Judicial mortgages and pledges: securing your claim on a building or a business

Seizures of property, as we have already seen, are designed to freeze assets. Sometimes, however, the aim is not to prevent the debtor from using his assets, but rather to secure priority over a valuable asset should it be sold. A creditor may wish to secure its claim on the debtor's property or business, without completely paralysing the debtor's business or daily life.

This is where the judicial sureties. Unlike conventional securities which arise from an agreement between the parties (such as a mortgage granted on a property loan), judicial securities are imposed by a court decision, at the request of the creditor. The two main types of security are the judicial protective mortgage for real estate and the judicial protective pledge for business assets. These mechanisms enable a creditor to take out a solid guarantee, even against the will of the debtor, without making the asset completely unavailable. Let's find out how these guarantees work, from provisional publicity to final publicity, and what their practical effects are.

What is a judicial surety?

A judicial surety is therefore a guarantee taken out on a specific asset of the debtor, ordered by a judge to secure a debt whose recovery appears to be threatened (articles L. 511-1 and L. 531-1 of the Code of Civil Enforcement Procedures - CPCE).

The fundamental difference with a precautionary seizure lies in the fate of the asset: an asset encumbered by a court-ordered charge remains alienable (article L. 531-2 of the CPCE). This means that the debtor can still sell his property or business, even if it is subject to a mortgage or judicial pledge. However, as we shall see, the creditor benefiting from the security retains significant rights over the property or its sale price. The emphasis here is on priority and the resale rightrather than outright blocking.

What types of property are covered? The law is very precise and limits the possibilities. Article L. 531-1 of the CPCE expressly covers :

• The buildings (house, flat, land, etc.): the security will take the form of a protective judicial mortgage.
• The business capital safety will be a protective judicial pledge. As a reminder, a business is a collection of items enabling the operation of a commercial or craft activity (customer base, business name, leasehold rights, specific equipment, any licences, etc.).
• The shares and other securities These specific cases will be dealt with in a later article.

It is not possible to take out a security interest in other types of property.

How does a court security order work? Publicity in two stages

The effectiveness of a security (whether judicial or contractual) depends on its publicity: third parties (other creditors, potential buyers, etc.) must be informed of its existence. In the case of judicial sureties, publicity is carried out in two separate but related stages: provisional publicity, followed by definitive publicity.

Provisional advertising: setting a date

This first stage is crucial because it allows you to "take the date", i.e. to establish the ranking of your guarantee in relation to other creditors or rights that may be registered subsequently on the same property.

1. Obtain authorisation (or exemption) : As with any precautionary measure, in principle you need to obtain authorisation from the Juge de l'Exécution (JEX) or, in certain cases, from the President of the Tribunal de Commerce (we explain the procedure and exceptions in our article on this subject).
2. Completing the publication formalities : Once authorisation has been obtained (or if you are exempt), you must proceed with provisional advertising. The formalities vary depending on the property:
   • For a mortgage on an immovable : Two copies of a document called a "bordereau" must be filed with the Service de la Publicité Foncière (SPF) responsible for the property (article R. 532-1 of the CPCE). This form contains precise information about the creditor, the debtor, the property, the secured debt and the judge's authorisation.
   • For a pledge on a business : Two similar forms must be filed with the registry of the Commercial Court within whose jurisdiction the business is operated (article R. 532-2 of the CPCE).
3. Meeting deadlines: If judicial authorisation has been required, this provisional publicity must be carried out within a reasonable time. three-month period following the date of the judge's order (article R. 511-6 of the CPCE), failing which the authorisation will lapse. The date of filing at the SPF or the registry is essential because it determines the initial ranking of your security. It's a bit like reserving your place in a queue: you make a date for your security.
4. Informing the debtor : Very important: in eight days Once this provisional publicity has been completed, you must notify your debtor by bailiff's deed (article R. 532-5 of the CPCE). This document must contain a copy of the authorisation or title, an indication of the debtor's right to contest it and a reproduction of certain legal articles. Failure to provide this information within the time limit will render the provisional advertisement null and void.

