At Cultura Legal, we frequently see the same case: companies that sell machinery, equipment, or high-value vehicles, with the transaction backed only by the corresponding invoice. As long as the buyer pays on time, everything works fine. The problem shows up when the buyer stops paying, and the company discovers that its only tool for recovering the money is a long, costly, and uncertain court process.
This situation has had a legal solution in Guatemala for more than a decade. It’s called a security interest (garantía mobiliaria), and in this article we explain exactly how it works.
What Is a Security Interest?
Decree 51-2007, the Law on Security Interests (Ley de Garantías Mobiliarias), unified under a single legal framework all the security devices that previously existed separately over movable property: the common pledge, the industrial pledge, guarantees over trade invoices, and in general any movable asset—tangible or intangible—that can back a payment obligation.
In simple terms: it’s the legal mechanism that lets a seller or creditor ensure that, if the buyer doesn’t pay, they have the right to collect directly against the asset sold, with priority over other creditors.
What Assets Can Be Used as Collateral?
The law is broad. Among the most common in Guatemalan business practice:
- Machinery and industrial equipment.
- Vehicles and fleets.
- Inventory and merchandise.
- Accounts receivable (invoices pending payment from a third party).
- Certificates of deposit and other negotiable instruments.
How Is It Created and Registered?
The process, broadly speaking, follows three steps:
- Security agreement or clause: the agreement between the parties is documented in writing, specifying the asset and the obligation it secures.
- Registration form: submitted to the Registry of Security Interests (Registro de Garantías Mobiliarias), a division of the Ministry of Economy that has operated electronically since January 1, 2008.
- Public registration notice: once registered, the security interest is public and enforceable against third parties.
This last point is key: the law establishes that priority—that is, who has priority of payment over other creditors—is determined by the moment the security interest was made public through registration, not by the date of the sale or the date of the invoice.
The Difference Between an Invoice and a Security Interest
This is the point that generates the most confusion among business owners.
An invoice proves that a commercial transaction took place: that something was sold and a payment obligation arose. It’s an accounting and tax document.
A security interest is a different legal tool: it gives the seller a property right over the asset sold, which can be enforced if the buyer defaults.
Without a registered security interest, a seller who isn’t paid ends up in the same position as any other unsecured creditor: at the back of the line, competing with all of the buyer’s other creditors to recover their money. With the security interest registered, they have priority over that specific asset.
What Happens If the Buyer Defaults?
If the security interest was properly created and registered, the creditor can initiate enforcement proceedings to recover the asset or its value, through a more direct procedure than an ordinary collection lawsuit. The specific enforcement conditions—whether it’s judicial or whether the parties agreed on an out-of-court process—depend on what was established in the security agreement.
The Cost of Not Doing It in Time
Once the buyer has already defaulted and there is no registered security interest, the options narrow considerably. Other collection routes may exist—a collection lawsuit, or negotiating a payment agreement with a security interest created at that point—but none carries the same weight as a security interest registered from the start of the transaction.
That’s why this is, essentially, a preventive tool: its value lies in using it before the sale, not after the default.
Frequently Asked Questions
Can I register a security interest on an asset I’ve already sold?
Only if the buyer agrees to create it afterward, generally as part of renegotiating the debt. It doesn’t have the same effect as if it had been registered from the start, because other creditors may have acquired rights over that same asset in the meantime.
How long does it take to register a security interest?
Since it operates electronically, registration is considerably faster than other registry procedures in Guatemala, although the exact time depends on the form and documentation being properly prepared from the start.
Does this apply only between companies, or also to sales to individuals?
It applies in both cases. Any person, whether an individual or a legal entity, who extends credit backed by a movable asset can create a security interest.
Does a security interest replace the need for a contract?
No. The security interest is created within a contract or contractual clause; both documents work together, and neither replaces the other.
How We Help at Cultura Legal
If your company makes credit sales of high-value assets—machinery, equipment, vehicles, inventory—we can help you:
- Create and register the corresponding security interest before closing the deal.
- Draft the contract that backs both the sale and the security interest.
- Enforce the security interest if a default has already occurred.
