ក្រមរដ្ឋប្បវេណី (គន្ថីទី៦)

(1) A person who creates a real security right over his/her own property so as to secure the debt of another shall be referred to as a Security Provider. (2) A person who receives the assignment of the Object of a real security right created by a Debtor to secure his/her own debt shall be referred to as a Third Party Acquirer.'

(1) The types of real security rights shall be limited to those established under the Civil Code or through special laws, and no other type of real security may be created. (2) The five types of real security rights established under the Civil Code shall be: (i) rights of retention; (ii) statutory liens; (iii) pledges; (iv) hypothecs; and (v) security rights by way of transfer of title.

An Object or right that cannot be transferred shall not comprise the Object of a real security right. However, the lack of transferability of an Object shall not prevent the creation of a right of retention with regards thereto.

(1) A real security right shall be established in order to secure an existing debt. A real security right may also be established in order to secure a debt to be incurred in the future should it be specifiable. (2) Should a debt not be formed due to the absence of the necessary elements thereof, a real security shall not be formed as well. (3) Should a debt be void or rescinded due to a defective declaration of intent or other reason, the real security right in reference thereto shall also be void. (4) Should a debt be extinguished due to satisfaction, prescription or other causes, the real security right thereto shall also be extinguished. (5) The provisions set forth in paragraphs (1) through (4) shall not apply to a floating hypothec created to secure multiple debts to be accrued under a continuing contract.

(1) Should a claim secured through a real security be assigned, unless otherwise set forth in the declaration of intent, the real security shall be assigned to the assignee of the claim. However, should it be necessary for the holder of the real security right to possess the Object of the real security right, the assignee of the claim shall be required to acquire possession thereof. (2) The provisions of paragraph (1) shall not apply to claims that are secured through a floating hypothec.

The effect of a real security right shall extend over the whole of the Object or right comprising the Object of the security right until the holder of the real security right has received full satisfaction of the secured claim.

Except for cases referred to in Article 807 (Power to pursue Third Party acquirers) in relation to statutory liens and Article 894 (Disposition of Object by creator of the security right) in relation to a right of security by way of transfer of title, should the Object of a real security right be transferred to a Third Party, the holder of the real security right may assert the effect of his/her security right against such Third Party. This provided that such holder fulfils and complies with the established requirements for such assertion.

Should the holder of a real security right not receive satisfaction of the secured claim, he/she may enforce the real security right in accordance with procedures established by law.

(1) Should a person possessing an Object belonging to another have a claim arising in regard to such Object, such person may retain the Object until such claim has been satisfied. However, should the claim have yet to come due, the right of retention shall not exist. (2) The provisions of paragraph (1) shall not apply where the possession commenced as a result of a tortious act.

(1) The holder of a right of retention may collect fruits produced by the Object retained and apply them to satisfy the secured claim in preference to other creditors. (2) The fruits referred to in paragraph (1) shall first be applied towards the payment of interest and the surplus, if any, then shall be applied towards the principal of the claim.

(1) The holder of a right of retention shall possess the Object retained with the care of a good manager. (2) The holder of a right of retention shall not use, lease or give as security the Object retained without the consent of the Debtor. However, the holder of a right of retention may use the Object retained so long as such use is necessary to preserve the Object. 11 See Article 127 for the definition of ‘fruit.’ (3) Should the holder of a right of retention violate the provisions of paragraphs (1) and (2), the Debtor may demand the extinction of the right of retention.

(1) Should the holder of a right of retention have defrayed necessary expenses in regard to the Object retained, he/she may seek reimbursement for such expenses from the owner of the Object. (2) Should the holder of a right of retention have defrayed beneficial expenses in regards to the Object retained, he/she may seek reimbursement from the owner of the Object for, at the holder’s discretion, either the amount defrayed or the amount by which the value of the Object has increased, so long as the increase in value remains in effect. A court may, upon petition by the owner, grant him reasonable time for reimbursement.

The exercising of a right of retention shall not interrupt or suspend a period of extinctive prescription with regards to the secured claim.

The Debtor may demand the extinction of a right of retention upon the furnishing of adequate security.

(1) A right of retention shall be extinguished through the loss of possession of the Object retained. This shall not apply to cases where the Object retained has been leased or pledged with the consent of the Debtor in accordance with the provisions of paragraph (2) of Article 776 (Duty of holder of right of retention to preserve the Object retained). (2) Even should the holder of a right of retention lose possession of the Object retained, if the holder of the right of retention regains possession of the Object retained pursuant to the provisions of Article 237 (Right to demand return of Object in possession) possession shall be deemed to have continued uninterrupted.

(1) An Obligee holding a statutory lien has a right to obtain satisfaction for the claim from the assets subject to statutory lien in preference to other Obligors. (2) A statutory lien held by an Obligee over the entire property of the Obligor shall be referred to as a General Statutory Lien. (3) A statutory lien held by an Obligee over specific property of the Obligor shall be referred to as a Special Statutory Lien. In such case, a statutory lien over a specific movable held by the Obligee shall be referred to as a Statutory Lien Over a Movable, whereas the statutory lien over a specific immovable held by the Obligee shall be referred to as a Statutory Lien Over an Immovable.

(1) Statutory liens may also be exercised against Objects, including monies that the Obligor is to receive as a result of sale, lease or loss of, or damage to, the Object of the statutory lien. This provided, however, that it shall not apply once payment or delivery of the monies or other Object has been made to the Obligor. (2) The provisions of the preceding paragraph shall likewise apply to the consideration for real rights established by the Obligor to the Object of the statutory lien.

A person who has a claim that arose through any of the causes listed below shall have a statutory lien over the entire property of the Obligor: a. Expenses for common benefit; b. Claims held by employees; c. Funeral expenses; or d. Supply of daily necessities.

(1) Statutory liens for expenses for common benefit shall exist with respect to the expenses for preservation, liquidation or distribution of the property of the Obligor incurred for the common benefit of all Obligees. (2) With respect to expenses that were for the benefit of only a portion of the Obligees, a statutory lien shall exist solely for Obligees who received a benefit as a result of such expenses.

Statutory liens for claims held by an employee shall exist with respect to any and all claims that the employee possesses under the labor contract.

(1) Statutory liens for funeral expenses shall exist with respect to expenses incurred for a funeral conducted in accordance with the deceased Obligor's status. (2) The statutory lien under the preceding paragraph shall also exist with respect to expenses incurred for a funeral conducted in accordance with the status of a deceased relative to whom the Obligor was bound to support.

Statutory liens for the supply of daily necessities shall exist with respect to the supply of food, drink and other daily necessities for subsequent six months required for the household of the Obligor or his/her relatives who reside with the Obligor, and whom the Obligor is bound to support and the servants of the same.

A person bearing a claim that arose from causes listed below shall have a statutory lien over certain movables of the Obligor: a. Lease of immovable property; b. Transportation of passengers or luggage; c. Preservation of movables; d. Sale of movables; or e. Supply of seeds, seedlings, or fertilizer and/or breeding stocks, progeny, or forage of creatures.

Statutory liens for the leasing of immovable property shall exist with respect to the movables of the Lessee in connection with Obligations of the Lessee that arose through the lease relationship, including rent for said immovable property.

(1) The statutory lien of a Lessor of land shall exist with respect to movables furnished for such land or buildings provided in the use of such land, movables provided for the use of that land, and fruits of that land in the possession of the Lessee. (2) A statutory lien for a Lessor of a building shall exist with respect to movables furnished to such building by the Lessee.

In the cases of assignment of a Lessee’s rights or subleasing, the statutory lien of the Lessor shall extend to the movables of the assignee or sub-lessee. The same shall apply to monies that the assignor or sub-lessor is to receive.

Should all of the Lessee's property be liquidated, the statutory lien of the Lessor shall exist only with respect to Obligations, including rent, for the previous term, current term and following term, and Obligations to compensate for damages that arose in the previous and current terms.

In cases where a lessor has received a security deposit, he/she shall have a statutory lien solely in respect to the portion of his/her claim that will not be satisfied by that security deposit.

Statutory liens for transportation shall exist with respect to luggage in the possession of the transporter in connection with the transportation charges for passengers or luggage and expenses incidental thereto.

The provisions of Article 193 (Bona fide acquisition of ownership of movables) regarding bona fide acquisition shall apply mutatis mutandis to statutory liens as set forth in Article 789 (Statutory lien for leasing of immovable property) through Article 794 (Statutory lien for transportation).

(1) Statutory liens for the preservation of movables shall exist with respect to movables in connection with expenses required for the preservation thereof. (2) The statutory lien under the preceding paragraph shall also exist in relation to expenses required for the preservation, securing or execution of rights regarding such immovables.

Statutory liens for sale of movables shall exist with respect to movables in connection with the price of those movables and interest on the same.

(1) Statutory liens for the supplying of seeds, seedlings or fertilizer shall exist, in relation to the price thereof and the interest thereon, with respect to the fruits derived from the land on which they are used for a period of one year from the time of their use. (2) Statutory liens for the supply of breeding stocks, progeny or forage for animals shall exist, in relation to the price thereof and the interest thereon, with respect to the animals and fruits derived from the creature for which they are used for a period of one year from the time their use. (3) The statutory lien under the preceding paragraph shall exist, for the supplying of silkworm eggs or mulberry leaves provided for the breeding of silkworms, with respect to the Objects produced from the silkworm eggs or the mulberry leaves.

A person who has a claim that arose from the causes listed below shall have a statutory lien over certain immovable property of the Obligor: a. The preservation of immovable property; b. Construction work for immovable property; or c. The sale of immovable property.

(1) Statutory liens for the preservation of immovable property shall exist with respect to such immovable property in relation to the expenses required for the preservation of said immovable property. (2) The statutory lien under the preceding paragraph shall also exist in relation to the expenses required for the preservation, ratification or execution of rights regarding such immovable property.

(1) Statutory liens for construction work for immovable property shall exist, with respect to such immovable property, in relation to the expenses for construction work performed by artisans, engineers and contractors. (2) The statutory liens under the preceding paragraph exist, in cases where there is a current increase in the value of the immovable property resulting from the construction work, with respect to that increased value.

Statutory liens for the sale of immovable property shall exist with respect to such immovable property in relation to the price of that immovable property and interest of the same.

(1) In cases where there is conflict among the general statutory liens, the order of priority shall follow the order listed for each item of Article 783 (Definition of general statutory lien). (2) Should there be a conflict between a general statutory lien and a special statutory lien, the special statutory lien shall prevail over the general statutory lien. This provided that statutory liens on expenses for the common benefit shall have the effect of prevailing over all Obligees who received the benefit thereof.

(1) Should there be a conflict among special statutory liens with respect to the same movable, the order of priority shall follow the order listed below: First rank: Statutory liens for lease of immovable properties or for transportation; Second rank: Statutory liens for preservation of a movable. This provided that if there are two or more preservers, a new preserver shall prevail over previous preservers; and Third rank: Statutory liens for sale of a movable or for the supplying of seeds, seedlings or fertilizer, and statutory liens for supply of breeding stocks, progeny or forage of creatures. (2) Should a person having a statutory lien of the first rank have been aware, at the time that he/she acquired his/her claim, of the existence of a person having a statutory lien of the second or third rank, his/her rank shall be inferior to that of all persons having statutory lien of the second or third rank. A person having a statutory lien of the first rank is also inferior to a person who has preserved the Object for the benefit of statutory lien holder. (3) First ranking regarding fruits shall belong to the supplier of seeds, seedlings or fertilizer, while the second rank shall belong to the Lessor of the land.

(1) Should there be a conflict among special statutory liens with respect to the same immovable properties, their order of priority shall follow the order of the items of Article 799 (Statutory lien for immovables). (2) Should successive sales be made with respect to the same immovable Object, the order of priority for the statutory liens among the sellers shall follow the chronological order of the sales.

Should there be two or more holders of a statutory lien with the same priority in respect to the same Object, the holders of statutory liens shall be paid in proportion to the amounts of their claims.

The holder of a statutory lien shall not exercise the statutory lien with respect to a movable once the Obligors have delivered such movable to the Third Party acquirer.

Should there be a conflict between a statutory lien and a pledge of a movable, the Pledgee of said movable shall have the same rights as those of the holder of a statutory lien of a first rank under Article 804 (Order of priority of statutory liens over movables).

(1) Holders of a general statutory lien shall not be paid out of the immovable properties unless such is first paid out of property other than immovable properties and any outstanding claims remain. (2) With respect to immovable property, satisfaction must first be sought out of Objects that are not subject to specific security rights.12 (3) Should holders of a statutory lien fail to participate in the distribution in accordance with the provisions of paragraphs (1) and (2), such holders shall not exercise their statutory liens against registered third parties to the extent the holders would have received claims through such participation. 12 The term ‘specific security right’ refers to a statutory lien over a specific immovable, pledge, hypothec or security right by way of transfer of title. (4) The provisions of paragraphs (1) through (3) shall not apply should a distribution be made from the value of an immovable Object, which is subject to specific security right, prior to that of the value of movables.

The holder of a general statutory lien may, even should the right not be registered over an immovable, assert such right against an Obligee who has no specific security right over the immovable. This right shall not be asserted against a registered Third Party.

(1) The effect of a statutory lien for the preservation of an immovable shall not be asserted against a Third Party unless such lien is registered immediately upon the act of preservation being completed. (2) The amount of increase in the value of the immovable resulting from the preservation shall be determined by an appraiser appointed by the court at the time of participation in the distribution.

(1) The effect of a statutory lien for construction work on an immovable shall not be asserted against a Third Party unless the right is registered immediately upon the construction work having been completed. (2) The amount of increase in the value of the immovable resulting from the construction work performed shall be determined by an appraiser appointed by the court at the time of participation in the distribution.

A statutory lien registered in accordance with Article 811 (Effect of statutory liens for preservation of immovables against Third Party) and Article 812 (Effect of statutory lien for construction work on immovable against Third Party) may be exercised in preference to a hypothec.

Party The effect of a statutory lien for sale of an immovable shall not be asserted against a Third Party unless a statement announcing that the sales price or interest thereon has not been paid is registered simultaneously with the execution of the sales contract.

In addition to the provisions of this Chapter, the provisions of Article 846 (Scope of effect of hypothec) through Article 848 (Effect of hypothec over fruits), Article 851 (Order of priority of hypothecs), Article 852 (Scope of claims secured), Article 853 (Compulsory sale of hypothecated property) and Article 859 (Sub-hypothecation) through Article 863 (Ranking of disposal of hypothec) regarding hypothec shall apply mutatis mutandis to the effect of statutory liens.

A Pledgee shall have the right to possess the Object received from the Obligors or third parties as security for their claims, and to have their own claims paid in preference to other Obligees of the Object.

(1) A pledge may also be exercised against money or other Objects that the Pledgor is entitled to receive due to the sale or loss of, or damage to the Object pledged. This shall not be exercised once such money or other Objects have been paid or delivered to the Pledgor. (2) The same shall apply to money to be paid for real rights established by a Pledgor over the Object pledged.

(1) A pledge shall be created upon the Object to be pledged being delivered to the Pledgee by the Obligor or a Third Party who provides the security. (2) The delivery referred to in Paragraph (1) shall include summary delivery provided by Paragraph (3) of Article 229 (Assignment of possession).

A Pledgee shall not allow the Pledgor to reacquire direct possession of the Object pledged.

Pledges shall secure the principal, interest, penalties, expenses for executing the pledge, expense for preserving the Object pledged and compensation for damages arising from a failure to perform Obligations or latent defects in the Object pledged. This provided that it shall not apply if the act establishing the pledge stipulates otherwise.

A Pledgee may retain the Object pledged until the claims provided for in Article 820 (Scope of secured claim) have been satisfied. This provided that the right cannot be asserted against Obligees who have priority over the Pledgee.

(1) A Pledgee may collect fruits begotten from the Object pledged and appropriate the same to the satisfaction of his/her claim in preference to other Obligees. (2) The fruits described in paragraph (1) must first be appropriated to the payment of interest on the claim, and any remainder then must be appropriated towards the satisfaction of the principal.

(1) A Pledgee shall possess the Object pledged with the duty of care of a good manager. (2) Should a Pledgee violate the provisions of paragraph (1), the Obligor may demand the extinction of the pledge.

(1) Should a Pledgee have incurred necessary expenses in regards to the Object pledged, he/she may seek reimbursement for such expenses from the owner. (2) Should a Pledgee have incurred beneficial expenses in regards to the Object pledged, he/she may seek reimbursement from the owner of, at the Pledgee’s discretion, either the amount incurred or the amount by which the value of the Object has increased, so long as the increase in value remains in effect. The court may upon petition by the owner grant him/her reasonable time for reimbursement.

The exercise of a pledge shall not preclude the continuing of extinctive prescription on the claim.

(1) A Pledgee may sub-pledge the pledged Object in order to secure his/her own debt with the consent of the Pledgor. (2) A Pledgee may, within the duration of the original pledge, sub-pledge the pledged Object in his/her own capacity. In such case, the Pledgee shall be responsible for damages even those due to force majeure that would not have otherwise occurred had the Object not been sub-pledged. (3) Should the Object pledged be sold through compulsory sale and the price apportioned, the sub-Pledgee may receive full satisfaction of his/her claim from and to the extent of the amount to be apportioned to the Pledgee. However, during the period that the claim of the sub-Pledgee is yet to be due, the sub-Pledgee may only demand that the amount to be received be officially deposited.

Unless otherwise provided for in this Code or other law, a Pledgor shall not, either by an act of creation of a pledge or by a contract made prior to the due dates for performance, agree that the Pledgee shall acquire ownership of the Object pledged or dispose of it in a manner other than that provided for by law.

Should persons who have created pledges to secure the Obligations of others have performed those Obligations or have lost ownership of the pledged Object due to the execution of the pledges, they shall have the right to obtain reimbursement from the Obligors in accordance with the provisions regarding guarantee Obligations.

The Pledgee of a movable shall not assert the pledge against a Third Party unless he/she is in continuous possession of the pledged Object.

The Pledgee of movables may, should the pledged Object be usurped, recover the Object solely through the bringing of actions for the recovery of possession.

(1) A Pledgee may not use or lease the Object pledged without the consent of the Obligor. However, the Pledgee may use the Object pledged so long as such use is necessary to preserve the Object. (2) Should a Pledgee violate the provisions of paragraph (1), the Obligor may demand the extinction of the pledge.

(1) Should the claims of Pledgees of movables not be performed, they may, limited to cases where there are reasonable grounds, demand from a court immediate appropriation of the Object pledged to the performance of the claims in accordance with the evaluation of an appraiser. In such case, the Pledgees of movables must notify the Obligors in advance of such demand. (2) In the case referred to in paragraph (1), should the value of the Object pledged as determined by the appraiser exceed the amount of the debt, the Pledgee of the movable shall return the excess amount to the owner of the pledged Object.

Should more than one pledge be created with respect to the same movable, the order of priority of those pledges shall follow the chronological order of their creation.

(1) The Pledgee of an immovable may use and receive the profits of the immovable in accordance with its ordinary use. (2) With respect to the land to which a pledge for an indefinite period of time has been created to secure the claim, should the Pledgee use the land for cultivation, if the time for harvest of the crops which the Pledgee seeded or planted is coming within no later than a year, the Pledgee may use the land till the time for harvest of said crops even if the pledge has been extinguished through the performance. (3) With respect to the land to which a pledge for a definite period of time has been created to secure a claim, should the Pledgee use the land for cultivation, if the time for harvest of the crops which the Pledgee seeded or planted is coming within no later than a year, the Pledgee may use the land till the time for harvest of the crops, even though the pledge may have been extinguished by performance before such due time. However, the Pledgee must return the land immediately after receiving the performance even if the time for harvest will be arriving within one year following the due time for such performance.

The Pledgee of an immovable shall pay the expenses for management and otherwise bear responsibility in relation to the immovable.

The Pledgee of an immovable shall not demand interest on his/her claim.

The provisions of Article 834 (Pledgee's right to use and receive profits) through Article 836 (Interest) shall not apply where otherwise provided for through the act of creation of the pledge.

(1) The duration of a pledge of an immovable shall not exceed five years. Should the pledge of an immovable be created for a longer period, such period shall be reduced to five years. (2) The pledge of an immovable may be renewed. However, the renewal period shall not exceed five years from the time of renewal.

In addition to the provisions of this Section, the provisions of Chapter Five (Hypothec) shall apply mutatis mutandis to pledges of immovables.

(1) Pledges may have property rights13 as their Object. (2) In addition to the provisions of Section IV, the provisions of

(1) Should a pledge be created over a nominative claim, such pledge shall not be asserted against third parties, including Third Party Obligors, unless notice of the creation of the pledge is provided to such Third Party Obligors or the Third Party Obligors acknowledge the claim. (2) The notice or acknowledgement set forth in paragraph (1) may not be asserted against a Third Party other than the Obligor unless the notice or acknowledgement has been made using an instrument bearing a fixed date.

(1) A Pledgee may directly collect the claim that is the Object of the pledge. (2) Should monies be the Object of a pledged claim, the Pledgee may collect the same to the extent of the portion that corresponds to the amount of the Pledgee’s own claim. (3) In the case set forth in paragraph (2), should the due date of the pledged claim under the preceding paragraph arrive prior to the due date of the claim of the Pledgee, the Pledgee may have the Third Party Obligor have the amount to be paid to the Pledgee deposited. In such cases, the pledge shall exist over the amount so deposited. (4) Should the Object of the claim not be money, the Pledgee shall have a pledge over the Object to be received as satisfaction thereof.

(1) A Hypothec Right Holder shall have the right to receive performance of his/her claim in preference to other Obligees out of the immovable properties that the Obligor or a Third Party provided to secure the Obligation without transferring possession. (2) A perpetual lease or usufruct may also be made the Object of a hypothec. The provisions of Chapter Five shall apply mutatis mutandis in such case. (3) Should a special law allow a certain type of property other than immovable property to be the Object of a hypothec, such law shall apply.

A hypothec shall be created through an agreement reached between a Creditor and Debtor and/or Third Party that furnishes immovable property as security.

A Hypothec Right Holder shall not assert the hypothec against a Third Party who is not the Hypothecator unless the instrument creating the hypothec is notarized and registered in the land registry.

(1) A hypothec shall extend to all Objects that are attached to and form part of the land comprising the Object of the hypothec when the hypothec is created, including buildings residing thereon. The hypothec shall also extend to Objects that are attached to the land following the creation of the hypothec. (2) A contract creating a hypothec may not contain any provision that is contrary to the provision set forth in paragraph (1).

Should, based on a perpetual lease, usufruct or leasehold, a Third Party own a building on the land comprising the Object of the hypothec, the hypothec shall not extend to such building.

The provisions of Article 846 (Scope of effect of hypothec) shall not apply to the fruits produced from the immovable comprising the Object of the hypothec. This shall not apply once the immovable is subject to an order of attachment.

(1) A hypothec may also be exercised against money or other Objects that the hypothecator is entitled to receive due to the sale or loss of, or damage to, the Object thereof. However, this may not be exercised once such money or other Object have been paid or delivered to the Hypothecator. (2) A hypothec may be enforced against fruits that are produced after the Object of the hypothec is subject to an order of attachment.

Should a person who creates a hypothec to secure the Obligations of others perform those Obligations or have lost ownership of the hypothecated immovable as a result of the enforcement of the hypothec, he/she shall have the right to obtain reimbursement from the Obligors in accordance with the provisions regarding guarantee Obligations.

Should multiple hypothecs have been created on an immovable in order to secure multiple debts, the order of their priority shall be based on the order of their registration.

(1) Should the Hypothec Right Holder have the right to demand periodic payments, including interest, he/she may exercise their hypothec solely with respect to payments that have fallen due in the most recent two years. This provided that if special registration is effected with respect to prior periodical payments that have fallen due, the Hypothec Right Holder may exercise their hypothecs as from the time of said registration. (2) Should the Hypothec Right Holder have the right to demand compensation for damages resulting from breach of Obligations, the provisions of paragraph (1) shall apply to the damages of the most recent two years. This provided that the aggregate period including the interest and other periodical payments shall not exceed two years.

In the event of a failure to perform in relation to a debt, a Hypothec Right Holder may apply to the court for compulsory sale of the hypothecated immovable.

