What Is the Difference Between a Mortgage and a Pledge Under the Bulgarian Special Pledges Act (SPA)

In Bulgarian law, a mortgage and a pledge under the Special Pledges Act (SPA) are two different methods of securing obligations, both serving to guarantee the fulfillment of a given debt. Although they share the same purpose — securing the creditor’s interest — they differ significantly in their legal nature, as regulated by the Law on Obligations and Contracts (LOC), the Law on Ownership (LO), and the Special Pledges Act (SPA).

1. Subject of the Security

A mortgage can be established only on real property — for example, an apartment, house, plot, building, or construction right. It constitutes a real right that burdens the property, regardless of its future ownership.

A pledge under the SPA, on the other hand, may be established over movable property and property rights, including receivables, company shares, commercial enterprises, bank accounts, machines, vehicles, etc. According to Article 4 of the SPA, a pledge may also cover a set of assets or rights, including future ones.

2. Registration and Opposability

A mortgage must be registered in the Property Register with the Registry Agency. The registration has a constitutive effect — the mortgage arises from the moment of registration.

A special pledge is registered in the Central Register of Special Pledges (CRSP) or another register, depending on the pledged object. Unlike a mortgage, the pledge may be established without transferring possession — this is its key “special” feature.

Registration in CRSP has a declarative effect, but is necessary to make the pledge enforceable against third parties — the creditor has priority only if the pledge is duly registered.

3. Possession and Use

In the case of a mortgage, the debtor retains possession and use of the property until default occurs. The creditor cannot use or manage the property.

Similarly, in a pledge under the SPA, the debtor usually keeps possession and can continue using the pledged assets (e.g., equipment, vehicles, business enterprise). This similarity makes the SPA pledge more flexible than a traditional possessory pledge.

4. Enforcement in Case of Default

For a mortgage, the creditor must obtain a writ of execution and initiate a public sale under the Civil Procedure Code (CPC). The sale is carried out by a state or private enforcement agent, and the proceeds are distributed among creditors.

For a special pledge, the creditor can satisfy their claim without a court procedure, through direct enforcement under the SPA — for example, by selling the pledged property on behalf of the pledgor (Articles 32–36 SPA). This makes it a faster and more efficient mechanism for creditor satisfaction.

5. Legal Nature

A mortgage is a real right on another’s immovable property — it follows the property regardless of ownership transfer. The buyer of a mortgaged property acquires it with the encumbrance.

A special pledge has a contractual (obligatory) nature — it creates a right of preference but is not a real right in the classical sense and does not necessarily “follow” the asset upon transfer, unless provided by law.

Summary

Conclusion

Both the mortgage and the special pledge are key legal instruments for securing receivables in civil and commercial transactions. Their main difference lies not only in the type of assets involved (immovable vs. movable) but also in the flexibility and speed of enforcement. The SPA pledge represents a modern mechanism for dynamic business relations, while the mortgage remains the traditional and stable tool for real estate transactions.