A nominative title is that credit document that specifies which natural or legal person is in charge of the issued debt. It’s about a agreement that is in writing by means of a document or contract.
In other words, the registered title establishes the rules and the members of the operation, who, upon signing it, de facto accept the agreed conditions.
Therefore, the nominative title serves to recognize the debt, establish the conditions agreed in writing and postpone its payment by mutual agreement.
Characteristics of the nominative title
The main objective of this type of securities is to make known and clearly record the debtor to whom the debt is linked.
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This makes the transfer between natural or legal persons of this type of securities more complicated or less attractive than with other types of securities. In fact, sometimes they usually have exclusivity clauses in which it is established that the sale or transfer of the title is not allowed.
Also in this type of operation it is important to know the regulations of the financial entities that support it, since although the creditor and debtor may be, for example, natural persons (self-employed and individuals), the bank or financial entity that issues and/or or accept the document will do so under its own rules and conditions.
Types of securities
Among the securities, the best known are:
- Title to order.
- Bearer bond.
- Name title.
In the first place, it should be noted that the nominative and custom titles are very similar. The only thing that distinguishes them is that in practice the title to order is usually less restrictive with regard to sale or transfer and that a record is kept in the nominative, sometimes public, of the participants in it.
On the other hand, bearer securities are easier to transfer, since, as their name indicates, the bearer of the same will be the owner who can liquidate said title. It should be noted that, in some financial or banking entities, these titles are not usually issued or accepted for settlement.
Name title example
Given the sale of real estate in Madrid, the still owner requests that the notary public pay him the agreed amount by means of a nominative check in his name.
This would mean that, if the property has finally been sold for €500,000, the bank check must be in your name and the creation and, therefore, its transfer, must be registered in a notarial deed.
Then, the buyer of the real estate will be the creditor, the seller the debtor, and the title channel will be the financial or banking entity itself.