chattel mortgage report

8/19/2019 Chattel Mortgage Report

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CHATTEL MORTGAGE (Articles 21402141)

A contract by virtue o !"ic" #ersonal #ro#erty is recor$e$ in t"e

C"attel Mort%a%e Re%ister as a security or t"e #eror&ance o an obli%ation

(Art 2140)'

not re%istere$ *LE+GE

C"aracteristics

1' Accessory contract , it is or t"e #ur#ose o securin% t"e #eror&ance o a

#rinci#al obli%ation

2' -or&al contract , re%istration in t"e C"attel Mort%a%e Re%ister is in$is#ensable

or its vali$ity

.' /nilateral contract , it #ro$uces only obli%ations on t"e #art o t"e cre$itor to ree

t"e t"in% ro& t"e encu&brance on ull&ent o t"e obli%ation'

C"attel Mort%a%e *le$%e

1' +elivery o t"e #ersonal #ro#erty to t"e &ort%a%e is not necessary 1' +elivery o

t"e t"in% #le$%e$ is necessary

2' re%istration in t"e C"attel Mort%a%e Re%istry is necessary or its vali$ity 2'

re%istration not necessary to be vali$

.' #ro#erty is oreclose$3 t"e ecess over t"e a&ount $ue %oes to t"e $ebtor .'

+ebtor is not entitle$ to ecess unless ot"er!ise a%ree$ or ece#t in case o le%al

#le$%e

4' t"ere is $eciency ater oreclosure3 cre$itor is entitle$ to recover t"e

$eciency ro& t"e $ebtor3 ece#t un$er Art' 1454

4' t"ere is $eciency3 cre$itor is not entitle$ to recover not!it"stan$in% any

sti#ulation to t"e contrary



MLARTE

1' ecure #eror&ance2' Only #ersonal #ro#erty

.' n$ivisible4' Lien on #ro#erty6' Cre$itor cannot a##ro#riate #ro#erty to "i&sel in #ay&ent o $ebt7' ncase o $eault , &ust be sol$8' Etin%uis"&ent , ull&ent or $estruction

O9enses involvin% C"attel Mort%a%e

1' :no!in%ly re&ovin% t"e #ro#erty &ort%a%e$ to any #rovince or city ot"er

t"an t"e one in !"ic" it !as locate$ at t"e ti&e o eecution o &ort%a%e

!it"out t"e consent o t"e &ort%a%ee2' ellin% or #le$%in% #ersonal #ro#erty alrea$y &ort%a%e !it"out t"e consent

o t"e &ort%a%ee an$ $uly recor$e$ in t"e C"attel Mort%a%e Re%istry

Co&&on Essential Ele&ent1' *ro#erty re&ove$ or re#le$%e2' *ro#erty !all alrea$y &ort%a%e or #le$%e$.'

#ecial Re;uisites (in a$$ition to t"e co&&on essential re;uisites)<

1' t can cover only #ersonal or &ovable #ro#erty in %eneral= "o!ever3 t"e #arties

&ay treat as #ersonal #ro#erty t"at !"ic" by its nature !oul$ be real #ro#erty=

2' Re%istration o t"e &ort%a%e !it" t"e C"attel Mort%a%e Re%ister !"ere t"e

&ort%a%or resi$es= i #ro#erty is locate$ in a $i9erent #rovince3 re%istration in bot"

#rovinces re;uire$=

.' +escri#tion o t"e #ro#erty as !oul$ enable t"e #arties or ot"er #ersons to

i$entiy t"e sa&e ater reasonable investi%ation an$ in;uiry= an$

4' Acco&#anie$ by an a>$avit o %oo$ ait" to bin$ t"ir$ #ersons3 but not or t"e

vali$ity o t"e contract'

6' t can cover only obli%ations eistin% at t"e ti&e t"e &ort%a%e is constitute$'

?OTE< A &ort%a%e containin% a sti#ulation in re%ar$ to uture a$vances in t"e cre$it!ill ta@e e9ect only ro& t"e $ate t"e sa&e are &a$e an$ not ro& t"e $ate o t"e

&ort%a%e (aca vs +avao Lu&ber Co'3 11. CRA 108)

E9ect o re%istration<



Creates a real ri%"t

T"e re%istration o t"e c"attel &ort%a%e is an e9ective an$ bin$in%

notice to ot"er cre$itors o its eistence an$ creates a real ri%"t or a lien

!"ic"3 bein% recor$e$3 ollo!s t"e c"attel !"erever it %oes' T"e re%istration

%ives t"e &ort%a%ee sy&bolical #ossession (?ort"ern Motors3 nc' vs' Co;uia375 CRA .84)'

E9ect o ailure to re%ister c"attel &ort%a%e in t"e c"attel &ort%a%e re%istry

Article 2140 &a@es t"e recor$in% in t"e C"attel Mort%a%e Re%ister an

essential re;uisite but i t"e instru&ent is not recor$e$3 t"e &ort%a%e is

nevert"eless bin$in% bet!een t"e #arties' But t"e #erson in !"ose avour

t"e la! establis"es a &ort%a%e "as no ot"er ri%"t t"an to $e&an$ t"eeecution an$ t"e recor$in% o t"e $ocu&ent'

ubect &atter o bot" is &ovable #ro#erty

A>$avit o Goo$ -ait" Oat" in a contract o c"attel &ort%a%e !"erein t"e #arti es

Dseverally s!ear t"at t"e &ort%a%e is &a$e or t"e #ur#ose o securin% t"e

obli%ation s#ecie$ in t"e con$itions t"ereo an$ or no ot"er #ur#oses an$ t"at t"e

sa&e is a ust an$ vali$ obli%ation an$ one not entere$ into or t"e #ur#ose o

rau$' (ec' 63 C"attel Mort%a%e La!)

