(An Act relating to loans, mortgages and other security interests in moveable and immovable property)

Be it enacted by the National Assembly of the Kingdom of Bhutan in the year 1999, corresponding with the Bhutanese Calendar year of the Female Earth Hare, as follows: –


  1. Short Title: – This Act may be cited as the Moveable and Immovable Property Act of the Kingdom of Bhutan
  2. Commencement, extent, and repeal: – This Act shall come into force with effect from the 15th day of 6th month of Female Earth Hare Year of the Bhutanese Calendar corresponding to July 28, 1999. It shall extend to the whole Kingdom of Bhutan. Chapters 1, 2, 3 and 4 of   the Law of Bhutan (NGA) Loan Act of 1981, are repealed by this
  3. Definitions: – In this Act, unless the context otherwise requires,
  • “collateral” means moveable property that is subject to a security interest;
  • “debtor” means a person who owes payment or other performance of the obligation secured, whether or not the persons owns or has rights in the collateral, and includes,
  • an assignor of an account, and
  • a person who receives the debtor’s interest in the collateral following a transfer, or a successor to a debtor’s interest in collateral;
  • “default” means the failure to pay or otherwise perform the obligation secured when due, or the occurrence of any event following which the security becomes enforceable under the terms of the security agreement;
  • “document of title” means any written document that purports to be issued by or addressed to a person who holds moveable property on behalf of another and purports to cover goods in the person’s possession which are identifies or which are fungible portions of an identified mass, and that in the ordinary course of business the document is treated as establishing that the person in possession of it is entitled to receive, hold and dispose the document and the goods it covers;
  • “goods” means tangible moveable property including fixtures, growing crops, the unborn young of animals, timber to be cut, and minerals and hydrocarbons to be extracted but does not include documents of title, instruments, money and securities;
  • “instrument” means,
  • a bill, note, cheque, or any other writing that evidences a right to the payment of money and is of a type that, in the ordinary course of business, is transferred by delivery with any necessary endorsement or assignment, or
  • a letter of credit and an advice if the letter or advise states that it must be surrendered upon claiming payment thereunder;

but does not include a writing that constitutes pert of a document of title or a security;

  • “intangible” means all moveable property that is not goods, documents of title, instruments, money or securities;
  • “money” medium of exchange authorized or adopted by the Royal Government as part of the currency of Bhutan or by a foreign government a part of its currency;
  • “moveable property” means documents of title, goods, instruments, intangibles, money and securities and includes fixtures and addition but does not include building materials that have been affixed to immovable property;
  • “prescribed” means prescribed by regulations;
  • “proceeds” means identifiable or traceable moveable property in any form which is derived directly or indirectly from any dealing with collateral or the proceeds of collateral, and includes any payment representing indemnity or compensation for loss of or damage to the collateral or proceeds of collateral;
  • “purchase” includes taking by sale, lease, negotiation, mortgage, pledge, lien, or any other consensual transaction creating an interest in personal property;
  • “purchaser” means a person who takes by purchase;
  • “registration change statement” means the information prescribed for a registration change statement in the prescribed form or format;
  • “registration statement” means the information prescribed for a registration statement in the prescribed form or format;
  • “regulations” means the regulation made under this Act;
  • “secured party” means a person who holds a security interest for the person’s own benefit or for the benefit of any other person and for the purposes of Sections 32, 46 to 49, 54 and 55 includes a receiver;
  • “security interest” means an interest in moveable property that secures payment or performance of an obligation;
  • “value” means any consideration sufficient to support a simple contract and includes a pre-existing debt or liability;
  • “lease” means an agreement to occupy and use land, space, structure, or equipment for a definite term in consideration of a payment usually in the form of rent;
  1. (1) Application to agreements: – Subject to section 5, this Act applies to,
  • every transaction that in substance creates a security interest. This application is without regard to the form of the transaction and without regard to the person who has title to the collateral and includes, without limiting the foregoing,
  • a debenture, floating charge, pledge, hypothecation;
  • an assignment, lease or consignment that secures payment or performance of an obligation;
  • a transfer of an account even though the transfer may not secure payment or performance of an obligation;
  • every mortgage of immovable property; and
  • every loan
  • Sale agreements: – A sale agreement does not establish a security interest unless expressly provided in the
  • Previous agreements included: – Except as otherwise provided in this Act, this Act applies to every transaction that in substance creates a security interest or mortgage whether made before the coming into force of this Act or after, and such agreements continue to have force and effect and the perfection or continuation of the security interest represented by such agreement are governed by this
  • Failure to register agreement during transition: – Where a secured party fails to register a security interest or mortgage which existed prior to this Act within six months following the date on which this Act came into force, the security interest or mortgage created by the security agreement or mortgage agreement shall be lower in priority to the interest of any person without knowledge of the security interest or mortgage who has subsequently acquired rights in the collateral or immovable property and ahs relied upon a search in the name of the transferee made in the central file of the registration system established under this
  1. Non-application of the Act: – this Act does not apply to a lien given by statute or rule of law, except as provided in Sub section 26(1) (a) (i) or Section