ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra
3.7 Subordinating Existing Debt to Newly Created Debt As there is no land registry in Andorra, secured debt priority is ranked by means of recording in the Andorran Notary Chamber ( Cambra de Notaris del Principat d’Andorra ). The subordination of a secured mortgage to a newly created one requires express agreement between creditors and the raising of such con - sent into the status of a public deed before a public notary. The subordination of a pledge to a newly created one requires express agreement by the parties; its documentation through a notarial deed is highly recommended. 3.8 Lenders’ Liability Under Environmental Laws Overall, Andorran environmental regulations fol - low the “polluter pays principle” and are config - ured as a strict liability system. Therefore, in an enforcement scenario, the new owner of the land corresponding to a real estate asset may be liable for any environmental dam- age caused to that specific plot of land or deriv - ing from it, even if that new owner did not cause any pollution of the real estate, irrespective of the new owner (lender) demanding liability from the prior owner (borrower) on the grounds of latent defects. 3.9 Effects of a Borrower Becoming Insolvent From a general perspective, security interests created by a borrower in favour of a lender are not made void upon the borrower’s declaration of insolvency, as the protection granted to the lender in rem guarantees and its faculties against the guaranteed asset are not affected by the
must be complied with for an entity to give valid security over its real estate assets. However, such a decision authorising the creation of valid security over specific asset(s) must be adopted according to the generic legal and statutory requirements that apply to the company. 3.6 Formalities When a Borrower Is in Default No specific formalities or obstacles need to be overcome to enforce a security over real estate against a defaulting borrower, although the granting of security over real estate by public deed before a notary is mandatory in the case of creating a mortgage and advisable regarding the granting of pledges. Priority of the lender’s security interest is deter - mined by strict order of creation ( prior tempore potior iure ). In a scenario of borrower default, legal action must be taken by the lender by means of the following. • A declarative procedure to ascertain the existence and quantification of the debt. • Filing a payment demand before the compe - tent courts after such declarative procedure. A notarial enforcement proceeding is also available if the parties have previously agreed to this proceeding and its terms and condi - tions. According to Andorran case law, the enforce - ment procedure cannot be started unless the defaulted amount corresponds to at least three defaulted instalments. The typical range of time needed to successfully enforce and realise on real property security, if such is security is a mortgage, is from six to 12 months.
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