(1) Should the Hypothecator or a Third Party erect a building on land after it is been hypothecated, and the Hypothecator owns such building, the Hypothec Right Holder may demand the compulsory sale of the building together with the hypothecated land. However, should the price of the land together with the building thereon be less than the price of the land as a vacant plot, the Hypothec Right Holder may demand that the hypothecator remove the building prior to the compulsory sale of the land. (2) Should a Third Party own the building on the hypothecated land based on a perpetual lease, usufruct or leasehold, if the Third Party cannot assert such perpetual lease, usufruct or leasehold against the Hypothec Right Holder, the Hypothec Right Holder may demand the compulsory sale of the building together with the hypothecated land.

A Third Party acquirer of a hypothecated immovable may purchase the immovable through a compulsory sale.

Should a Third Party acquirer have incurred necessary or beneficial expenses in regards to a hypothecated immovable, he/she may obtain reimbursement out of the proceeds of the sale of the immovable in preference to the Hypothec Right Holder.

(1) Should two or more immovables be hypothecated to secure the same claim and their proceeds from compulsory sale are to be applied simultaneously to its satisfaction, the burdens of satisfaction of the claim shall be allocated in proportion to the value of each immovable. (2) Should the proceeds of only one of the immovables be sufficient to obtain full satisfaction of the claim of the Hypothec Right Holder. In such case, the Hypothec Right Holder next in rank may exercise the right of the prior Hypothec Right Holder via subrogation to the extent of the amount that the prior Hypothec Right Holder would have received out of the other immovables in accordance with the provisions of paragraph (1).

A person enforcing a right of hypothec via subrogation in accordance with the provisions of paragraph (2) of Article 857 (Simultaneous or staggered application of proceeds in case of joint hypothec) must enter such subrogation in the registry of the hypothec.

(1) A Hypothec Right Holder may hypothecate his/her right of hypothec in order to secure the debt of him/herself or another. This is referred to as Sub-hypothecation. (2) Should a hypothecated Object be sold through compulsory sale and the proceeds be apportioned, the sub-pledgee of the hypothec may receive full satisfaction of his/her claim from and to the extent of the amount to be apportioned to the Hypothec Right Holder. However, during the period that the claim of the sub-pledgee of the hypothec has yet to come due, the sub-pledgee of the hypothec may only demand that the amount to be received be officially deposited.

(1) A Hypothec Right Holder may transfer or waive his/her right of hypothec for the benefit of another creditor(s) of the same debtor. (2) A transferee of a right of hypothec may exercise the received right of hypothec as security for his/her own debt. In such case, the provisions of paragraph (2) of Article 859 (Sub-hypothecation) shall apply mutatis mutandis. (3) A person waiving a right of hypothec shall not thereafter assert the right of hypothec against the creditor(s) for whose benefit the waiver was made.

(1) A Hypothec Right Holder may transfer or waive his/her priority ranking for the benefit of another Hypothec Right Holder of the same debtor. Moreover, a Hypothec Right Holder may change the priority of his/her ranking among multiple Hypothec Right Holders with the consent of the other Hypothec Right Holder. However, should such a change affect the interests of another party, such party's consent must be obtained. (2) Should the Object of a right of hypothec be sold through compulsory sale and the proceeds apportioned among multiple Hypothec Right Holders, a transferee of a priority ranking in regards to the right of hypothec may receive full satisfaction of his/her claim from and to the extent of the total amount to be apportioned thereof. (3) Should the Object of a right of hypothec be sold through compulsory sale and the proceeds apportioned among multiple Hypothec Right Holders, a Hypothec Right Holder who has received a waiver of a priority ranking in regards to the right of hypothec may, as between himself and the Hypothec Right Holder who has waived the priority ranking, receive equal repayment from and to the extent of the total amount to be apportioned to both of them. (4) A Hypothec Right Holder who consents to a change in priority ranking may enforce the right of hypothec in accordance with such consent.

(1) The disposal of a hypothec described in Article 859 (Sub-hypothecation), Article 860 (Transfer or waiver of hypothec) and Article 861 (Transfer, waiver or change of ranking) shall be null unless it is notarized and entered in the registration thereof. (2) The disposal of a hypothec shall not be asserted against the principal Debtor, a Guarantor, Hypothecator or their respective successors unless the principal debtor is notified of such disposal or acknowledges thereto. (3) Should the principal debtor receive notice of or consents to the disposal of a right of hypothec as described in paragraph (2), repayment made without the approval of a person receiving the benefit of such disposal shall not be asserted against such person.

Should, in the cases set forth in Article 859 (Sub-hypothecation), Article 860 (Transfer or waiver of hypothec) and Article 861 (Transfer, waiver or change of ranking), the Hypothec Right Holder have disposed of his/her right of hypothec for the benefit of two or more persons, the rank of priority of the rights of the persons benefiting from such disposal shall be determined by the order of entries in the registration of the hypothec.

Should a Third Party who has purchased ownership of or perpetual lease or usufruct on the hypothecated immovable pay the price thereof to the Hypothec Right Holder at the request of the Hypothec Right Holder, the hypothec shall be thereby extinguished for the benefit of said Third Party.

No hypothec shall be extinguished by prescription in relation to the Obligors and Hypothecators unless it is extinguished simultaneously with the claim the hypothec secures.

Should a person who is neither an Obligor nor a Hypothecator have possessed the hypothecated immovable property in complete conformity with the requirements for acquisitive prescription, the hypothec shall be extinguished thereupon. This shall not apply where a Third Party acquirer of the hypothecated immovable property acquire the immovable with knowledge of the existence of the hypothec.

(1) A hypothec may be created between a Creditor and a Debtor to secure unspecified claims, up to the limit of the maximum amount that may occur through the specific type of continuous transactions. A hypothec of such nature shall be referred to as a Revolving Hypothec. (2) The scope of the unspecified claims that are secured by a Revolving Hypothec must be set forth in the agreement creating the Revolving Hypothec.

A Revolving Hypothec Right Holder may exercise his/her Revolving Hypothec Right up to the maximum amount with respect to all fixed payments of principal as well as periodical payments, including interest and compensation for damages resulting from failure to perform Obligations.

(1) The parties to a Revolving Hypothec agreement may, through their mutual agreement, amend the scope of the claims secured by the Revolving Hypothec during the period of time until the principal settled upon. (2) Amendments pursuant to paragraph (1) shall not require the consent of subordinate Hypothec Right Holder or any other Third Party. (3) An amendment pursuant to paragraph (1) must be registered before the principal settled upon.

(1) The parties to a Revolving Hypothec agreement may, through mutual agreement, amend the maximum amount of the Revolving Hypothec. (2) The consent of interested parties must be obtained in the event of an amendment as set forth in paragraph (1). (3) An amendment set forth in paragraph (1) shall not be asserted against any Third Party other than those persons who have consented pursuant to paragraph (2), unless the amendment is registered.

(1) With respect to the principal secured by a Revolving Hypothec, the date on which the principal is to be fixed may be prescribed or amended. (2) The provisions of paragraph (2) of Article 869 (Amendment of the scope of secured claims) shall apply mutatis mutandis to paragraph (1). (3) The date set forth in paragraph (1) must be within five (5) years of the date on which it is prescribed or amended. (4) The amendment of the date set forth in paragraph (1) must be registered prior to said date.

(1) A person who acquires a claim from a Revolving Hypothec Right Holder before the principal has been fixed shall not exercise the Revolving Hypothec with respect to such claim. A person who makes payment for or on behalf of an Obligor before the principal is fixed also may not exercise the Revolving Hypothec through subrogation by performance. (2) Should an Obligation be assumed before the principal is fixed, the Revolving Hypothec Right Holder of the hypothec shall not exercise his/her Revolving Hypothec with respect to the Obligation of the person who assumes the Obligation.

(1) Should a succession have commenced in connection with the Revolving Hypothec Right Holder before the principal has been fixed, the Revolving Hypothec shall secure the claims that exist at the time of the commencement of the succession. The Revolving Hypothec shall also secure the claims that the successor, prescribed by agreement between the successors and the Revolving Hypothecator, acquires after the commencement of the succession. (2) Should a succession have commenced in connection with a Debtor before the principal is fixed, the Revolving Hypothec shall secure the debts that exist at the time of the commencement of the succession. The Revolving Hypothec shall also secure the debts that are incurred by the successor, prescribed by agreement between the Revolving Hypothec Right Holder and the Revolving Hypothecator, after the commencement of the succession. (3) The provisions of paragraph (2) of Article 869 (Amendment of the scope of secured claims) shall apply mutatis mutandis to the agreement set forth in paragraph (1) or (2). (4) Should an agreement set forth in paragraph (1) or (2) not be registered within six (6) months of the commencement of the succession, the principal to be secured shall be deemed to have been fixed at the time that succession was commenced.

(1) Should a merger have occurred in connection with a corporate Revolving Hypothec Right Holder before the principal is fixed, the Revolving Hypothec shall secure the claims that exist at the time of the merger, and shall also secure the claims acquired after the merger by the surviving corporation or the corporation established as a result of the merger. (2) Should a merger have occurred in connection with a corporate debtor before the principal is fixed, the Revolving Hypothec shall secure the debts that exist at the time of the merger, and shall also secure the debts incurred by the surviving corporation or the corporation that is established as a result of the merger. (3) In the event of paragraph (1) or paragraph (2), the Revolving Hypothecator may demand the secured principal be fixed. This provided that it shall not apply in the case of paragraph (2) if the debtor is the Revolving Hypothecator. (4) Should a demand pursuant to paragraph (3) have been made, the principal secured shall be deemed to have been fixed at the time of the merger. (5) A demand pursuant to paragraph (3) shall not be made should two (2) weeks have passed from the date that the Revolving Hypothecator has become aware of the merger. The same shall apply should one (1) month have passed from the date of the merger.

Division of revolving Hypothec Right Holder or debtor before (1) Should a division occur for a corporate Revolving Hypothec Right Holder before the principal is fixed, the Revolving Hypothec shall secure the claims that exist at the time of the division, as well as the claims acquired after the division, by the corporation that divided, or the corporation that was established or assumed the business as a result of the division. (2) Should a division occur in connection with a corporate debtor before the principal has been fixed, the Revolving Hypothec shall secure the debts that exist at the time of such division, as well as the debts that are incurred after such division, by the corporation that divided or the corporation that was established or assumed the business as a result of the division. (3) The provisions of paragraphs (3), (4) and (5) of Article 874 (Merger of revolving Hypothec Right Holder or debtor) shall apply mutatis mutandis to paragraphs (1) and (2) hereof.

(1) The Revolving Hypothec Right Holder cannot make any disposition as set forth in paragraph (1) of Article 860 (Transfer or waiver of hypothec), or paragraph (1) of Article 861 (Transfer, waiver or change of ranking), prior to the fixing of the principal. This provided that it shall not prevent a disposition as set forth in Article 859 (Sub-hypothecation). (2) The provisions of paragraph (3) of Article 862 (Effect of disposal of hypothec) shall not apply to repayments made prior to the fixing of the principal in the case set forth in the provisions of paragraph (1).

(1) Prior to the principal being fixed, a Revolving Hypothec Right Holder may transfer a Revolving Hypothec with the approval of the Revolving Hypothecator. (2) A Revolving Hypothec Right Holder may divide her/his Revolving Hypothec into two Revolving Hypothecs, and transfer one of these in accordance with paragraph (1). In such event, should that Revolving Hypothec have been subject to the rights of a Third Party, the rights of said Third Party shall be extinguished in connection with the Revolving Hypothec that was transferred. (3) The Revolving Hypothec Right Holder must obtain the approval of the Third Party set forth in paragraph (2) in order to make the transfer set forth therein.

Prior to the principal being fixed, a Revolving Hypothec Right Holder may, with the approval of the Revolving Hypothecator, effect a partial transfer of the Revolving Hypothec and co-own the same with the acquiring party.

(1) The joint owners of a Revolving Hypothec shall receive payment in proportion to the amounts of the claims held by each. This provided that should, prior to fixing the principal a different ratio is prescribed or it is prescribed that one of the parties shall receive payment in preference to other parties, the payment shall be received as so prescribed therein. (2) A joint owner of a Revolving Hypothec may obtain the consent of the other joint owners and transfer his/her rights under the Revolving Hypothec in accordance with the provisions of paragraph (1) of Article 877 (Transfer of Revolving Hypothec).

Hypothec Right Holder who has accepted a transfer or waiver of the order of priority of a hypothec Should a Revolving Hypothec Right Holder who has accepted a transfer or waiver of the order of preference for a hypothec have transferred or partially transferred his/her Revolving Hypothec, the acquiring party shall acquire the benefit of the transfer or waiver of that order of preference.

The provisions of Article 857 (Simultaneous or staggered application of proceeds in case of joint hypothec) and Article 858 (Joint hypothec - registration of subrogation) shall apply with respect to Revolving Hypothecs, given that this shall be limited to cases where, concurrent with the establishment of the same, it is registered that a Revolving Hypothec has been established on several immovable properties to secure the same claim.

(1) Any amendment to the scope of claims secured by or the Debtors or maximum amount of a Revolving Hypothec registered pursuant to Article 881 (Joint Revolving Hypothec), or the transfer or partial transfer thereof, shall be null unless registered in connection with all of the immovable Objects. (2) The principal secured under a Revolving Hypothec that has been registered pursuant to Article 881 (Joint Revolving Hypothec) shall be set even should cause for such settlement have occurred in connection with only one immovable.

A person who has Revolving Hypothecs on several immovable properties may exercise his/her preference right in respect to proceeds of each immovable property up to the respective maximum amounts, except in cases provided for in Article 881 (Joint Revolving Hypothec).

(1) The Revolving Hypothecator may demand the settling of the principal to be secured should three years have passed since the creation of the Revolving Hypothec. This provided that it shall not apply should a date have been prescribed on which the principal is to be fixed. (2) The Revolving Hypothecator may demand the fixing of the principal to be secured should, as a result of a change in the scope of claims to be secured, termination of transaction, or other cause, it become certain that no more principal will arise for which security is necessary. (3) The Revolving Hypothec Right Holder may demand the setting of the principal to be secured. This provided that it shall not apply should a date have been prescribed on which the principal is to be settled upon. (4) Should a demand be made pursuant to paragraph (1), (2) or (3), the principal to be secured shall be set with the expiration of two weeks from the time of the demand.

(1) In addition to cases in which a demand for settlement has been made as set forth in Article 884 (Demand for fixing of principal), the principal to be secured under a Revolving Hypothec shall be set under the following circumstances: a. If the Revolving Hypothec Right Holder has made a petition for compulsory sale of the immovable under the hypothec, provided that it shall be limited to cases in which the compulsory sale procedures have commenced; b. If the Revolving Hypothec Right Holder has effected an attachment for delinquent taxes against the hypothecated immovable properties; c. If two weeks have passed since the Revolving Hypothec Right Holder became aware that compulsory sale procedures have been commenced or attachment for delinquent taxes has been made against the hypothecated immovable properties; or d. If the Debtor or the Revolving Hypothecator has received a declaration of bankruptcy. (2) Should the effect of a compulsory sale or attachment pursuant to paragraph (1)(c) or a declaration of bankruptcy pursuant to paragraph (1)(d) have been extinguished, the setting of the principal shall be deemed to not have occurred. This provided that it shall not apply if a Third Party has acquired the Revolving Hypothec or the rights created over the same on the basis that the principal has been set.

(1) Once the principal has been set, the Revolving Hypothecator may demand a reduction in the maximum amount of that Revolving Hypothec based on the amount of the Obligations actually in existence plus the amount of the periodical payments including interest and the amount of damages due to default in Obligations that may arise in the subsequent two years. (2) In relation to reductions in the maximum amount of Revolving Hypothecs for which registration under Article 881 (Joint Revolving Hypothec) has been effected, the demand under the paragraph (1) shall be sufficient if made with respect to one of those immovable properties.

(1) Should the amount of the debt existing following the fixing of the principal exceed the maximum amount of the Revolving Hypothec, the person who created the Revolving Hypothec to secure the debts of another, or the Third Party who has acquired ownership or perpetual lease, or the leasehold that can be asserted against third parties with respect to hypothecated immovable properties, may, by paying or depositing an amount equivalent to the maximum amount, demand that the Revolving Hypothec be extinguished. In such event, the payment or deposit shall have the effect of performance. (2) A Revolving Hypothec that has been registered as prescribed in Article 881 (Joint Revolving Hypothec) shall be extinguished should a demand set forth in paragraph (1) be made against one of the immovable Objects. (3) The principal debtor, Guarantor or their successor in interest shall not demand the extinguishment as prescribed in paragraph (1). (4) A Third Party who has acquired ownership or another right set forth in paragraph (1) that is encumbered by a condition precedent shall make a request for extinguishment as prescribed in paragraph (1) during the period in which the existence or absence of said condition remains undetermined.

