Pledge and Transactions

Mortgage is one of the most common way to secure timely contractual obligations.

Usually, in order to secure payments at the agreed and set rate and time, one party will require the introduction of some type of surety to ease its mind and  its CEO that contractual obligations will be met.

Surety can be portrayed in numerous ways at a wide-ranging of scale, each bears its own benefits or downfalls. One of the most solid is a bank autonomous guarantee. Yet, most parties elect not to use it because of its financial implications and would rather to use one of their assets as means of pledge to secure payment, which is by far more economically wise to the granting party.

Mortgage is the optimal mid-way solution and will serve right to support the financial proviso of most agreements – subject to meticulous execution of all legal and administrative qualifications: starting by accurate filling the last updated form and annexing all authenticated documents, exact and detailed description of the property to be pledged, ending by timely registration at all relevant legal and governmental agencies such as the Pledge Registrar and Corporate Registrar.

A sound mortgage is basically a three-pronged test: first you must secure a full and comprehensive knowledge of the asset. It shouldn't be subject to any prior or competing rights, it must be at the full ownership of your counterparty, and it ought not be subject to any legal impediment in case of realization (dwelling house as opposed to commercial use). Second you must act in good faith. There is no rational in realization which will foreclose your counterparty's business – preventing it from making the payment – even in case of late payment. It is in your best interest that his business will continue. Late payment which creates a justifiable cause for realization may create an opportunity to purchase a portion of his business. Last but not least is the publication. Let all third-party dealers know that there is a pledge. It grants you the comfort of legal protection of your surety and prevents any counter dealings with the same property. Therefore, a scrupulous adherence to the regulatory and administrative regulations regarding registration is of the essence.