Skip to content Skip to footer
Knowledge   >   Amendment to the Portuguese Civil Code: right of retention versus mortgage

Amendment to the Portuguese Civil Code: right of retention versus mortgage

Today, the Decree-Law 48/2024 was published, limiting the situations in which the right of retention prevails over the mortgage, amending Article 759 of the Portuguese Civil Code. The aim of this amendment is to strengthen the mortgage in relation to the right of retention, since, previously, mortgage creditors, especially banks, in certain circumstances, saw their real right of guarantee arising from the mortgage succumb to the right of retention, even if it had been previously registered.

In effect, and as mentioned in the preamble now published, the position of the mortgage creditor is strengthened by limiting the prevalence of the right of retention over the previously registered mortgage to cases in which the failure to enshrine this solution would lead to the mortgage creditor making a profit at the expense of the holder of the right of retention. These situations occur whenever the holder of the right of retention has incurred expenditure on the property with a view to preserving it or increasing its value.

In view of this amendment, Article 759 of the Portuguese Civil Code will read as follows:

Article 759

(Retention of immovable property)

1 – If the right of retention is over immovable property, the respective holder, as long as the retained property has not been delivered, has the right to enforce it, under the same terms as the mortgage creditor, and, in cases where the claim ensures the reimbursement of expenses to preserve it or increase its value, to be paid in preference to the debtor’s other creditors.

2 – In the cases provided for in the final part of the previous paragraph, the right of retention takes precedence over the mortgage, even if the latter has been registered previously.

3 – Until the thing is delivered, the rules of the pledge shall apply, with the necessary adaptations, to the rights and obligations of the holder of the retention.

The amendment will only apply to retention rights that are constituted after 24th August 2024 (inclusive) and is particularly important when it comes to classifying claims, especially in insolvency proceedings.

Marina Carvalho Associate

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.