Letter/certificate of non-crystallisation in property transactions
Letter/certificate of non-crystallisation in property transactions

The following Property practice note provides comprehensive and up to date legal information covering:

  • Letter/certificate of non-crystallisation in property transactions
  • What is a letter of non-crystallisation?
  • When should it be used?
  • So why is a floating charge dealt with differently from a fixed charge?
  • When does crystallisation take place?
  • Registration of floating charges
  • Purchaser for value
  • Purchaser not for value

What is a letter of non-crystallisation?

A letter of non-crystallisation is required by a buyer’s/lender’s solicitor to confirm that:

  1. a floating charge has not crystallised in respect of particular property,

  2. no steps have been taken to crystallise a floating charge so that it fixes on a particular property, and

  3. 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.

When should it be used?

A letter of non-crystallisation should be used where:

  1. 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

  2. a lender is taking security for a loan to a borrower by way of a second floating charge over property

The buyer’s/lender’s

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