Types of Pledge and Its Scope
Proper documentation of security begins with determining the type of pledge. The law distinguishes possessory and registered pledge, and this choice determines which documents and formalities are required. The pledge secures the claim and the accessory rights connected with it — including interest and penalties — as well as the costs of maintaining, litigating and realizing the property, unless otherwise provided by law or agreement. The pledge right also extends to fruits received from the pledged item unless the parties agree otherwise, which means the documentation should expressly clarify whether fruits are covered.
Possessory Pledge
A possessory pledge of a movable arises through the agreement of the parties and the transfer of the item into the possession of the pledgee or a third person designated by him. Where the item is already in the possession of the pledgee or a person authorized by him, the agreement of the parties alone suffices — no physical transfer is required. The advantage of this form is speed; the drawback is that the creditor becomes the actual holder of the item and must care for its storage.
Registered Pledge and the Content of the Transaction
A registered pledge requires a transaction in written form and registration of the pledge right in the public registry; transfer of the movable to the pledgee is then not required. The transaction must indicate its date, data on the pledgee, the pledgor and any possible debtor third person, a description of the pledged item by general or specific features such that it can be identified, and a general or specific description of the secured principal claim together with the maximum amount within which the claim is to be satisfied. Where the pledged item is the entire movable property, its description is required only if so agreed. A pledge of a vehicle or agricultural machinery is registered at the Service Agency of the Ministry of Internal Affairs, and authentication of signatures is not required where the parties sign before the registering authority in the presence of an authorized person or where an electronic document exchange agreement exists between the pledgee and the Agency. Financial collateral is regulated by a separate law.