Chapter IV: Guarantee trusts

Ownership of real estate may be assigned as security for an obligation under a trust agreement entered into pursuant to the articles 2011 to 2030. The secured obligation may be present or future; in the latter case, it must be determinable. Notwithstanding Article 2029, the death of the natural person settlor does not terminate the trust contract created under this chapter.

In the event of a trust entered into by way of security, the contract shall mention, on pain of nullity, in addition to the provisions set out in Article 2018, the debt secured.

In the absence of payment of the secured debt and unless otherwise stipulated in the trust agreement, the trustee, where it is the creditor, acquires free disposal of the property assigned as security. Where the trustee is not the creditor, the creditor may require the trustee to surrender the property, which it may then freely dispose of, or, if the agreement so provides, to sell the property and remit all…

If the beneficiary of the trust has acquired free disposal of the property pursuant to Article 2488-3, he shall pay to the settlor, where the value mentioned in the penultimate paragraph of that Article exceeds the amount of the debt secured, a sum equal to the difference between that value and the amount of the debt, subject to the prior payment of debts arising from the conservation or management of…

Property assigned pursuant to Article 2488-1 may subsequently be assigned to guarantee debts other than those mentioned in the constitutive act provided that the latter expressly so provides. The settlor may offer it as security, not only to the original creditor, but also to a new creditor, even if the first has not been paid. Where the settlor is a natural person, the trust assets may then be used as…