Lénsrekstur

Lénsrekstur is an Icelandic term that translates to "loan security" or "pledge." It refers to a legal mechanism in Iceland where movable property is used as collateral for a debt. This is distinct from traditional mortgages, which apply to real estate. Lénsrekstur allows individuals or businesses to leverage assets such as vehicles, machinery, or inventory to secure loans.

The process typically involves a formal agreement between the borrower and the lender. This agreement outlines the specific property being pledged, the terms of the loan, and the conditions under which the lender can claim the pledged asset if the borrower defaults. Registration of the lénsrekstur is crucial, often taking place in a public registry to ensure the lender's claim is legally recognized and enforceable against third parties.

There are different types of lénsrekstur, but the core principle remains the same: providing security for a creditor through movable property. This mechanism can be particularly useful for small businesses or individuals who may not have significant real estate holdings but possess valuable movable assets. It facilitates access to credit by reducing the risk for lenders. The legal framework governing lénsrekstur aims to balance the interests of both the borrower and the lender, ensuring fair practices and clear procedures for the creation and enforcement of such security interests.