Taking security

Types of security

Security creates an interest in assets: the party receiving the security (the secured party, usually the lender) is granted a security interest in the assets of another party (the security provider).

There are four types of security interest recognised under English law. They are:

1. •

   mortgages—the transfer of ownership (legal and/or equitable) by way of security in the secured assets

2. •

   charges—an encumbrance over the secured assets

3. •

   pledges and liens—the transfer of possession of the secured asset

For more information see:

1. •

   Practice Notes:

   1. ◦

      Introductory guide to security in a lending transaction

   2. ◦

      Types of security, and

   3. ◦

      Security—frequently asked questions

2. •

   Checklists:

   1. ◦

      Taking security—mortgage—checklist

   2. ◦

      Taking security—fixed charge—checklist

   3. ◦

      Taking security—floating charge—checklist, and

   4. ◦

      Taking security—pledge—checklist

Taking security

Mortgages, charges, pledges and liens each have different characteristics and are used for different purposes depending on:

1. •

   which type of security arrangement is appropriate to a particular transaction, and

2. •

   which