Last Updated on June 27, 2021 by LawEuro
German Civil Code (BGB) German law
Division 7
Provision of security
Section 232
Types
(1) A person who is required to provide security may do so: by the deposit of money or securities, by the pledge of claims that are registered in the Federal Debt Register [Bundesschuldbuch] or the Land Debt Register [Landesschuldbuch] of a Land, by the pledge of movable things, by the creation of ship mortgages on ships or ships under construction which are recorded in a German ship register or a ship construction register, by the creation of mortgages on land within the country, by the pledge of claims for which there is a mortgage on land within the country, or by the pledge of land charges or annuity land charges on land within the country.
(2) If security cannot be provided in this manner, it is admissible to furnish a reasonable surety.
Section 233
Effect of deposit
When the deposit is made, the person entitled acquires a security right over the money deposited or the securities deposited and, if the money or the securities pass into the ownership of the treasury or the institution designated as the depositary office, a security right over the claim for reimbursement.
Section 234
Suitable securities
(1) Securities are only suitable for the provision of security if they are made out to the bearer, have a market value and are of a kind in which money held in trust for a ward may be invested. Instruments made out to order and endorsed in blank are equivalent to bearer instruments.
(2) The interest coupons, annuity coupons, dividend coupons and renewal coupons are to be deposited with the securities.
(3) Securities may be provided as security only up to the amount of three quarters of their market value.
Section 235
Right to exchange
A person who has provided security by depositing money or securities is entitled to exchange the money deposited for suitable securities and the securities deposited for other suitable securities or for money.
Section 236
Registered claims
A registered claim against the Federal Government or a Land may be provided as security only up to the amount of three quarters of the market value of the securities the delivery of which the creditor may demand in return for cancellation of his claim.
Section 237
Movable things
A movable thing may be provided as security only up to the amount of two thirds of its estimated value. Things may be rejected as security if their spoilage is to be feared or if their safekeeping involves special difficulties.
Section 238
Mortgages, land charges and annuity land charges
(1) A mortgage claim, a land charge or an annuity land charge is suitable as security only if it complies with the requirements for the investment of money held in trust for a ward in mortgage claims, land charges or annuity land charges at the place where security is provided.
(2) A claim secured by a debt-securing mortgage is not suitable as security.
Section 239
Surety
(1) A surety is qualified if he possesses property appropriate for the amount of security to be provided and is subject to general jurisdiction within the country.
(2) The declaration of suretyship must contain a waiver of the defence of unexhausted remedies.
Section 240
Duty to supplement security
If the security provided becomes insufficient without this being the fault of the person entitled, it is to be supplemented or another security is to be provided.
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