Equitable charge Definition

GLOSSARY

What does Equitable charge mean?

A charge is a security interest by which property is made available for the payment of a debt or the performance of some other obligation.

It is an equitable right that does not by itself give a right to possession. The remedy to enforce the security is an application to the court for sale of the property or for the appointment of a receiver. Mortgages are effected by means of a charge by way of legal mortgage, which does create an interest and does give a right to possession.

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Drafting and negotiating a retention of title clause—checklist

Drafting and negotiating a retention of title clause—checklist This Checklist outlines key provisions and issues for consideration when drafting and negotiating retention of title clauses. A retention of title clause may also be referred to as an ROT clause. For a Precedent retention of title clause together with detailed drafting notes, see Precedent: Retention of title (standard, or simple) clause. For information on retention of title generally, see Practice Note: Retention of title and, in particular: • What is a retention of title (ROT) clause? • What does a retention of title clause do? • Key elements of retention of title clauses, and • Extended retention of title provisions Legal Issues General comments What to watch out for When does title pass? Retention of title clauses delay the passing of title to a purchaser of goods until the supplier has received payment for them. If the customer becomes insolvent (or suffers certain other specified events), the supplier is able to retake possession from the liquidator or administrator. See Practice...

Negotiating overage—acting for a funder—checklist

Negotiating overage—acting for a funder—checklist Funder’s primary objective If the buyer will acquire the property subject to overage and intends to obtain finance secured against the property then, from a funder’s perspective, it is essential that the terms of the overage will not hinder or prevent the funder from enforcing its security. A funder will need to be satisfied that its charge is good security over the property. Property and associated rights Consider the nature of the site over which the funder is taking a charge. If it is part of a larger development then, if the funder exercises its power of sale, will the property require any rights over neighbouring land owned by (or being acquired by) the buyer? Examples could be rights of way, rights relating to service media and rights of support. If any rights would be required then consider agreeing the form of a deed of easement to be annexed to the charge and giving the funder the ability to call for the easement...

Legal mortgages and legal charges

The terms ‘mortgage’ and ‘charge’ are often used as though they are interchangeable. Strictly speaking, they are not. Both are security for the payment of a debt or other obligation. However, while a mortgage confers an interest in property, a charge is the appropriation of property without giving the creditor either a general or special interest in, or possession of, the subject of the security. The classic description of a mortgage is ‘a conveyance of land…for the payment of a debt or the discharge of some other obligation for which it is given’.The difference between the two is blurred by the reference to a 'charge by way of legal mortgage' in the Law of Property Act 1925. The Law Commission has acknowledged that the area of law is too complex and made recommendations for all existing methods of mortgaging and charging land to be abolished and two new forms of mortgage (formal and informal) to be introduced, but this has not, as yet, been acted on.Legal mortgagesA legal mortgage of...

Equitable mortgages and equitable charges—general principles and registered land

Nature of mortgages and chargesMortgages and charges are distinct forms of security. A mortgage can be legal or equitable and involves the transfer of a legal or beneficial interest in the secured property.A charge simply creates rights over the secured property without any associated transfer of title and is always equitable. The chargee has a right to have the property appropriated to meet the debt in the event of default.This distinction is sometimes blurred because under section 85 of the Law of Property Act 1925, a mortgage over land must be granted by way of a charge by deed expressed to be by way of legal mortgage. Such a charge is often referred to as a ‘legal charge’ which is part of the reason why the terms ‘charge’ and ‘mortgage’ tend to be used interchangeably. See Practice Notes: Legal mortgages and legal charges, Types of security and How is a mortgage created?Whether a transaction gives rise to an equitable mortgage is primarily determined by the intentions of the parties. However,...

Discover our 53 Practice Notes on Equitable charge

Guarantee and indemnity: single company guarantor—bilateral—all monies

Guarantee and indemnity: single company guarantor—bilateral—all monies This Deed of guarantee and indemnity is made on [insert day and month] 20[insert year] Parties 1 [Insert name of Guarantor], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Guarantor); and 2 [Insert name of Lender], of [insert address] (the Lender). BACKGROUND (A) The Lender has provided facilities to the Company (as defined below) under various financing arrangements. (B) It is a condition of the Lender making the facilities available to the Company that the Guarantor enter into this Deed in favour of the Lender. It is agreed as follows: 1 Definitions and interpretation 1.1 Definitions In this Deed[, unless otherwise provided]: Business Day • means a day, other than a Saturday, Sunday or public holiday on which banks are open for business in London; Company • means [insert name of the borrower company to whom the Lender is making financing facilities available], a...

