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Commercial Pledge

A commercial pledge (Prenda)protects the creditor against third parties that claim an interest in the collateral, allows the creditor to foreclose on the property and apply all proceeds to the outstanding debt, and grants preference against a bankruptcy trustee and all other creditor types including tax claims. A pledge or trust agreement granted over movable property must be in writing and registered with the federal personal property collateral registry (Registro Único de Garantías Mobiliarias or RUG).

Under the RUG, collateral may be pledged in three ways:

  1. Ninguno – All products that are being sold by the customer/debtor
  2. Bienes específicos – Assets that can be specifically identified
  3. Todos los bienes de la empresa – All assets that are currently owned

Compliance requires:

  1. Three documents, written in Spanish
    1. A non-possessory pledge signed by the debtor
    2. A credit application
    3. A promissory note
  2. Authentication of the debtor’s identity by a Mexican notary public
  3. A copy of the debtor’s articles of incorporation, federal tax registration and electronic registry numbers.
  4. The completed, signed and notarized pledge agreement recorded in the public registry.

Non-Possessory Pledge

The equivalent of a non-possessory lien, a non-possessory pledge is the legal claim against an asset in order to secure payment of the debtor's obligation. In a non-possessory pledge the creditor does not hold physical possession of the asset in question, only a legal right.

Collateral Trust

The collateral, or guarantee, secures payment by transferring into trust all types of assets (real property, moveable assets and rights). Through a trust agreement, the borrower transfers title to a trustee in order to secure payment for the goods. Should a default occur, the creditor (beneficiary) can foreclose on the collateral by requesting that the trustee execute the trust’s assets to pay the outstanding debt.

Floating Lien Pledge

A non-possessory pledge, the floating lien pledge allows the debtor to pledge its inventory and receivables to the creditor without transfer of the property. This pledge allows the debtor to sell or use the pledged property and assets in the normal course of business without the need to secure permission from the creditor. The debtor can also submit newly acquired assets as collateral without requiring additional filing. A floating lien pledge can be documented and registered in the Sole Guarantee Registry (Registro Único de Garantías Mobiliarias) (SGR) making it enforceable against third parties.

Conditional Sale (venta con cláusula rescisoria)

The sale of goods according to a contract containing conditions, typically that ownership does not pass to the buyer until after a set time, usually after payment of the last installment of the purchase price, although the buyer has possession and is committed to acquiring ownership. U.S. exporters that have entered into a valid contract with their Mexican customer may enforce the contract of conditional sale in Mexican court to secure payment and damages. However, if the contract was executed without a promissory note or similar security, obtaining a judgment can often take several years and no lien is placed on the debtor’s assets pending the resolution.

Pagarés (Promissory Note)

The pagaré is the equivalent of the “promissory note”. It is a simple document where a debtor unconditionally promises to pay his creditor a certain amount of money. While the pagaré is not theoretically a security device (in the sense that it creates a security interest in certain collateral), it does add some level of security to a creditor that is looking to make a loan.


  • Access to executive proceeding - The pagaré grants a privileged legal action to creditors. By supporting your claim on a pagaré (instead of a loan or sales agreement), you gain access to an executive proceeding which will generally take less time to reach judgment (from 1 to 2 years), as opposed to the ordinary proceeding, which takes anywhere from 1 to 4 years.
  • Immediate attachment – A pagaré provides the creditor the opportunity to obtain a writ of attachment following the filing of the complaint pleading, which allows him to seize assets from his debtor immediately without the need for a bond.
  • Legal presumption of debt - The unconditional nature of the promise inserted to the pagare turns most burdens of proof on debtors during proceedings.

Further Reading: “Pledges and Pagarés in Mexico”, Romelio Hernandez, HMH Legal, Business Credit Magazine (Part One) (Part Two)

Personal Guarantee (Aval)

An aval is a personal guarantee granted by a third party (usually the customer’s bank) and is a promise to pay a negotiable instrument in case of default by the obligor. Under an aval, the customer is considered jointly and severally liable with the obliger and the creditor may collect payment directly from the bank without exercising rights against the customer.

Title Retention Contract (venta con reserva de dominio)

In a Title Retention Contract the buyer holds physical possession of the goods while the seller retains the title until the buyer has paid in full. Only when the debt is cancelled will the buyer be considered the owner of the movable property or real estate. While the buyer has the goods in their possession, use is contingent upon permission from the seller and the buyer takes on the risks of loss or damage.

Cross Corporate Guarantee

Difficult to pierce corporate veil in Mexico so a Cross Corporate (Parent) Guarantee is recommended. Sample Cross Corporate Guarantee