Legal Framework
Security rights in Lithuania are primarily governed by the:
- Civil Code of the Republic of Lithuania;
- Law on the Mortgage Register;
- Law on the Register of Property Seizure Acts.
Lithuania is also subject to relevant EU regulations, such as the Financial Collateral Directive.
Types of Security Rights
The main types of security rights in Lithuania include:
- Pledge (įkeitimas): A movable asset or right is given as security;
- Mortgage (hipoteka): A real estate property is encumbered as security;
- Financial Collateral: Special regime under EU law for cash, securities, and financial instruments;
- Retention of Title: Ownership remains with the seller until full payment is made;
- Suretyship or Guarantee: A third party undertakes personal liability for the debtor’s obligations.
Creation and Perfection of Security Rights
To be valid and enforceable against third parties, most security rights must be:
- Formally documented in writing.
- Registered in the appropriate public register.
Registration establishes priority in enforcement proceedings and protects the secured creditor’s rights in insolvency.
Registration Requirements
- Mortgages have to be registered in the Real Property Register;
- Pledges have to be registered in the Register of Contracts and Rights Restrictions;
- Financial collateral may be valid without registration, if conditions under EU law are met.
Enforcement of Security Rights
If a debtor defaults, the creditor may enforce the security through:
- Out-of-court procedures, when this is agreed in advance and notarized (common in mortgage contracts).
- Judicial enforcement, by filing a claim and executing via court and bailiff.
The secured asset may be seized and sold, with proceeds used to satisfy the secured debt.
Priority and Ranking
Secured creditors are ranked based on the order of registration. Earlier-registered rights generally take precedence over later ones, unless otherwise stipulated by law or contract.
Cross-Border and EU Context
Lithuania applies EU regulations on cross-border recognition of security rights. Important instruments include:
- Brussels I Regulation (jurisdiction and enforcement)
- Rome I Regulation (choice of law)
- Financial Collateral Directive (for financial markets)
These ensure cross-border enforceability and legal certainty for foreign investors and lenders.
Recent Reforms and Trends
Lithuania has taken steps to modernize its pledge and mortgage regime, aiming to improve transparency, simplify registration, and align with best practices in the EU. Digital registration and unified enforcement platforms are among the ongoing improvements.