(1) A Transfer as Security shall mean the transfer of ownership of a prescribed movable owned by a Debtor or a Third Party, to the Creditor, for the purposes of securing a debt. In such event, the ownership over the property shall be re-transferred to the person who provided the security once the debt has been paid in full. (2) It shall be possible to have more than one movable for which the scope is defined according to the type of movable, the location or other standards, be the Object of a Transfer as Security as one aggregate movable, even if there are changes in the individual movables included 14 This is essentially the same as a common law chattel mortgage, and only applies to movables. therein.

A security interest under a Transfer as Security shall be created through an agreement between the Creditor and the Debtor or the Third Party providing the movable(s) for the Transfer as Security.

A security interest under a Transfer as Security shall not be asserted against a Third Party other than the creator of the security right unless possession of the Object is assigned pursuant to Article 229 (Assignment of possession).

Security (1) A security interest under a Transfer as Security shall extend to all Objects that are affixed to and form part of the Object of the security interest of the Transfer as Security at the time of the creation thereof. It shall also extend to all Objects that are affixed to the Object subsequent to the creation of the security interest under the Transfer as Security. (2) Provisions to the contrary may be set forth in the agreement creating the security interest under the Transfer as Security.

(1) Should the creator of the security right or a Third Party, upon instruction from the creator of the security right directly possessing the Object, the provisions of Article 891 (Extent of effect of security interest under a Transfer as Security) shall not apply to the fruits thereof. This provided that it shall not apply once the holder of the security interest under the Transfer as Security has demanded delivery of the Object pursuant to paragraph (2) of Article 898 (Conversion to cash or conclusive transfer of ownership). (2) Should the holder of the security interest under the Transfer as Security or a Third Party on instruction from said holder who directly possesses the Object, the provisions of Article 822 (Priority right to receive satisfaction from fruits) concerning pledges shall apply mutatis mutandis to fruits produced from the Object.

(1) The security interest under a Transfer as Security may be exercised against money or other Objects to be received by the creator of the security right, as a result of sale, loss or destruction of, or damage to the Object of the Transfer as Security. This provided that it shall not be exercised against money or other Object once such Object has been paid or delivered to the creator of the security right. (2) Notwithstanding the provisions of paragraph (1) above, should the Object under the Transfer as Security consist of the movables prescribed in paragraph (2) of Article 888 (Definition of Transfer as Security), and the creator of the security right plans to sell the Object to another, the security interest under the Transfer as Security shall not be exercised against the sale proceeds.

(1) Should a creator of a security right, who continues his/her direct possession over the Object even after the security interest under a Transfer as Security has been created, assigns said Object to a Third Party, or has created a real security right over said Object in favor of a Third Party, if said Third Party satisfies the requirements set forth in Article 193 (Bona fide acquisition of ownership of movables), the Third Party may assert its rights against the holder of the security interest under the Transfer as Security. (2) Notwithstanding the provisions of paragraph (1) above, should the Objects under the Transfer as Security consist of movables prescribed in paragraph (2) of Article 888 (Definition of Transfer as Security), and the creator of the security right plan to sell the Object to another, and should the creator of a security right, who continues to be in direct possession of the Object following the creation of the Transfer as Security, sell the Object to a Third Party, the holder of the security interest under the Transfer as Security shall not be able to assert his/her security interest against the Third Party regardless of whether the Third Party satisfies the requirements set forth in Article 193 (Bona fide acquisition of ownership of movables). (3) Should another person on instruction from the creator of the security right continue with direct possession over the Object even after the security interest under a Transfer as Security has been created, if the creator of the security right assigns said Object to a Third Party or creates a real security right over said Object in favor of a Third Party, the provisions of paragraph (1) or (2) shall apply mutatis mutandis.

The security interest under the Transfer as Security shall secure the principle, interest, penalty, expenses for enforcing the security interest under the Transfer as Security, the expenses for preserving the Object, as well as compensation for damage resulting from default on Obligations, or any hidden defect in the Object. This shall not apply when otherwise provided for in the act of creation.

Should the holder of the security interest under the Transfer as Security or a Third Party on instruction from the holder take direct possession of the Object, the provisions of Article 821 (Retention of Object pledged), Article 823 (Pledgee's duty to preserve Object pledged), and Article 824 (Pledgee's right to reimbursement) shall apply mutatis mutandis.

Transfer as Security (1) Should the holder of the security interest under the Transfer as Security, who is in direct possession of the Object, assign the Object to a Third Party, or creates a real security right in favor of a Third Party, if the Third Party satisfies the requirements set forth in Article 193 (Bona fide acquisition of ownership of movables), the Third Party may assert said rights against the creator of the security right. (2) Should a Third Party have direct possession over the Object through the instruction from the holder of the security interest under the Transfer as Security, who transferred ownership of the Object to another Third Party or provided it as security for another Third Party, the provision of Paragraph (1) shall apply mutatis mutandis.

(1) Should the debt not be discharged, the holder of the security interest under the Transfer as Security may, by giving notice to the creator of the security right, take measures, in his own capacity, to convert the Object to cash, or obtain ownership of the Object conclusively. (2) Should, in the event of paragraph (1), the Object be held in the direct possession of the creator of the security right or a Third Party upon instruction by the creator of the security right, a demand for delivery of the Object may be made upon such person. (3) Should, in the event of paragraph (1), the price of the Object exceed the amount of debt payable, the holder of the security interest under the Transfer as Security must pay the creator of the security right the difference as settlement.

The creator of the security right may, even if the due date of the debt has passed and until the settlement payment set forth in paragraph (3) of Article 898 (Conversion to cash or conclusive transfer of ownership) is made, tender the entire amount of the debt and show proof thereof to the holder of the security interest under the Transfer as Security, and retrieve the Object under the Transfer as Security. This provided that should the price of the Object encumbered by the security interest under the Transfer as Security not exceed the amount of the debt that is payable, the preceding shall not apply after the holder of the security interest under the Transfer as Security has notified the creator of the security right to that effect.

(1) A guaranty shall be formed when: (i) a prospective Guarantor undertakes a Obligation towards the Obligee that in the event the Obligor fails to perform his/her Obligation, the prospective Guarantor will perform in whole or part such Obligation together with the Obligor; and (ii) the Obligee accepts such undertaking. (2) A rider providing security for loss, which shall constitute a guaranty Obligation independent from the underlying Obligation, may be executed as part of a contract of guaranty. This shall be limited to situations in which the provision of security for loss or guaranty constitutes part of the business of the person assuming the Obligations imposed by such rider. (3) Should the assumption of the guaranty Obligation not constitute part of the business of the prospective Guarantor, the Obligee shall provide the prospective Guarantor with any and all material information concerning the guaranty Obligation to be assumed, thereby giving the prospective Guarantor a chance to fully deliberate. (4) Should the Obligee fail to carry out the duty described in paragraph (3), the Guarantor may rescind the contract of guaranty.

(1) A guaranty undertaking not recorded in an instrument or document may be revoked at any time. This shall not apply where the Guarantor has voluntarily sought to perform the guaranty Obligation. (2) The provisions of paragraph (1) shall also apply to a guaranty undertaking made in connection with a monetary Obligation where the amount of the guaranty Obligation is not stipulated in the Guarantor's handwriting. (3) The contents of the guaranty Obligation shall be specifically described in the guaranty instrument or document.

(1) Notwithstanding the provisions of paragraphs (2) and (3) of Article 901 (Form of contract of guaranty), a floating guaranty contract that guarantees the performance of unspecified future Obligations accruing from a certain continuing legal relationship shall be valid and effective only if the continuing legal relationship forming the basis of the underlying Obligations is specified. (2) Should the term of the guaranty not be stated in the floating guaranty contract, the Guarantor may, once a reasonable period of time has elapsed since the date of execution of the contract, terminate the floating guaranty contract, and such shall not be retroactive. (3) Should the principal Obligor's business or financial position have deteriorated substantially since the date of execution of the floating guaranty contract, the Guarantor may immediately terminate the floating guaranty contract, and such termination shall not be retroactive. (4) Upon the death of a Guarantor under a floating guaranty contract, only the floating Guarantor's Obligations regarding the underlying Obligations in existence at the time of the Guarantor's death shall be subject to succession.

