§ 5-20. Release of collateral on joint loans
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The text of the law (unofficial translation)
§ 5-20. Release of collateral etc.
(1) Without the express consent of the co-debtor (samskyldner), the lender (kredittyter) has no right to release collateral (pant) that was provided or was assumed to be provided when the credit agreement (kredittavtale) was entered into. This does not apply if other equivalent collateral is provided or the release has no significance or only very limited significance for the co-debtor's position.
(2) Consent under the first paragraph can only be given in connection with an imminent release of a specifically identified collateral. Consent from a consumer (forbruker) shall be in writing and signed. § 3-9 third paragraph applies correspondingly to the consumer's consent.
What does this mean?
The bank cannot release collateral that was provided or assumed when the loan was taken out unless the co-debtor expressly consents. Exceptions apply if equivalent collateral is provided in its place, or if the release has little or no significance for the co-debtor's position.
The consent can only be linked to an imminent release of a specific collateral. A consumer must give the consent in writing and signed, and § 3-9 third paragraph applies correspondingly. These rules are part of the rules on co-debtors in §§ 5-16 to 5-21.