Meaning
A statutory possessory security interest created under German civil law grants contractors a lien over movable items produced or modified during contract performance. Statutory provisions in german BGB 647 secure claims for compensation by allowing a manufacturer to retain physical possession of customer-owned circuit boards or enclosure assemblies. The right secures outstanding payments for manufacturing services and assembly labor.
This possessory lien extinguishes immediately when the contractor voluntarily surrenders physical control of the manufactured goods to the buyer.
Possessory Security
Contractors obtain an automatic statutory lien over physical items delivered by the customer for processing, testing or assembly operations. Under german BGB 647, the contractor holds lawful possession of the hardware until the customer settles all outstanding manufacturing invoices. This security interest attaches directly to raw boards and integrated end products present on the factory floor.
Priority Ranking
Ownership structures dictate whether contractor security claims take precedence over third-party financing interests in the retained inventory. Statutory liens under german BGB 647 require that the customer holds legal title to the items at the time processing begins.
Retainage Control
Assembly facilities employ physical possession to enforce payment compliance without initiating immediate court proceedings. Under german BGB 647, retaining custom hardware assemblies creates financial pressure on defaulting buyers in supply chain disputes. The contractor cannot sell the retained hardware without following statutory notice periods and public auction requirements defined in civil enforcement laws.