E9ect o absence T"e s#ecial a>$avit is re;uire$ only or t"e #ur#ose otransor&in% an alrea$y vali$ &ort%a%e into F#reerre$ &ort%a%e' T"us3 it is not

necessary or t"e vali$ity o t"e c"attel &ort%a%e itsel but only to %ive it a

#reerre$ status' n ot"er !or$s3 its absence vitiates t"e &ort%a%e only as a%ainst

t"ir$ #ersons !it"out notice li@e cre$itors an$ subse;uent encu&brancers'

-oreclosure o C"attel Mort%a%e ?OTE< -oreclosure sale in c"attel &ort%a%e is

by #ublic auction un$er Act ?o' 16053 but t"e #arties &ay sti#ulate t"at it be by

#rivate sale' T"e &ort%a%ee &ay3 ater t"irty (.0) $ays ro& t"e ti&e o t"e

con$ition bro@en3 cause t"e &ort%a%e$ #ro#erty to be sol$ at #ublic auction by a

#ublic o>cer' T"e .0$ay #erio$ is also a %race #erio$ or t"e &ort%a%or to

$isc"ar%e t"e &ort%a%e obli%ation' Ater t"e sale o t"e c"attel at #ublic auction3t"e ri%"t o re$e&#tion is no lon%er available to t"e &ort%a%or (Cabral vs'

Evan%elista3 25 CRA 1000)'

A##lication o #rocee$ o sale<

1' Costs an$ e#enses o @ee#in% an$ sale

2' *ay&ent o t"e obli%ation secure$ by t"e &ort%a%e



.' Clai&s o #ersons "ol$in% subse;uent &ort%a%es in t"eir or$er

4' T"e balance3 i any3 s"all be #ai$ to t"e &ort%a%or or #erson "ol$in% un$er "i&

?OTE< T"e cre$itor &ay &aintain an action or t"e $eiciency3 ece#t i t"e

c"attel &ort%a%e is constitute$ as security or t"e #urc"ase o #ersonal #ro#erty

#ayable in instal&ents (Art' 1454)' T"e action or $eiciency &ay be brou%"t

!it"in ten (10) years ro& t"e ti&e t"e cause o action accrues (Arts 1141 an$

1142)' Only e;uity o re$e&#tion is avail able to t"e &ort%a%or= t"e latter can no

lon%er re$ee& ater t"e conr&ation o t"e oreclosure sale'

Ri%"t o re$e&#tion "en t"e con$ition o a c"attel &ort%a%e is bro@en t"e

ollo!in% &ay re$ee&< a) &ort%a%or= b) #erson "ol$in% a subse;uent &ort%a%e=

or c) subse;uent attac"in% cre$itor' An attac"in% cre$itor !"o so re$ee&s s"all

be subro%ate$ to t"e ri%"ts o t"e &ort%a%ee an$ entitle$ to oreclose t"e &ort%a%e

in t"e sa&e &anner t"at t"e &ort%a%ee coul$ oreclose it' T"e re$e&#tion is

&a$e by #ayin% or $eliverin% to t"e &ort%a%ee t"e a&ount $ue on suc" &ort%a%e

an$ t"e costs3 an$ e#enses incurre$ by suc" breac" o con$ition beore t"e sale

t"ereo (ec 1.3 Act ?o' 1605)'

Ri%"t to #ossession o oreclose$ #ro#erty 1' Real &ort%a%e , Ater t"e re$e&#tion

#erio$ "as e#ire$3 t"e #urc"aser o t"e #ro#erty "as t"e

ri%"t to a conveyance an$ to be #lace$ in #ossession t"ereo'

?OTE< *urc"aser is not obli%e$ to brin% a se#arate suit or #ossession' He &ust

invo@e t"e ai$ o t"e courts an$ as@ or a RT O- *OEO?' ection 8 o Act

?o' .1.6 allo!s t"e #urc"aser to ta@e #ossession o t"e oreclose$ #ro#erty $urin%

t"e #erio$ o re$e&#tion u#on lin% o an e #arte a##lication an$ a##roval o a

bon$'

2' C"attel &ort%a%e , "en $eault occurs an$ t"e cre$itor $esires to oreclose3 t"e

cre$itor "as t"e ri%"t to ta@e t"e #ro#erty as a #reli&inary ste# or its sale' ?OTE<

"ere t"e $ebtor reuses to yiel$ t"e #ro#erty3 t"e cre$itors re&e$y is to institute

an action eit"er to e9ect u$icial oreclosure $irectly or to secure #ossession

(RE*LE?) as a #reli&inary to t"e sale conte&#late$ in ection 14 or Act' ?o' 1605

chattel mortgage report

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