Tagatisust

Tagatisust refers to collateral that secures the performance of an obligation, most commonly in lending and credit agreements. It is a way for a creditor to reduce risk by having a source from which repayment can be made if the debtor defaults. The collateral can be provided by the debtor or by a third party who undertakes to satisfy the obligation if the debtor fails to do so.

In Estonian law, the use of collateral is governed by the Law of Obligations Act and related regulations. For real estate, a common form is a mortgage on immovable property, often registered in the land register as a real security right. This gives the creditor a priority claim against the property and enables enforcement through sale if the debt remains unpaid. For movable property, a pledge (pant) may be created by agreement, sometimes with possession transferring to the creditor or to a custodian to secure the debt. A personal guarantee by a third party is another form of tagatis, where the guarantor promises to fulfill the obligation if the debtor defaults.

The primary purposes of tagatisust are to enable lenders to offer credit on favorable terms and to provide a clear mechanism for recovering owed amounts. The enforcement process and the release of collateral depend on the type of security and on applicable procedure in law, including valuation, registration, and termination of the security right. Properly managed collateral arrangements reduce credit risk but require careful documentation and compliance with legal requirements.