Pledge Register: How to Use It and What to Check Before a Deal

Most often, people deal with checking the pledge register before buying a car or a flat, when the seller is rushing the deal and all you have in hand are the documents for the item. The buyer wants to make sure the property is not pledged, not sold twice and will not go towards someone else's loan after payment. Businesses check counterparties and leased assets so as not to lose machinery or goods that actually belong to a bank.

The article explains what the pledge register is, who must enter information into it and when, what can be seen from a record and how to obtain an extract. It separately covers situations involving errors in a record, a repaid pledge that remained in the register, and the consequences for a deal if the encumbrance was not checked in advance.

Pledge Register: What It Is and Why It Was Created

The pledge register is a public electronic database of pledged property. It is maintained by the authorised body for registration of pledges over movable property. A record confirms the pledge and makes the fact known to anyone who opens the database.

Checking is important when buying movable items: a car, machinery, equipment. If the property is listed in the database as a pledged item, the buyer risks acquiring an item that is free of encumbrance only on paper. Checking before the deal reduces this risk.

For the pledgee, the record secures the priority of their claim. For the pledgor, the open database helps confirm the absence of encumbrances when selling or re-pledging an item. The register has three tasks: to inform third parties, to protect the creditor and to remove uncertainty in the turnover of property.

• confirms the existence of a pledge over a specific item;
• shows who acts as the pledge holder;
• helps the buyer see the encumbrance before the transaction;
• records the priority of the creditor's claim;
• gives the pledgor a way to prove the absence of a pledge;
• does not cover the pledge of vehicles — it is reflected when the vehicle is registered.

Who must submit information to the pledge register and when

A pledge of movable property is registered in the register of pledges of movable property, while a pledge of immovable property is registered in the Legal Cadastre. An entry in the wrong register has no effect.

The obligation to make the entry lies with the pledge holder or the pledgor — under the contract and the requirements of the legislation of the Republic of Kazakhstan. Registration makes the encumbrance known to third parties.

Without an entry, the pledge is valid between the parties but does not protect against bona fide third parties: the pledge holder's priority is in question. Checking a vehicle's encumbrances through eGov.kz before the transaction is sensible.

The pledge is not void, but the pledge holder's position is weaker in disputes and bankruptcy proceedings. The currency of the extract is checked as at the date of the transaction. The parties should set out in the contract who submits the information and within what timeframe.

• Make sure that the pledge of movable property is registered in the pledge register, and not merely stated in the contract.
• Check who under the contract bears the obligation to make the entry in the pledge register.
• Request up-to-date information from the pledge register as at the date of the planned transaction.
• Cross-check the property data against the Legal Cadastre if immovable property is involved.
• Check the vehicle's encumbrances through eGov.kz before purchase.
• Keep confirmation of the check of the pledge register and the Cadastre in case of a dispute.

What can be found in the pledge register: the subject of the pledge and the parties

The register of pledges of movable property in Kazakhstan is maintained electronically and discloses information about a pledge, which allows the encumbrance to be checked before a transaction. Every pledge of movable property is subject to registration, while the pledge of vehicles is registered when the vehicle itself is registered.

What the pledge register contains: a description of the subject of the pledge in a scope sufficient to identify the property, the details of the pledgor and the pledge holder, the date of registration, the term of the pledge and the entry number. The information is open to any interested person, but does not replace title documents and does not confirm ownership.

The register does not contain information on the transaction price, the procedure for performing the obligation, the payment schedule, or personal data not related to the identification of the parties. Entries on the pledge of immovable property are kept in the Legal Cadastre.

• description of the subject of the pledge;
• details of the pledgor;
• details of the pledge holder;
• date of registration of the pledge;
• pledge term;
• registry entry number.

Information on pledges of vehicles is recorded upon registration of the vehicle; pledges of immovable property — in the Legal Cadastre.

How to check a car in the register of pledges before buying

Before buying a car, it is checked in the register of pledges — an open electronic resource containing information on pledges of movable property. The check shows whether the car is securing anyone's claim; access is available to any interested person.

The encumbrance can be checked via eGov.kz: the search requires the identification details of the car and the owner. The result is compared against the seller's documents.

