio

Traditio, meaning transmission or delivery, refers to the transfer of ownership through delivery from the transferor (tradens) to the recipient (accipiens), with the mutual intention to transfer and acquire ownership based on a just cause.

Land Registration Systems

Constitutive Registration

Under constitutive registration, registration is necessary to acquire property rights.

Declarative Registration

Declarative registration allows property rights to be transferred and created outside the land registry. Registration confirms existing rights. Examples include Cuba and Puerto Rico.

Validation

Validation is not compulsory, but registration provides special protection for the right holder and third parties.

Other Legal Concepts

Euromortage

Established by the Mortgage Credit Directive (MCD), the Euromortage is a body of European legislation regulating first and second charge mortgages and consumer buy-to-let (CBTL) lending.

Management Right

The management right allows a person to hold someone else's property for a specific period, such as in a trust, treuhand, or fiducie.

• France: Semi-exception rechargeable hypothec.
• Germany: Full-exception security land charge.

Quasi Usufruct

Similar to usufruct but applies to perishable/consumable items. Since the original items cannot be returned, their value must be repaid. This concept does not exist in the Netherlands.