The equity of exoneration and how it applies in practice

Copyright © 2025 LexisNexis
Published by a LexisNexis Restructuring & Insolvency expert
Practice notes

The equity of exoneration and how it applies in practice

Copyright © 2025 LexisNexis

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes
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This Practice Note looks at the Equity of exoneration: what it is, and when and how it applies. It does not look at how the Trustee in bankruptcy (Trustee) ascertains and values any interest they may have in property, what assets vest in them, or how they realise any interest and equitable accounting. For further reading on this, see Practice Notes:

  1. •

    Protecting a trustee in bankruptcy's interest in property following their appointment

  2. •

    Equitable accounting—how it works in practice

  3. •

    Possession and sale applications in respect of a Bankrupt's family home

What is the equity of exoneration?

The equity of exoneration is an equitable relief which can be applied if jointly-owned property is mortgaged or charged to raise money for the payment of one of the co-owner’s debts, or otherwise for their benefit. In these circumstances it is presumed, absent any evidence to the contrary, that the charge given by the non-debt incurring party is given merely by way of security, and they may be indemnified by the debt incurring

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Jurisdiction(s):
United Kingdom
Key definition:
Equity definition
What does Equity mean?

Capital that is used to finance companies in the form of ordinary share capital as opposed to debt finance. The term is also sometimes used to describe preference shares or subordinated loan capital contributed by equity investors (commonly known as quasi-equity) to distinguish it from third party debt.

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