1. What rules, if any, govern retention of title (RT) in your country? In the absence of rules, what are the principal mechanisms, if any, on which RT is based in your country?

In Colombian law, RT is regulated as part of the commercial law, specifically articles 952 and following. Those articles are used to secure payment from the debtor in immovable goods. In 2013, a new law was enacted relating to privileged guarantee when a seller finances the payment of movable goods.

  1. Please describe the characteristics and scope of your country´s RT rules

The main features and scope for both types of goods are:

  1. The seller keeps the property right in the goods until the buyer pays the full price.
  2. The buyer obtains the property right with the last payment. Until full payment, he or she only has pure possession.
  3. The RT rules are not mandatory, and consequently their incorporation must be agreed to by both parties.
  4. Law requires the inscription of the RT in order to apply to a third person. That requirement implies that the contract, or at least the RT clause, must be written. It is important to specify whether the goods are movable or immovable goods, as explained below.
  1. If RT is not regulated in your country, are there similar or commercially equivalent forms of security preserving seller´s rights to the goods?

RT is regulated in Colombia.

  1. What is the relation of RT and passage of risk in your system? How may a seller protect its interest after passage risk?

The risk is transferred to the buyer upon delivery of the goods. If the goods have been secured by an insurance company, entitled to pay, the buyer will assume the risk.

If there is no insurance and the goods are damaged, the seller can file a lawsuit against the buyer if he or she refuses payment.
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  1. What are formal requirements, if any, including timing, to perfect the seller´s right?

The guarantee applies in relation to a third person only when the RT is registered.

Regarding immovable goods, the process is completed at the office of public instruments.

Firstly, the document must be presented to a public notary and then brought to the office of public instruments, where the inscription of RT is made.

The public instruments office manages local (not national) information.

Regarding movable goods, the process only requires one private document, with inscription made on a web platform administered by a non-public office, with application in the entire national territory.

For both movable and immovable goods, it is necessary to pay a fee to undertake the process.

  1. Effectiveness
    1. Does sale to third party break RT? What if the goods have been transformed or sold?

If a third party buys goods subject to RT and is not deemed to have known of the RT because there was no public registration, he or she must return the goods but is entitled to recover the cost of the purchase.

In cases where the third party is considered to know of the existence of RT because of registration the third party cannot recover the cost paid for the goods.

If yes, is there a possibility to transform the RT in case of a sale to third party?

As above, RT does not suffer because of a third party sale as the guarantee follows the goods and not the person in possession. Parties may agree to a different guarantee than RT, but then the conditions explained above will not apply.

  1. Enforcement of RT if delinquent buyer is not insolvent — What is the judicial procedure and what is its likely timeline?

The judicial enforcement process and timeline for insolvent people differs for retailers and nonretailers.
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In either case, the judge performs stocktaking and determines the form of payment to the creditors, taking into account a number of factors.

  1. What happens in case of conflict between RT and a buyer´s creditor´s rights?

RT generally has priority over another creditor´s right. Only when the buyer is in bankruptcy may there be a conflict with another creditor´s privileged right, such as those of the treasury or employees. In these cases, the decision is in the judges’ hands.

  1. Model Clause(s) — Drafting tips

Note: The following language is based on contractual provisions commonly seen in this country, but readers should always consult legal counsel before including an RT clause in a contract.

The seller keeps the ownership of the goods until the buyer pays the full price according to the contract and Colombian law. Once that happens, the RT has to be cancelled and the goods will be liberated.