A. INTRODUCTION
9.101 A guarantee is made to creditors as security for the performance of a debtor’s debt or engagement. This guarantee may take the form of bailment of the obligor’s movable of immovable properties that will be answerable for settlement of a debt (guarantee in rem), or originate from a third-party promise to honor a debtor’s obligation if the latter is unable to do so in full with his own assets (guarantee in personam).
B. GUARANTEES IN REM
9.102 A guarantee in rem provides the creditor with a direct right over the debtor’s assets to secure a credit, if the debtor defaults. Currently, the guarantee in rem comprises the following mechanisms: (i) pledge; (ii) antichresis; (iii) mortgage; and (iv) fiduciary title.
9.103 The validity of a guarantee in rem is conditioned to fulfillment of some general requirements:
(i) Special Capacity: In addition to the general capacity for the acts inherent to civil life, guarantees in rem may only be given by whoever has the power to dispose of his own assets. A bankrupt person, for instance, is deprived of the right to manage his own assets when bankruptcy is decreed and, for this reason, cannot make a guarantee in rem;
(ii) Divisibility of Eligible Assets: an asset belonging to two or more owners cannot be fully tendered as a guarantee in rem unless all owners have given their consent, but each owner may individually offer his share in a divisible asset as a guarantee in rem;
(iii) Eligibility of Assets: only the assets that may be given in pledge, antichresis or mortgage may be offered in guarantee. Accordingly, non-tradables, non-disposable items, dotal property, and the like cannot be given in guarantee in rem; and
(iv) Specification of Guarantee Conditions and Proper Filing: in addition to the requirements set out in article 104 of the Civil Code, a guarantee in rem is only enforceable on third parties if the following conditions are clearly specified: the credit value; the debt settlement period; interest rate; and specification of the asset given as security. Moreover, the guarantee must be filed with the competent body for proper publicity of the act.