Assignment of contractual rights: single company assignor—bilateral—specific monies

Assignment of contractual rights: single company assignor—bilateral—specific monies This Deed is made on [insert day and month] 20[insert year] Parties 1 [insert name of Assignor], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Assignor); and 2 [insert name of Lender] of [insert address] (the Lender). Recitals: (A) The Lender has agreed to make available a loan facility to the Assignor on the terms and conditions set out in the Facility Agreement (as defined below). (B) It is a condition precedent to the availability of the loan facility that the Assignor enter into this Deed for the purpose of providing security in favour of the Lender in respect of the Secured Obligations (as defined below). IT IS AGREED as follows: 1 Definitions and interpretation 1.1 Definitions In this Deed, unless otherwise provided: Assigned Contracts • means the contracts specified in Schedule 1 (Assigned Contracts); Assigned Rights • means all of the present and...

Dive into our 33 Precedents related to Equitable charge

What will be the applicable limitation period where a settlement agreement is secured by way of a charging order and the debtor under the agreement subsequently defaults on repayment of the debt, which entitles the creditor to immediate repayment of the whole sum, and the creditor now wishes to enforce their charging order?

What will be the applicable limitation period where a settlement agreement is secured by way of a charging order and the debtor under the agreement subsequently defaults on repayment of the debt, which entitles the creditor to immediate repayment of the whole sum, and the creditor now wishes to enforce their charging order? We have assumed that reference is being made to a charging order. When seeking to enforce the charging order it would have been subject to the previous rules in this area (CPR 73 and CPR PD 73 were amended with the changes coming into force on 6 April 2016). Where such orders charge a beneficial interest under a trust in land, the charge is protected by means of a restriction under the Land Registration Act 2002. We also assume that the charging order was validly obtained. If seeking to apply for an order for sale to enforce a charging order made prior to 6 April 2016 you should still follow the regime set out in the amended...

Where an equitable charge registered pursuant to a charging order following a money judgement has been registered for over 12 years without the beneficiary seeking to enforce the charge or seek an order for sale, will it now been unenforceable under the Limitation Act 1980?

Where an equitable charge registered pursuant to a charging order following a money judgement has been registered for over 12 years without the beneficiary seeking to enforce the charge or seek an order for sale, will it now been unenforceable under the Limitation Act 1980? Section 24(1) of the Limitation Act 1980 (LA 1980) provides that an action cannot be brought on any judgment after the expiration of six years from the date on which the judgment became enforceable, unless an extension is granted on application by the judgment creditor. However, the enforcement of charging orders does not appear to be affected by this provision and may be enforced after it is made despite a lapse in time. Such enforcement can be way of applying for an order for sale and seeking possession for the purposes of a sale. Third party debt orders similarly appear to have no limitation in terms of enforcement. Charging orders also appear to be immune from LA 1980, s 20(1), and...

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Banking & Finance—July to September 2024 case round-up

Banking & Finance analysis: This News Analysis provides a summary of the cases we have alerted in Banking & Finance from July to September 2024.

Private Client weekly highlights—26 September 2024

This week’s edition of Private Client highlights includes: (1) HMRC updates form IHT400; (2) Carey Street Investments Ltd (In Liquidation) v Brown, a decision concerning professional trustees and ‘fraudulent’ breaches of trust; (3) Nilsson v Cynberg, a bankruptcy case where an express declaration of trust was held to be superseded by a subsequent common intention constructive trust; (4) Nunn v HMRC, Garden development—Appropriation to trading stock saves PPR claim; (5) Brindleyplace Holdings v HMRC, where the FTT decided that no SDLT was due on distributions of partnership and its properties following the purchase of a JPUT holding structure, and (6) STEP publishes its supplementary response to the proposed abolition of the non-dom regime.

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