Good news for title retention agreements in Spain
In the modern era of the internet, digitalization and telematic management, one area of private and registration law remained inexplicably anchored in the past and caused real headaches for businesses and legal practitioners - to wit, registering hire-purchase contracts for moveable assets with retention of title in provincial Personal Property Registries.
First of all, we should remember how important it is to register contracts, as this is the only way to guarantee that a title retention agreement can be used against third parties and, especially, to deploy its full protective efficacy in arrangements with creditors, making the deferred outstanding price a special privilege credit or, where applicable, enabling the recovery of the sold item if the contract is terminated.
But to register these contracts and important title agreements in the Personal Property Registry, the law mandated the use of official forms approved and designed by the General Directorate for Registries and Public Notaries more than 15 years ago.
The forms could only be acquired from the Personal Property Registry in person, were carbonless and had to be completed by manual or mechanical means, which not only meant dusting off the old typewriter but also made for an awkward, impractical system.
Fortunately, the General Directorate for Registries and Public Notaries resolution of 21 February 2017 has alleviated this deplorable situation by agreeing, in its first phase, to digitalize the official forms for HP contracts to make them accessible to companies over the Registry website so they can be completed directly online.
The resolution also indicates that the second phase will consist of the possibility of the online and telematic filing of hire-purchase contracts, which will undoubtedly entail a very significant advance in this area, streamlining the processing and registration of title retention agreements so that companies will even be able to handle them themselves by electronic means using their digital signature, thus saving time and money.
However, in the case of valuable assets and machinery that has to be integrated in the purchaser’s production lines, we recommend that companies seek suitable legal advice to prevent the asset or machine in question from being considered necessary for the continuance of the purchaser’s professional or business activity, introducing the appropriate precautionary measures to enable the asset to be recovered without having to wait for the approval of an agreement whose content does not affect the exercise of the right to enforce the security.
The situation is the same in cases where the deferred-price payment schedule is premised on future events, as is the norm with the acceptance or commissioning of sold assets. In these cases, it is strongly advisable to get advice on including additional clauses so that payment dates can be adapted to possible arrears, providing the contract with the necessary legal determination and security.
In conclusion, the digitalization of official hire-purchase forms with retention of title is a major step forward that will allow companies to directly manage contract registration themselves, although in certain cases it will still be advisable to get outside advice to ensure greater legal certainty.