– To send things to the creditor, with the proviso that, if debtor has defaulted, the thing goes into foreclosure, regardless of the size of the debt and value of the mortgaged property.
Providing a guarantee provided by borrowing a sum of money to provide opportunities to meet the priority requirements of the mortgagee of the property value of the mortgaged property and proprietary rights restrictions – on the order laid down by the mortgagor[5].
As a general rule collateral arises under the contract (par. 3 art. 334 Civil Code). The contract shall be in writing (par. 1 art. 339 Civil Code). The security deposit can be transferred to any property, including property rights and things, with some exceptions (art 336 Civil Code)[6].
Owing to the nature of collateral relations, funds cannot be pledged[7]. The pledge may be both the debtor and the third person. To pledge things necessary to the mortgagor was entitled to its ownership or the right of economic management. The pledge of property right may be the person to whom the pledged right belongs (art 335 Civil Code). The right of pledge arises from the conclusion of the pledge agreement. If the property must be transferred to the pledge, the pledge right there at the time of transfer of the thing. May otherwise be provided in the contract (art 341 Civil Code).
The main drawback is the inability of collateral circulation in the foreclosure of the collateral. In case of failure of the principal obligation the creditor is forced to sell the mortgaged property itself and meet its requirements only obtained from its value[8]. If there is a dispute between the pledge and the pledge the initial selling price of collateral established by the court on the basis of market price of the property[9]. In practice, the party concerned shall evaluate the property. Based on the results, as reflected in the report, agree with the other party selling price of the collateral.
The pledged property in its entirety provides the pledge’s claim, including interest, penalty, damages caused by delay in performance[10]. In addition, the cost of the mortgaged property is reimbursement of the mortgagee for the maintenance of things as well as the costs of foreclosure. May otherwise be provided in the contract (art 337 Civil Code).