(1) A guaranty Obligation shall include interest accruing on the underlying Obligation, penalties, damages and all other charges incidental to the underlying Obligation. (2) A guaranty contract may specify the amount of penalties or damages payable for non-performance of the guaranty Obligation.

(1) Should an underlying Obligation not exist, a guaranty shall not be created. However, a guaranty may be created with regard to an underlying Obligation that could arise in the future or an underlying Obligation subject to a condition. (2) Should the Guarantor's burden be more onerous than that of the underlying Obligation with respect to either the Object or the terms and conditions of the Obligation, the Guarantor's Obligation shall be reduced in accordance to the scope of the underlying Obligation. (3) The extinction of the underlying Obligation shall operate to extinguish the guaranty Obligation as well. (4) A demand for performance or any other grounds for interruption of a prescription period against the principal Obligor shall also be effective against the Guarantor. (5) Except as otherwise provided for in the guaranty contract, once the claim owed to the principal Obligor has been assigned, the claim owed to the Guarantor shall also be deemed to have been assigned to the assignee.

(1) The Guarantor is entitled to invoke prescriptive extinction of the underlying Obligation. (2) The principal Obligor's waiver of the benefit of prescription shall not be effective upon the Guarantor. (3) The Guarantor may raise any defenses available against the principal Obligor. (4) Should the principal Obligor be entitled to rescind or terminate his/her Obligations, the Guarantor may refuse to perform the guaranty Obligation. (5) Should the principal Obligor be entitled to a set-off the underlying Obligation by virtue of a counter-Obligation owed by the Obligee, the Guarantor may refuse to perform the guaranty Obligation to the extent that the underlying Obligation would be extinguished by the exercising of the set-off.

Should a Guarantor, who offers a guaranty or security against loss as part of his/her business, assume a guaranty Obligation regarding a voidable Obligation while aware of the grounds for rescission of the contract giving rise to the underlying Obligation, the Guarantor shall be presumed to have assumed an independent Obligation regarding the same Object as that of the underlying Obligation.

(1) Should an Obligor have a duty to furnish a Guarantor for the Obligee, the Guarantor must be a person of full legal capacity who has sufficient financial ability to effect performance. (2) Should the Guarantor cease to fulfill the conditions set forth in paragraph (1), the Obligee may demand that the Obligor replace the Guarantor with a person who fulfills such conditions. (3) Should the Obligor be unable to furnish a Guarantor who fulfills the conditions set forth in paragraph (1), the Obligee may demand that the Obligor furnish other security in lieu thereof. (4) This Article shall not apply in cases where the Obligee has designated the Guarantor.

(1) A Guarantor shall not: (i) demand from the Obligee a demand of performance from the principal Obligor in preference to the Guarantor; or (ii) exempt him/herself from enforcement of the guaranty Obligation by establishing that the principal Obligor has sufficient resources to tender performance and is easily subject to execution. (2) In the absence of an agreement to the contrary, the Guarantor shall be bound to perform the guaranty Obligation jointly and severally with the principal Obligor.

Events that occur with respect to the Guarantor shall have no effect in respect to the principal Obligor. This shall not apply to a demand or other grounds for the interruption of prescription that is made or occurs to a Guarantor who has been commissioned by the principal Obligor.

(1) Should multiple persons undertake to be Guarantors in a contract, each Guarantor shall be obligated in respect to the entire amount of the underlying Obligation. (2) In the absence of an agreement to apportion the guaranty Obligation among the co-Guarantors and limit each co-Guarantor’s liability vis-à-vis the Obligee to their apportioned share, the burden of the guaranty Obligation shall be presumed to be shared equally among all co-Guarantors.

(1) Should a Guarantor commissioned by the principal Obligor have effected performance on behalf of the principal Obligor or has otherwise extinguished the underlying Obligation at his/her expense, the Guarantor is entitled to demand indemnification from the principal Obligor. (2) The Guarantor described in paragraph (1) may demand indemnification of the actual amount paid by him and interest accruing thereon from the time of payment, as well as compensation for damages. (3) A Guarantor commissioned by a principal Obligor may preemptively exercise his/her right to indemnification in any of the following cases: a. Where the Guarantor has, without negligence on his/her part, received the issuance of a judgment ordering performance to the Obligee, and such judgment has become final and binding; b. Where the principal Obligor has been declared bankrupt, and the Obligee does not file for a distribution in the bankruptcy procedure; c. Where the underlying Obligation has come due; or d. Where the deadline for performance of the underlying Obligation is not fixed, its maximum period of performance cannot be established, and five years have elapsed since the date of execution of the guaranty contract. (4) A principal Obligor who has received a demand for indemnification from the Guarantor pursuant to paragraph (1) may, so long as the Obligee has not received full and complete performance of the Obligation, demand that the Guarantor furnish security or procure a discharge from the Obligation for the benefit of the principal Obligor. (5) In the case set forth paragraph (4), the principal Obligor may relieve himself of liability for indemnification by making a deposit with an official depository office, furnishing security to the Guarantor or procuring a discharge from the Obligation for the benefit of the Guarantor.

Should a Guarantor who not commissioned by the principal Obligor have effected performance on behalf of the principal Obligor or have otherwise caused the principal Obligor to be released from the underlying Obligation at the Guarantor’s expense, the principal Obligor shall indemnify the Guarantor to the extent that the principal Obligor was enriched thereby. However, should the guaranty have been provided against the will of the principal Obligor, the principal Obligor shall indemnify the Guarantor to the extent that the principal Obligor continues to be enriched.

(1) Should the Guarantor have, without notifying the principal Obligor that he/she received a demand for performance from the Obligee, effected performance of the Obligation or otherwise procured the discharge thereof at his/her own expense, and if the principal Obligor has had any means of defense against the Obligee, the principal Obligor may set it up against the Guarantor's demand for indemnification. However, should the means of defense so set up be a set-off, the Guarantor may demand that the Obligee perform the counter-Obligation that might have been extinguished if it had been set-off. (2) Should, as a result of the Guarantor's failure to notify the principal Obligor that he/she has procured the discharge of the Obligation at his/her own expense, the principal Obligor have also effected in good faith performance of the Obligation or otherwise procured a discharge at the principal Obligor's expense, the principal Obligor may treat his/her performance or other act of discharge as effective.

Obligors A Guarantor on behalf of one of several joint Obligors or Obligors of an indivisible joint Obligation may obtain indemnification from the other Obligors in proportion to their respective shares.

(1) Should one of several co-Guarantors have effected performance of the guaranty Obligation or otherwise procured a common discharge thereof at his/her own expense, such Guarantor may demand indemnification from the other Guarantors in proportion to their respective share of the burden. (2) In the case set forth in paragraph (1), the Guarantor may demand indemnification with respect to the actual amount paid and interest accruing thereon, as well as compensation for damages. (3) Should a co-guaranty contain an agreement to apportion the guaranty Obligation among the co-Guarantors and limit each co-Guarantor’s liability vis-à-vis the Obligee to the apportioned share thereof, if one of the co-Guarantors has procured at his/her own expense a common discharge of the Obligation in excess of his/her share of the burden, the provisions of Article 912 (Voluntary Guarantor’s right to indemnification), Article 913 (Requirements for indemnification) and Article 914 (Right to indemnification of Guarantor on behalf of one of several Obligors) shall apply mutatis mutandis.

(1) A Guarantor who has effected performance of the underlying Obligation or otherwise procured discharge thereof at his/her own expense shall acquire the Obligee's rights in connection with the underlying Obligation, and shall be entitled to exercise, in lieu of the Obligee, the security interests securing such rights. (2) In the case described in paragraph (1), a Guarantor who has obtained a partial discharge may exercise the Obligee's rights and the associated security interests concurrently with the Obligee in proportion to the value of the discharge obtained by the Guarantor. In such case, the right of termination shall be exercised solely by the Obligee. However, in the event of termination, shall return to the subrogor the amount for which the discharge was obtained and interest thereon.