An entry means an active encumbrance. This is not an automatic ban on sale, but the pledge survives a change of owner: until the obligation is fulfilled, the pledged item may be claimed. The entry is examined before the money is handed over.

• check the car's encumbrances via eGov.kz using the car's and owner's details
• check the car by VIN code and compare the data with the seller's documents
• if a pledge is found, request documents confirming its termination
• make sure the entry has been removed before signing the contract and paying
• keep a printout or screenshot of the check results
• if in doubt, postpone the deal until the encumbrance is removed

Checking real estate and other property via the register of pledges

Rights to real estate and encumbrances on it are reflected not in the register of pledges but in the Legal Cadastre. The query "register of pledges real estate" mixes up two sources: for real estate, data is viewed in the Cadastre, while the register of pledges concerns movable property.

Checking a pledge on an apartment is based on an extract from the Legal Cadastre: it shows a mortgage, arrest or other encumbrance, the right holder and the basis. The information is ordered through a Public Service Centre or electronically. A pledge of a vehicle is reflected when it is registered with the authorised body.

A pledge of other movable property is registered in the register of pledges of movable property, which does not replace the Cadastre and does not contain data on mortgages. Before a deal, both sources are checked: the Cadastre — for real estate, the register of pledges — for movable items, including equipment and inventory.

• ownership and registered encumbrances — the Legal Cadastre;
• a pledge of an apartment or other real estate object — the Legal Cadastre;
• a pledge of movable property — the register of pledges of movable property;
• a pledge of a vehicle — vehicle registration data;
• arrests and restrictions — according to the data of the relevant register;
• the bases for entries — title documents and statements of the parties.

The information is current as at the date of the extract; before a transaction, request fresh data.

An entry in the pledge register is a public notice: a buyer who has not checked it will find it hard to prove that they did not know and could not have known about the encumbrance. A check takes less time than a dispute over the fate of a purchased item.

Extract from the pledge register: how to obtain it through a Public Service Centre

An extract from the pledge register confirms whether property is pledged and in whose favour, which is why the document is requested before a transaction or dispute. An applicant may submit a request to a Public Service Centre or generate an electronic document through eGov.kz services. A vehicle encumbrance check can be done through eGov.kz, while for real estate the data is taken from the Legal Cadastre, operated by the state corporation.

To obtain an extract from the pledge register, the applicant states in the application the identification data of the pledged item and information about the pledgor. For real estate, the cadastral number and the owner's IIN or BIN are sufficient; for vehicles, the state registration number and the owner's details. An electronic certificate from the pledge register is generated in the personal account and signed with an electronic digital signature.

• IIN or BIN of the pledgor and, for a legal entity, its full name
• Cadastral number of the real estate object or state registration number of the vehicle
• Identity document of the applicant; for a representative, a power of attorney
• Information from the title documents for the property

The pledge register shows an encumbrance: what this means for a transaction

An entry in the pledge register means that the property serves as security for someone else's claim. Under the Law of the Republic of Kazakhstan on registration of pledge of movable property, the entry makes the pledge known to third parties, so a buyer will find it hard to rely on not knowing about the pledge. A pledge of movable property is registered in the register of pledge of movable property, and a pledge of vehicles — upon vehicle registration. Both sources must be checked before signing the contract.

For a buyer, an encumbrance means the risk of losing the item: the pledge holder is entitled to demand foreclosure on the pledged item regardless of who owns it. A transaction involving pledged property without the pledge holder's consent may be challenged, and the transfer of title may not take place. The sale of a car from the pledge register is dangerous because the entry remains when the owner changes and follows the car, not the seller. Without removal of the entry, the buyer pays for property that they will not be able to dispose of freely.

• Request from the seller a certificate confirming there is no registered pledge.
• Check the register of pledge of movable property against the seller's details and those of the property itself.
• Separately check the vehicle pledge upon vehicle registration.
• Obtain the pledge holder's written consent if the entry remains.
• Include in the contract the seller's warranty that there are no encumbrances and the consequences of breaching it.
• Carry out a reconciliation of the register immediately before signing and settlement.

