The following Property practice note provides comprehensive and up to date legal information covering:
A letter of non-crystallisation is required by a buyer’s/lender’s solicitor to confirm that:
a floating charge has not crystallised in respect of particular property,
no steps have been taken to crystallise a floating charge so that it fixes on a particular property, and
the chargee consents to either the sale of a property, or, the creation of a second floating charge over a property
This ensures the seller is free to deal with the property (subject of course to any fixed charges and other title restrictions).
A certificate of non-crystallisation may be provided by either the chargee or the chargor. However, it is preferable to obtain the letter from the chargee because evidence of non-crystallisation is not conclusive unless it is given by such party. The chargee is not usually obliged to provide this confirmation, but is willing to do so in most cases.
Please see our precedent: Letter of non-crystallisation of a floating charge under a security agreement for a recommended form.
A letter of non-crystallisation should be used where:
a buyer is buying property, either alone or as part of the purchase of a business, and the relevant property is subject to a floating charge, or
a lender is taking security for a loan to a borrower by way of a second floating charge over property
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