Assignments by way of security
Assignments by way of security

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Assignments by way of security
  • What is an assignment by way of security?
  • Which assets are assignments by way of security used for?
  • Assignments by way of security—legal, statutory or equitable?
  • How to create a statutory or 'legal' assignment under the Law of Property Act 1925, s 136
  • Statutory assignments—meaning of the term 'absolute'
  • Statutory assignments—can they be taken over future assets?
  • Statutory assignments—financial collateral arrangements and execution requirement
  • Statutory assignments—what is their effect?
  • Equitable assignments
  • More...

Assignments by way of security can take different forms and it is important to understand how they are created and their effect. Security over choses in action such as debts and other contractual rights is often taken by way of an equitable or statutory assignment by way of security.

This Practice Note explains:

  1. what assignments by way of security are

  2. which types of assets they are used for

  3. whether they take legal, statutory or equitable form and the advantages of the statutory form

  4. why it is important to serve notice of an assignment by way of security

What is an assignment by way of security?

Assignments by way of security are a type of mortgage. They involve:

  1. an assignment (ie transfer) of rights by the assignor to the assignee

subject to:

  1. an obligation to reassign those rights back to the assignor upon the discharge of the obligations which have been secured

When the obligations that have been secured have been discharged, the assigned rights have to be reassigned back to the assignor. This is different to a charge which automatically terminates when the secured liabilities are discharged.

Which assets are assignments by way of security used for?

Assignments by way of security are one means by which security can be created over certain choses in action. A chose in action is something which is recoverable by legal action as opposed

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