(1) An Obligee who has obtained full satisfaction by virtue of the Guarantor's performance, or other expenditure, shall deliver to the Guarantor the instrument certifying the underlying Obligation and the property held in the Obligee's possession as security. (2) Should the Guarantor's performance or other expenditure have been made with respect to only part of the Obligation, the Obligee shall record the fact of the subrogation in the instrument and allow the Guarantor to supervise the preservation of the property held as security in the Obligee's possession.

An Obligee who has obtained satisfaction by virtue of the Guarantor's performance, or other expenditure, shall be obligated to preserve the security for the benefit of the Guarantor who made such performance or other expenditure.

(1) A Guarantor who effects performance, or other expenditure, shall not thereafter be subrogated to the rights of the Obligee as against a third-party acquirer of an immovable provided as security unless is registered after such performance or other expenditure. (2) A Guarantor shall be subrogated to the rights of the Obligee in relation to a Third Party security provider only in accordance with the proportion of the number of Third Party security providers to that of Guarantors.

With respect to subrogation arising out of a Guarantor's performance or other expenditure, in addition to the provisions set forth in Section VI, the provisions of Sub-section IV, Section I, Chapter Seven of Book Four shall apply mutatis mutandis.

(1) Should multiple persons have assumed a joint Obligation, the Obligee may demand full or partial performance from any individual Obligee or from all Obligees simultaneously or separately. (2) Should one, several or all joint Obligors have been declared bankrupt, the Obligee may seek satisfaction of the entire amount of the Obligation in the bankruptcy proceedings of each of such Obligors.

(1) A joint Obligation shall be created through the provision of law or by the express or implied agreement between the Obligee and each of multiple Obligors who are acknowledged to have in common an intention to be obligated jointly. (2) The agreement set forth in paragraph (1) may be reached between the Obligee and all Obligors simultaneously or between the Obligor and each Obligor separately. (3) The Obligee can exempt any Obligor from the joint liability with the other Obligors. (4) An Obligor who is exempted from the joint liability shall thereafter be liable only for such share of the Obligation assumed by the Obligor prior to the exemption. (5) Each joint Obligor shall be presumed to bear an equal share of the total Obligation.

The existence of grounds for nullification or recision of an act regarding a joint Obligor shall not affect the validity of the Obligation assumed by the remaining joint Obligors.

A demand for performance or other act that serves to interrupt a period of prescription that is made with respect to one joint Obligor shall be effective against all other joint Obligors.

Where one joint Obligor conducts performance, substitute act of performance or performance by deposit, the Obligation shall thereby be extinguished with respect to the other joint Obligors as well.

(1) Should one joint Obligor have a claim against the Obligee, the Obligor's offset of the claim against the Obligation shall serve to extinguish the Obligation on behalf of all joint Obligors. (2) Should the Obligor possessing the claim described in paragraph (1) not exercise an offset of such claim against the Obligation, the other Obligors may refuse to perform with respect to that Obligor's share of the Obligation.

The execution of a novation between the Obligee and any joint Obligor shall serve to extinguish the Obligation for all Obligors.

A merger between the Obligee and any joint Obligor shall be deemed to constitute performance by that Obligor.

(1) An exemption given to one joint Obligor with respect to the entire Obligation is effective with respect to the other Obligors only to the extent of the share of the Obligation for which that Obligor was responsible. (2) Should an exemption with respect to part of the Obligation be given to one joint Obligor, the exemption's effect with respect to the other Obligors shall be proportional to the effect it would have had if it had constituted an exemption with respect to the entire Obligation.

(1) Should one joint Obligor invoke the benefit of a prescription that has been perfected with respect to that Obligor, the other Obligors shall be exempted from the Obligation to the extent of the share of the Obligation for which that Obligor was responsible. (2) In the case described in paragraph (1), where the prescription has been perfected but the benefit of prescription has not been invoked, the other Obligors may invoke such prescription with respect to the share of the Obligation for which the Obligor originally eligible to invoke prescription was responsible.

Except as provided in Article 924 (Universal effect of demand or other ground for interruption of prescription period) through Article 930 (Universal effect of prescription), an event occurring with respect to one joint Obligor shall have no effect with respect to the other Obligors.

(1) Should a joint Obligor have obtained a discharge from the Obligation through his/her own performance or other expenditure, and the other joint Obligors have consequently been discharged as well, the joint Obligor may demand indemnification from the other Obligors with respect to their respective shares of the Obligation. Should the performance or other expenditure of a joint Obligor cover only a portion of the Obligation, and that Obligor and the other joint Obligors receive a discharge to that extent, the Obligor may demand indemnification in accordance with the portion of the entire Obligation that was discharged by such performance or expenditure. (2) The demand for indemnification described in paragraph (1) may include legal interest incurred after the date of discharge through performance or other expenditure, as well as unavoidable expenses and other losses.

(1) Should a joint Obligor, without notifying the other Obligors of the receipt of a demand for performance by the Obligee, obtain a discharge from the Obligation through his/her own performance or other expenditure, thereby discharging the other joint Obligors as well, another Obligor who had grounds to defend against the Obligee's claim may raise such grounds, to the extent of such Obligor's share of the Obligation, as a defense to a claim for indemnification by the joint Obligor who obtained a discharge from the Obligation through performance or other expenditure. However, should the other Obligor's grounds for defense against the Obligee consist of an offset, the Obligor against whom the defense is raised may demand that the Obligee perform such counter-obligation that should have been extinguished by the offset. (2) Should a joint Obligor obtain a discharge from the Obligation through his/her own performance or other expenditure and fails to notify the other Obligors that they are thereby discharged from the Obligation as well, and another joint Obligor thereafter obtains a discharge from the Obligation by tendering performance or other expenditure to the Obligee without knowledge of the discharge obtained as a result of the first joint Obligor's performance or expenditure, the second joint Obligor may deem his/her own performance or other action discharging the Obligation as effective. (3) Should performance or other expenditure that would discharge the Obligation be made by multiple joint Obligors, if the notification described in paragraphs (1) and (2) is not provided, the discharging performance or other expenditure that is made first in time shall be deemed effective.

Should a joint Obligor lack the financial capacity to make performance, the amount of that Obligor's liability for performance shall be borne by the Obligor demanding performance and by the remaining joint Obligors having such capacity in proportion to their respective share of the Obligation. However, should the Obligor demanding performance be negligent, such Obligor may not demand performance from the other Obligors for the financially incapable Obligor's share of the Obligation.

Obligor's share Should a joint Obligor obtain an exemption from joint liability with other Obligors, if any of the other Obligors lacks the financial capacity to make performance, the Obligee shall assume that share of the performance amount imputed to the financially incapable Obligor for which the Obligor exempted from the joint liability would otherwise be liable.

(1) Should a joint Obligor obtain the right to demand indemnification from the other Obligors, such Obligor shall succeed to the claims possessed by the Obligee against the other Obligors to the extent of such indemnification, and shall be subrogated to the position of the Obligee in regard to any security interests securing such claims. (2) The provisions of Book Four, Chapter Seven, Section I, Sub-section IV shall apply mutatis mutandis to the subrogation of an Obligor seeking indemnification.

Obligations (1) Should multiple Obligors owe the same Obligation to a single Obligee, if the Obligors are not acknowledged to have in common the intention to assume joint and several responsibility with the others, the provisions of Article 921 (Definition of joint Obligation) shall apply mutatis mutandis. However, should performance of the Obligation be divisible, and divided performances will cause harm to the Obligee, each Obligor shall assume a divided and separate Obligation corresponding to his/her respective share. Should each Obligor's share be unable to be determined, each share shall be presumed to be equal. (2) In the case set forth in the first sentence of paragraph (1), events occurring with respect to one Obligor shall not affect the other Obligors except in the cases described in Article 925 (Universal effect of performance) and paragraph (1) of Article 926 (Universal effect of offset). (3) Should an Obligor described in the first sentence of paragraph (1) obtain a discharge of the Obligation through his/her own performance or other expenditure, and the other Obligors are thereby discharged as well, if it is necessary to preserve fairness between the performing Obligor and the other Obligors, the performing Obligor may, to the extent necessary to preserve fairness among the Obligors, demand indemnification from the other Obligors.