Q&As

Historically, there was an advantage for a debtor in entering into an equitable charge rather than a legal mortgage because the equitable charge did not attract stamp duty. When and how did this advantage cease?

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Produced in partnership with Chris Bryden of 4 King’s Bench Walk
Published on LexisPSL on 11/11/2020

The following Property Q&A produced in partnership with Chris Bryden of 4 King’s Bench Walk provides comprehensive and up to date legal information covering:

  • Historically, there was an advantage for a debtor in entering into an equitable charge rather than a legal mortgage because the equitable charge did not attract stamp duty. When and how did this advantage cease?

Historically, there was an advantage for a debtor in entering into an equitable charge rather than a legal mortgage because the equitable charge did not attract stamp duty. When and how did this advantage cease?

The most common type of security in respect of borrowing is a legal mortgage. A legal mortgage will be registered at HM Land Registry and will rank in priority to subsequent encumbrances. Legal mortgages are governed by sections 85 and 86 of the Law of Property Act 1925 (LPA 1925), which contain mechanisms for the grant of a leasehold interest, and LPA 1925, s 87, which provides for the execution of a deed secured as a charge and which is the commonly used modern method for the grant of standard mortgages.

An equitable charge is a proprietary interest

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