Öryggiskrafas

Öryggiskrafas is a term of Icelandic origin that translates to "security interest" in English. It refers to a legal right granted to a creditor over the assets of a debtor as collateral for a debt. This security interest provides the creditor with a claim on the specific assets, allowing them to seize and sell them if the debtor defaults on their loan obligations.

In Icelandic law, an öryggiskrafa can be established through various legal instruments, such as pledges, mortgages, or charges. These agreements are typically registered to ensure public notice and priority among creditors. The specific types of assets that can be subject to an öryggiskrafa include real estate, vehicles, inventory, accounts receivable, and other personal property.

The purpose of an öryggiskrafa is to reduce the risk for the creditor. By having a claim on specific assets, the creditor is in a more favorable position compared to unsecured creditors in the event of the debtor's insolvency. This encourages lending and facilitates access to credit for businesses and individuals. The legal framework governing öryggiskrafa in Iceland aims to balance the interests of creditors and debtors, ensuring fairness and predictability in commercial transactions.