Keeping the thing until you are paid: the right of retention

It is Title VII of Book Four of the Civil Code of 2020: Article 1222, on the indirect or oblique action, and Articles 1223 to 1229, on the power of retention. They are the two ways the Code gives a creditor to protect their credit before being paid.

To retain, a creditor whose credit is enforceable and who holds the movable or immovable owed. For the oblique action, a creditor who has already pursued the property the debtor holds.

• That the credit be enforceable: the condition that opens the power of retention in Article 1223.Verified against the official source
• Holding the thing: you retain what you already hold; you do not take it in order to retain.Verified against the official source
• Raising the right of retention if required to restore or deliver the thing.Verified against the official source
• For the oblique action, having first pursued the property the debtor holds.Verified against the official source

• Evidence that the credit is enforceable and of its amount, even though retention is exercised over the whole thing.
• For an immovable, the preventive annotation in the corresponding registry: without it retention cannot be asserted against the third parties in Article 1228.

1. 1

   Step 1: First, the oblique action

   Article 1222 opens the title: creditors, after having pursued the property the debtor holds to realize what is owed to them, may exercise all the debtor’s rights and actions for the same purpose, except those inherent in their person. That is, collecting what your debtor is owed, but only after going against what they hold.

2. 2

   Step 2: What retaining is

   Article 1223 defines it: retention is the power granted by law authorizing a creditor whose credit is enforceable to keep in their possession the movable or immovable owed until the debtor pays or secures what they owe. Note the ending: pay or secure. Guaranteeing the debt is enough.

3. 3

   Step 3: No court is needed, but it must be said

   The same article clarifies it: the retainer needs no prior declaration and no judicial authorization to exercise this power, but if required to restore or deliver, they must raise their right of retention. Staying silent when the thing is demanded is not exercising the right.

4. 4

   Step 4: The whole is retained, however little is owed

   Article 1225 admits no proportions: retention may be exercised over the whole of the thing in the creditor’s possession, regardless of the amount of the debt owed to the retainer.

5. 5

   Step 5: Retaining is not keeping the thing

   Article 1226 is categorical: the power of retention does not authorize the retainer to acquire ownership of the retained thing, even if the obligation is not performed. And it adds what makes any clause saying otherwise void: any agreement to the contrary is void and is held as not written.

6. 6

   Step 6: Nor using it

   Article 1227 forbids it: the retainer may not use the retained thing. They must preserve it, make the necessary improvements at the debtor’s cost, and restore it when the retention ends. On fruits there is a rule of its own: if they choose to take the thing’s natural fruits, they must give notice to the debtor; they may then dispose of them and apply their value to the interest on the credit, and must account for the fruits taken when the retention ends.

7. 7

   Step 7: If another creditor attaches the thing

   Article 1228 does not block the auction: the right of retention does not prevent other creditors from attaching the retained thing and holding the auction. But it protects the retainer in the distribution: the acquirer cannot take possession except by delivering to the retainer the auction price, up to the amount of their credit.

8. 8

   Step 8: And if the thing is an immovable

   The second paragraph of the same article asks for paperwork: retention cannot be raised against third parties who acquired real rights over the immovable recorded before the opponent’s credit was constituted; and as to those recorded afterwards, retention cannot be asserted unless it was preventively annotated, before the credit, in the corresponding registry. The rules for that annotation are in the registry legislation, which we did not read.

9. 9

   Step 9: How it ends

   Article 1229 gives five causes: extinction of the credit it secures; voluntary delivery or abandonment of the thing it bears on, even if the same thing later returns to the retainer’s possession on another title; substitution by another sufficient security, if the court authorizes it at the request of the debtor of the sum of money; total loss or destruction of the thing; and abuse or deterioration of the thing or violation of any of this chapter’s rules.

Retention is exercised in fact, without judicial authorization. The court comes in to request substitution by another security, to dispute whether retention lies, or where another creditor attaches and auctions the thing. The preventive annotation of retention over an immovable is made in the corresponding registry, whose rules we did not read here.

• Retaining where the credit is not yet enforceable.
• Taking the thing in order to retain it: what is retained is what the creditor already holds.
• Staying silent when delivery is demanded: the right of retention must be raised.
• Keeping the property if not paid: retention does not give ownership, and any agreement otherwise is void and held as not written.
• Using the retained thing: it is forbidden, and abuse or deterioration extinguishes the right.
• Taking the natural fruits without notifying the debtor or accounting at the end.
• Voluntarily returning the thing and believing the right survives: delivery or abandonment extinguishes it.
• Counting on raising retention over an immovable without having preventively annotated it in the registry.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov