Special hypothecs and special privileges on movables : reasons, effects and implications

Abstract

Up till the emergence of the proposed amendments contained in the Civil Code (Amendment) Act (as firstly proposed in Bill 79 of 2006 and as later enshrined in Act VIII of 2007), movables, under our law were always considered as being objects upon which a special hypothec could not be created - the practice being that only where immovables were concerned, would one be able to create and register a hypothec or better still, a special hypothec, attaching to such immovable with the result that the obligation linked to such hypothec would remain in existence notwithstanding a sale of such immovable property until the obligation for which the hypothec would have been created, would be satisfied. The guarantee would continue to attach to the immovable property, until the obligation for which the hypothec would have been created would be satisfied by the debtor of such obligation, notwithstanding that the property would have passed to a third party. The concept of a hypothec owes its origin to Roman Law, which however saw the concept being quite different from the concept of hypothecation existing in our times however it served to create a better environment in the context of commerce and finance by providing a means of obtaining credit and a means for securing further one's obligations in relation to such credit.