An error in the register of pledges: how to correct an entry

If the register of pledges of movable property contains incorrect information, an entry was made in error, or a pledge has been terminated but is still listed in the database, the interested person is entitled to require the entry to be amended. A discrepancy between the actual state of the obligation and the register data affects the rights of the pledgor and the acquirer of the property. On discovering an error, it is necessary to establish the basis for the entry and whether the secured obligation still exists.

The procedure depends on the cause of the inaccuracy. If the pledge was terminated by performance, by agreement of the parties or on another lawful basis, the registering authority enters information on termination. Where the entry appeared through the error of the applicant or the registrar, an application is filed to amend or remove the information. Following consideration, the person receives notification of the state of the entry; if refused, a reasoned response is issued, which may be challenged.

• an application to amend or to remove inaccurate information;
• a document confirming termination of the secured obligation;
• an agreement of the parties to terminate the pledge or a court decision that has entered into force;
• documents confirming the identity of the applicant and their authority;
• notification from the registering authority of the outcome of consideration of the application.

The pledge has been released but the entry in the register of pledges remains: what to do

If the obligation under the pledge agreement has been performed, the pledge terminates by operation of law. But the pledgee does not always submit information on removal from the register of pledges of movable property, and the entry remains, formally encumbering the pledged item and preventing the pledgor from disposing of the property.

Information on termination of a pledge is, as a rule, submitted by the pledgee, but its inaction does not deprive the pledgor of protection: the termination of the obligation should be documented and a demand to remove the information sent. A refusal or silence gives grounds for a claim to recognise the pledge as terminated and to compel amendment of the register.

• Obtain from the pledgee written confirmation of performance of the obligation or termination of the pledge.
• Send the pledgee a demand to remove the information from the register, with an inventory of attachments and acknowledgement of receipt.
• Attach to the demand documents confirming termination of the secured obligation.
• If refused or met with inaction, file a claim to recognise the pledge as terminated and to oblige amendment of the register.
• After the decision enters into force, apply to the registering authority to remove the entry.
• Keep the correspondence and payment documents until the information is actually removed from the register.

The register of pledges and bankruptcy: why the entry matters for a creditor

The register of pledges is a public electronic record of encumbrances on movable property under the rules of the Republic of Kazakhstan. An entry records that an item is pledged to a particular person and, from the moment of registration, makes this known to any third party. The entry is the main evidence of a pledge when a claim is included in the register of creditors' claims in the debtor's bankruptcy.

A secured creditor's priority rests on the registered encumbrance: claims are satisfied out of the pledged property in preference to other creditors. An unregistered pledge yields to a registered one, and it is considerably harder for a creditor to assert priority. An encumbrance on a car can be checked via eGov.kz, and on other property via the Legal Cadastre.

• Make sure the pledge is registered in the register of pledges and that the entry is valid as at the current date.
• Verify the data on the pledged item: identification details, owner, absence of double encumbrances.
• Check an encumbrance on a car via eGov.kz, and on immovable property via the Legal Cadastre.
• Keep the documents confirming the basis for the pledge and the fact of registration — they will be needed when the claim is included in the procedure.
• Monitor changes to the record: removal of an encumbrance or a change of owner affects the scope of the priority right.

Court practice on the pledge register in Kazakhstan

Court practice treats the pledge register as an auxiliary, but not the sole, source of information on an encumbrance. A pledge of movable property is registered in the register of pledges of movable property, and a pledge of vehicles — upon registration of the vehicle. An entry serves as public notice to third parties, but its absence does not always mean that a pledge did not arise: the terms of the pledge agreement and evidence that the acquirer knew of the encumbrance are what matter.

In disputes, courts examine the good faith of the parties and whether the acquirer was aware of the encumbrance. If the buyer did not know and should not have known about the pledge, its interest may be protected as the interest of a bona fide acquirer. When a transaction is challenged, the key question becomes whether the pledgee consented to the disposal and whether the pledge is preserved on transfer of the right. Courts assess the body of evidence as a whole, not just the entry in the register.

• The moment the pledge arises and the date of its registration.
• The acquirer's awareness: requests to the register, correspondence, other evidence.
• The pledgee's consent to disposal of the pledged item.
• Preservation of the pledge on transfer of the right to a third party.
• The good faith of the parties and the reasonableness of their actions when concluding the transaction.
• The consequences of the absence of an entry in the register or of its late submission.