Priority Secondary security rights also give the holder of the right priority in
insolvency. Holders of personal rights will be treated equally in insolvency:paritas
creditorum. However, holders with a secondary right for security may claim their
money before the creditors who hold only personal rights.
Suppose that Joan not only owed€100,000 to the bank but also€50,000 to a friend. If there
is no hypothec to secure any of these loans and the house is sold to satisfy the creditors, the
bank will receive 2/3rds of the proceeds, and the friend 1/3, proportional to the claims they
had against Joan (paritas creditorum).
However, if the bank has a right of hypothec, the proceeds of the house will first be used
to pay the bank. If the house brings in€80,000 the bank will receive all that money and
Joan’s friend will receive nothing. If the house brings in€140,000 the bank will receive
€100,000 and the friend€40,000. (This example assumes that there are no other creditors
and that Joan has no money, but only the house).5.6 Principles of Property Law
Property law systems in Europe differ widely, especially at the level of detailed
rules. However, all systems of property law must deal with the same issues, and
they approach these issues similarly. This approach is based on principles and rules
of property law, which will be dealt with in this section.
5.6.1 The Principle ofNumerus Clausus
Property rights exist in land or goods and are not merely directed toward one or
more concrete persons; they can, in principle, be invoked against everyone. For this
reason, it is undesirable that individual persons (including “legal persons” such as
companies with limited liability) can make up such strong rights by themselves, if
only because they would thereby bind other persons who were not involved in
creating these property rights.
Imagine that A could create a property right on his land, with the content that everyone
should pay the owner of this piece of land an annual amount of€50. This would make A
rich very quickly indeed.
Therefore, only a limited number (numerus clausus) of property rights are
recognized. The property rights in this exhaustive list are the only types of property
rights that persons can create.
Thenumerus claususof property law should be seen in contrast with the freedom of
contract, which means that persons can, through a contract, create (almost) any obligations
they want. This larger freedom in the contractual sphere can be explained by the fact that
contracts normally only bind the contracting parties.
Note that thenumerus claususonly concerns thetypesof property rights that can
be created. It is not a limitation on thenumberof property rights of these kinds that
can be created.
86 B. Akkermans