Equitable charges v legal charges—impact on saleability
Produced in partnership with Jonathan Titmuss of Hardwicke
Equitable charges v legal charges—impact on saleability

The following Restructuring & Insolvency practice note Produced in partnership with Jonathan Titmuss of Hardwicke provides comprehensive and up to date legal information covering:

  • Equitable charges v legal charges—impact on saleability
  • Mortgages and charges over land—a recap
  • Mortgage
  • Legal mortgage of registered land
  • Equitable mortgage
  • Charge
  • Security documents—charge or mortgage?
  • Commonly seen equitable mortgages or charges
  • Can the equitable mortgagee or chargee sell the charged property?
  • What does this mean?
  • More...

This Practice Note considers the position of a security holder who has an equitable mortgage or charge over land and, in particular the powers that are available to complete a sale of the charged property.

This Practice Note deals only with registered land.

Mortgages and charges over land—a recap

Security over land can be taken by way of mortgage or charge.

Mortgage

A mortgage can be legal or equitable.

Legal mortgage of registered land

A legal mortgage of registered land (whether freehold or leasehold) is made by:

  1. a charge by deed expressed to be 'by way of legal mortgage' (commonly referred to as a 'legal charge') (section 85(1) of the Law of Property Act 1925 (LPA 1925) (freehold) or LPA 1925, s 86(1) (leasehold)) or

  2. a charge at law of the registered estate to secure the payment of money (section 23(1)(b) of the Land Registration Act 2002 (LRA 2002)). This power was introduced by section 25(1) of the Land Registration Act 1925 (LRA 1925) and its equivalent provision is now in LRA 2002, s 23(1)(b) which only applies to registered land.

Unless and until the mortgage is appropriately registered, it remains an equitable mortgage (LRA 2002, s 27(1), s 51).

Note: The power to create a mortgage at law (legal mortgage) by a demise (freehold) or sub-demise (leasehold) for a 'term of years absolute, subject to a provision for cesser on redemption' under

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