Register of liens

What it means

The register of liens is a public register kept by notaries in which liens over movable assets, receivables, business shares or an entire enterprise are recorded. It is part of the Notarial Central Register, and anyone can search it online.

A lien over these assets generally arises only on registration, not when the agreement is signed. Registration also determines priority: a secured creditor with an earlier entry is paid before later ones. It is therefore important for a creditor to register the lien as soon as possible.

Liens over real estate are not recorded here but in the land register. The register of liens thus complements the land register for other kinds of assets that would otherwise have no public record of encumbrances.

How it works in practice

Before buying a car, machine or business share, check the register to see whether it is subject to a lien. A lien generally follows the asset to the new owner, and the secured creditor could enforce against it even after the sale.

When lending, a bank usually takes security over machinery, inventory, receivables or a shareholder's stake and arranges registration with a notary. For the company this means it cannot freely deal with such assets, for example sell them, without the bank's consent.

Once the debt is repaid, the lien must be deleted from the register. This does not happen automatically; a notary usually arranges it on the basis of the creditor's confirmation. A forgotten entry can later complicate a sale or a new loan.

What to watch out for

If a lien is not registered although the agreement was signed, the creditor may lack the security it counted on. In the debtor's bankruptcy it may then be an unsecured creditor with much poorer prospects of recovery.

Register entries must be precise: the asset, the pledgor and the debtor must be identified unambiguously. A vaguely described collateral, such as simply all machinery without further detail, can lead to disputes over what was actually pledged.