How long does this temporary advertising last? It retains security for three years. If, after three years, the situation has not been resolved (you have not yet obtained a final judgment, for example), it is possible (and often essential) to take the case to the court. renew for a further period of three years, so as not to lose the rank acquired (article R. 532-7 of the CPCE).

Final advertising: consolidating the guarantee

Temporary advertising is, as its name suggests, only temporary. To make your guarantee permanent, you must consolidate it with a definitive advertisement.

1. Prerequisite: a final enforcement order : The condition sine qua non in order to proceed to final advertising is to have obtained a Enforcement order confirming your claimand that this title is res judicata (i.e. it is no longer subject to suspensive appeal like an appeal) (article R. 533-4 of the CPCE). It is therefore generally necessary to wait until the end of a trial and obtain a final judgment.
2. The crucial two-month deadline: Please note that once you have this final writ of execution, you have a period of three months in which to obtain it. strict deadline of two months to complete the final publication formalities (article R. 533-4 of the CPCE). This period runs from the date on which the decision becomes final. If you miss this deadline, provisional publicity will become compulsory. null and void (article R. 533-6 of the CPCE): it is cancelled retroactively, as if it had never existed, and you lose all the benefit of the guarantee and rank you had acquired!
3. Formalities: They consist of carrying out a new registrationthis time definitive, on the basis of the judgment obtained:
   • For the mortgage : Filing of new forms at the SPF, referring to the provisional registration and the final judgment (article R. 533-1 of the CPCE referring to article 2428 of the Civil Code).
   • For the pledge of the business : Filing of new forms at the Commercial Court registry (article R. 533-2 of the CPCE referring to article L. 142-4 of the Commercial Code).

The major effect: maintaining rank

The main advantage of this two-stage procedure is enshrined in Article R. 533-1 of the CPCE: definitive advertising gives priority to the security on the date of the initial formality (provisional advertising). Your definitive cover therefore takes effect not on the day you finalise it, but on the day you took the first provisional step, sometimes years earlier. This retroactive effect is essential to maintain your priority against other creditors or purchasers who may have registered their rights in the meantime.

What are the practical effects for the creditor and the debtor?

Aside from the publicity mechanism, what are the practical impacts of a court order?

• The debtor may sell the property: As we have said, the building or business may still be disposed of (article L. 531-2 of the CPCE). The debtor is not dispossessed and can, in theory, continue his business or sell his property.
• But the creditor's rights are protected in the event of a sale: If the debtor sells the property before The creditor's rights are not lost until the sale is finally advertised. The law stipulates that the share of the sale price that should accrue to the creditor (depending on his claim and his provisional ranking) must be recorded (blocked in a specific account, generally at the Caisse des Dépôts et Consignations) (article R. 532-8 of the CPCE). The creditor will only receive this sum if he can prove that he has completed the final publicity within the required timeframe. Otherwise, the sum deposited will be remitted to the other creditors or to the debtor. This is an effective form of protection for the creditor, whose security is in some way linked to the value of the property.
• After final publication: preferential rights and resale rights : Once final publication has been completed, the court-ordered security interest produces the classic effects of a mortgage or pledge:
  • Preferential right : If the property is sold (voluntarily or by seizure), the creditor benefiting from the security will be paid first out of the sale price, according to his or her rank.
  • Resale rights : The creditor can have the property seized and sold, even if it has been sold to a third party after the security interest was registered. The security "follows" the property.
• Protection of the debtor : It should not be forgotten that the debtor also has means of defence. If the value of the assets encumbered by the court-ordered security is manifestly excessive in relation to the amount of the secured debt (the law requires double the value), the debtor can ask the judge to limit the security to certain assets only (article R. 532-9 of the CPCE). The creditor may also propose a replacement guarantee deemed sufficient by the judge (such as a bank guarantee), which may result in the release of the initial security (article L. 512-1 CPCE). These remedies are described in detail in our article on contesting precautionary measures.

---

Taking out a judicial mortgage or pledge is a strategic move to secure a large claim on specific assets, without necessarily blocking their use by the debtor. It is a complex two-stage procedure that requires careful attention to deadlines. A tailored advice to your situation could save you time and resources, and above all protect your rights effectively. Contact us to find out more.

Sources

• Code of Civil Enforcement Procedures (CPCE)
• Civil Code
• Commercial code