The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
The terms security and quasi-security are frequently used in relation to finance transactions.
This Practice Note considers the term security in the context of security interests (eg a mortgage) which are created as collateral for a finance transaction.
Such security interests should not be confused with a 'security' or 'securities' in the context of the capital markets (both equity and debt). In capital markets transactions the term 'securities' refers to documents that evidences a debt or an investment. Securities in the context of capital markets are outside the scope of this Practice Note. For information on debt capital markets, see Practice Note: Introduction to the debt capital markets.
English law recognises four types of security (mortgages, charges, pledges and liens). A much broader range of arrangements could fall under the umbrella of quasi-security eg guarantees, comfort letters and set-off rights. Some lawyers even consider negative pledges to be a form of quasi-security.
This Practice Note explains:
why lenders take security and/or quasi-security
what security is
what quasi-security is
how security differs from quasi-security
how security and quasi-security can be used together
A lender's primary concern is that it is repaid. Even if a lender obtains a judgment for payment of the sum owed to it by its borrower, this does not mean that a lender will be repaid
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