veðréttindi

Veðréttindi are a form of security interest in Icelandic law that attach to a property to secure the performance of an obligation, typically the repayment of a loan. The holder of a veðréttindi has a right to satisfaction from the encumbered asset if the debtor fails to meet the obligation. Veðréttindi are commonly used to secure loans but can apply to various types of claims and properties.

Veðréttindi can attach to real estate (fasteign) as well as movable property (lausafé), and often arise from contractual agreements between debtor and creditor. To be effective against third parties, veðréttindi must be registered in the appropriate registry, such as the veðskrá for real estate mortgages. The order of priority among several veðréttindi on the same asset generally depends on the date of registration, with earlier registrations typically having priority over later ones.

Enforcement of veðréttindi occurs when the secured obligation is not fulfilled. The creditor may obtain a court order for sale of the encumbered asset, or pursue a private or public sale, to satisfy the debt from the proceeds. Costs and the balance, if any, follow in a statutory order, with the creditor's claim satisfied from the sale first, and any surplus returned to the debtor. In cases of multiple veðréttindi, those with higher priority are satisfied before those with lower priority.

When the secured obligation is discharged, veðréttindi are released by removing the registration, and the asset becomes free of the encumbrance. Veðréttindi thereby provide a mechanism for lenders to manage risk while allowing asset owners to use collateral in financing.