Fixed and floating charges

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

  • Fixed and floating charges
  • What is a charge?
  • The nature of fixed and floating charges
  • Fixed charges
  • Floating charges
  • Characteristics of fixed charges
  • The principal characteristic of a fixed charge—control
  • Fixed charge assets
  • Characteristics of floating charges
  • Characteristics of a floating charge
  • More...

Fixed and floating charges

There are four main types of security available under English law:

  1. mortgage

  2. charge

  3. pledge, and

  4. lien

This Practice Note explains:

  1. the nature of a charge (compared with other security interests)

  2. the nature of a fixed charge compared to a floating charge

  3. the types of assets which are typically the subject of fixed charges and the types of assets which are typically the subject of floating charges, and

  4. priority as between fixed and floating charges

For information on how to take a fixed or floating charge, see Practice Notes: Floating charges and Key features of debentures.

For information on mortgages, see Practice Note: Mortgages.

For more information on pledges, see Practice Note: Pledges.

For information on liens, see Practice Note: Types of security—Liens.

Special rules apply to agricultural charges. For more information, see Practice Note: Agricultural charges under the Agricultural Credits Act 1928.

What is a charge?

A charge has the following characteristics:

  1. it confers on the secured party (the chargee) an equitable proprietary interest in the charged asset (for more information on the meaning of 'equitable', see Legal versus equitable security interests and for more information on the meaning of 'proprietary interest', see Difference between security and quasi security)

  2. it does not involve the transfer of title to an asset; this contrasts with a mortgage where the legal and beneficial title (or in the case

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