Real (in rem) security
A real (in rem) security is a guarantee backed by a tangible asset belonging to the borrower or a third-party grantor, which grants the lender a real right over that asset. Upon default, the creditor may enforce the security — obtaining a forced sale or judicial attribution of the asset — and be repaid in priority from the sale proceeds.
Key points
- Real security differs from personal security in that it encumbers a specific asset rather than engaging the general assets of a person.
- The main real securities over real property in France are the conventional mortgage and the lender's special legal mortgage (formerly PPD).
- The lender holds a right of pursuit (the security follows the asset regardless of ownership transfer) and a right of priority (the lender ranks above unsecured creditors).
- Creating a real security over real property requires a notarial deed and registration with the land publicity service (publicité foncière).
- Release (mainlevée) of the security once the loan is repaid also requires a notarial deed, generating additional fees.
Frequently asked questions
Why do banks sometimes prefer a real security over a surety arrangement?
A real security gives the lender protection directly backed by the value of the financed property, independent of a third-party surety's solvency. For large-amount loans, SCI-structure financing, or atypical profiles (irregular income, higher-risk borrowers), a bank may consider the real property a more robust and predictable guarantee than a surety organization.
How is a real security created over a property?
Creating a real security over real property requires an authentic notarial deed specifying the secured amount, the security's rank, and the encumbered asset. This deed is then filed with the competent land publicity service, making the security enforceable against third parties and establishing the creditor's ranking relative to other holders of rights in the property.
What is the difference between a real security over movable property and one over real property?
A real security over movable property encumbers a personal asset (vehicle, business goodwill, company shares, securities portfolio), while a real security over real property encumbers a building or land. In residential mortgage lending, only real property securities are relevant: the conventional mortgage and the lender's special legal mortgage. Movable securities (pledge, lien) are more common in business financing or wealth structuring.
In practice
An investor purchases a rental building for €850,000. As the property is ineligible for a mutual guarantee organization's surety due to its investment-property status, the bank takes a first-ranking conventional mortgage over the building. This real security gives the bank the right to seize and force-sell the property if payments are persistently missed.
Official sources
- Article 2323 of the Civil Code (real security) · Légifrance
- Mortgage credit (official guide) · Service-Public.gouv.fr
- Housing and financing information · ANIL