1.1 SECURITY
There are three basic types of security that can be created
under English law:
- Pledge.
- Charge.
- Mortgage.
1.1.1 What is a charge?
For practical reasons, most lenders will not want to take
possession of a debtor's assets and a debtor will not want to
lose control of its assets, especially if they are used in the
day-to-day running of its business. Accordingly, a lender will want
to take security by obtaining rights over, but not necessarily
possession of, specific assets of the debtor as security for the
loan.
The term "charge" is often used by practitioners as a
generic term for all types of security interest, but essentially
represents an agreement between a creditor (chargee) and a debtor
(chargor) by which a particular asset is appropriated by the
chargee to the satisfaction of a debt owed to the chargor. A charge
can be thought of as an encumbrance over an asset. It confers on
the chargee an equitable proprietary interest in the
