Releasing security
Releasing security

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

  • Releasing security
  • Releasing security—the equity of redemption
  • Pre-release checks
  • Choosing the appropriate document to release the security
  • Updating the registers following the release of security
  • Security registered at Companies House
  • Security registered at HM Land Registry
  • Security registered on the UK Register of Aircraft Mortgages
  • Security registered at the UK Ship Registry
  • Security registered at the Intellectual Property Office

To deal with the discharge and release of security, it is necessary to consider:

  1. the conditions to be satisfied before any release is effected eg the redemption amount to be paid or consents to be obtained

  2. notification of relevant third parties that the release has been effected eg where a legal assignment by way of security of a contract has been released by re-assignment to the relevant security provider

  3. the nature of the security interest and the appropriate method to release it (see Choosing the appropriate document to release the security), and

  4. the removal of any registration made at the time that the security interest was created (see Updating the registers following the release of security)

Releasing security—the equity of redemption

Once a secured debt has been fully repaid, the security provider is entitled to have the secured property released from the security interest and, if relevant (ie if the security was created by way of a mortgage or assignment by way of security), returned to it free from the security interest.

When a security provider has granted a mortgage or a charge, there must be no clog on the 'equity of redemption'. This means that there must be no fetter on the right of the security provider to redeem the security and recover unencumbered enjoyment of the secured property