The transfer of ownership as security: When does this security right apply and what should be taken into account?

introduction

In modern commercial traffic, land security transfer plays an important role.

This security instrument allows companies to use movable property as collateral for loans without losing actual control over these items. The transfer of ownership as security is particularly relevant when it comes to securing bank loans or other forms of financing.

This guide article deals with the scope of application, the basic terms, the conditions and requirements as well as the legal consequences of an effective land security transfer.

Scope and explanation of terms

The transfer of ownership for security purposes is primarily used in corporate financing. It allows companies to use their movable assets (such as machinery, warehouses or operating equipment) as security for loans. The borrower remains in direct possession of the items while ownership passes to the lender.

Conditions and requirements

For an effective land security transfer, certain requirements must be met:

1. Definiteness and delimitability: The items to be transferred must be precisely determined or determinable. This can be done through markings, lists or spatial boundaries.
2. Security contract: A legally valid security agreement must be concluded between the parties. This regulates the rights and obligations of both sides.
3. Property constitution: The physical handover of the items is replaced by a constitutive of possession, whereby the security provider remains in direct possession.
4. No immorality: The agreement must not be immoral, for example due to excessive security.

Legal consequences of an effective agreement

In the case of an effective security transfer, ownership of the items is transferred to the security taker. However, the security provider retains direct possession.

If the secured claim is fulfilled, there is a right to retransfer of ownership.

In the event of insolvency of the security provider, certain rights of the security taker, such as claims for segregation, may be affected. i.e. the collateral holder has a secure legal position.

Conclusion

The transfer of ownership as security is an effective instrument for securing credit in corporate financing.

It allows companies to use their movable property as security without losing direct ownership. However, for an effective provision of security, precise specificity, a legally valid security agreement and compliance with the legal framework are required.

In practice, it is therefore important that companies and their advisors precisely understand and take into account the complex requirements and legal consequences of transferring property for security purposes.

Because errors when ordering collateral can, for example, B. insolvency can mean major economic damage.

This article does not represent specific and individual legal advice, but rather only provides a rough initial overview of the very complex legal matter described. You can only obtain legal certainty for your specific case constellation through coordinated examination and advice from an expert lawyer.

I would be happy to assist you as a lawyer and specialist lawyer for a legal assessment and assessment of your case and to accompany and support you with financial transactions or the assertion of liability claims and compensation for damages from financial transactions and investments as well as with banking law issues regarding loan collateral and loan agreements. Please feel free to contact me by phone or write to me.

I advise nationwide on site or via Zoom as a specialist lawyer in the legal areas of corporate law, tax law, insolvency law and banking and capital markets law, especially in the cities and metropolitan areas around Stuttgart, Heilbronn, Karlsruhe, Freiburg, Ulm, Augsburg, Munich, Frankfurt, Wiesbaden and Saarbrücken , Kaiserslautern, Bonn, Wuppertal, Duisburg, Nuremberg, Münster, Saarbrücken, Düsseldorf, Cologne, Dortmund, Hanover, Kassel, Leipzig, Dresden, Bremen, Hamburg and Berlin.

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