Collateral is not distrust: it is price
Every loan comes down to two questions: can they pay? and what happens if they don't? Collateral answers the second one. When the lender has an enforceable backstop, the risk drops — and with it, the rate and the rigidity of the terms. That is why at Tunton we ask for ample collateral: not to keep the asset, but to be able to say yes faster and on better terms.
Mortgage: the queen of collateral
A mortgage (hipoteca) is an in rem right over a piece of real estate that is not handed over to the lender: you keep using your house, premises or land. (CCF —Federal Civil Code— arts. 2893 et seq.) It is created by public deed before a notary and registered in the state's Public Registry of Property. That registration is what makes it enforceable: any third party who checks the property's record will know the lien exists.
- Advantage: it is the strongest form of collateral and the one that supports the highest amounts.
- Cost: notary fees and registration duties; the process takes longer than a pledge.
Pledge: with and without delivery of the asset
A pledge (prenda) is placed on movable property. In an ordinary pledge (LGTOC —General Law of Negotiable Instruments and Credit Operations— arts. 334–345) the asset or its title is handed over to the lender — this is the typical arrangement with gold, jewelry or watches held in custody. In a non-possessory pledge (prenda sin transmisión de posesión) (LGTOC arts. 346–380) you keep the asset and go on using it: this is how you secure a loan with machinery that keeps producing, vehicles that keep circulating or inventory that keeps turning over.
The detail almost no one takes care of: for movable collateral to have effect against third parties, it must be registered in the Single Registry of Movable Collateral (Registro Único de Garantías Mobiliarias, RUG) (CCom —Commercial Code— arts. 32 bis 1 to 32 bis 9). Registration is online and low-cost; skipping it leaves the lender lined up behind anyone who did register.
Aval and joint obligor: people who answer for the debt
When the backstop is an additional person, there are two figures that get confused and are not the same thing:
- Aval (guarantor on a negotiable instrument): a figure of credit instruments. Whoever guarantees a promissory note answers for its payment autonomously (LGTOC arts. 109–116, applicable to the promissory note via art. 174). It is enforced through the fast securities route.
- Joint obligor (obligado solidario): a figure of the contract. They are bound on the same terms as the principal debtor (CCF arts. 1987–1988); the lender can demand the full amount from either of them.
In a well-assembled file the two usually coexist: the third party signs the contract as a joint obligor and the promissory note as an aval.
The owner of the collateral does not have to be the debtor
A relative or business partner can mortgage their real estate or pledge their asset to back your loan, without being the one who receives it. Legally they are a third-party guarantor; commercially, it is the door that opens credit for someone who has cash flow but not yet any assets. That said: that third party must understand that their asset answers just as if they were the debtor.
Certain date (fecha cierta): the final lock
A private contract is valid between the parties, but against third parties —other creditors, the tax authority— it needs a certain date (fecha cierta). The SCJN (Mexican Supreme Court) recognizes it in three ways: registration in a public registry, presentation before a public officer, or death of one of the signatories (jurisprudence 2a./J. 161/2019, Second Chamber). The sound practice: ratify signatures before a notary or register the collateral. Signing "between friends" and keeping the paper in a drawer is betting that there will never be a dispute.