Q&As

Company X has a first legal charge secured against a property. The second legal charge holder is in the process of issuing possession proceedings. If the second charge holder successfully obtains possession order, how will this effect Company X’s first legal charge? For example, will the second charge holder need to pay Company X before they can do anything with the property, ie sell the property?

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Produced in partnership with Christopher Snell of New Square Chambers
Published on LexisPSL on 03/11/2016

The following Property Q&A Produced in partnership with Christopher Snell of New Square Chambers provides comprehensive and up to date legal information covering:

  • Company X has a first legal charge secured against a property. The second legal charge holder is in the process of issuing possession proceedings. If the second charge holder successfully obtains possession order, how will this effect Company X’s first legal charge? For example, will the second charge holder need to pay Company X before they can do anything with the property, ie sell the property?

In answering this Q&A, we have assumed that there is no inter-creditor agreement as between the first and second legal charge holders: such that no contract exists which sets out any obligations that the second legal charge holder may have in the event that it enters into possession in circumstances whereby the first legal charge remains unsatisfied.

Entry into possession of the property by the second charge holder does not affect the first legal charge holder’s priority, such that its interest in the equity of redemption falls to be settled before the interest of the second charge holder.

Further, entry into possession of the property by the second legal charge ho

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