Summary

The Right of Security of Lessors was introduced into Estonian law upon the entry into force of the Law of Obligations Acton 1 July 2002. Yet there has yet to develop a uniform practice for the interpretation of these norms. This right of security has recently drawn increased attention due to the considerable numbers of debtors in the current economic situation and the first judgment of the Supreme Court concerning the right of security of lessors, delivered in 2008.

The right of security of lessors does not only affect the rights of the parties to a lease contract, but also third parties who have property to which such right might extend. Third parties are protected by the fact that their rights have precedence over a lessor’s right of security and also by the fact that the lessor’s right of security may under certain circumstances be extinguished with regard to things belonging to third persons.

In this article, the author analyses the right of security of lessors (Sections 305-307 of the Law of Obligations Act), and discusses various possible interpretations of these rules. The article focuses on the issue of which rights of third parties under what conditions may have precedence over the right of security of the lessor as well as the conditions under which the right of security of a lessor extinguishes with regard to things belonging to a third party.