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A lender's primary concern is that it is repaid. Even if a lender obtains a judgment for payment of the sum owed to it by its borrower, this does not mean that a lender will be repaid in full or even in part, eg if the borrower is insolvent, the lender may have to share the borrower's available assets with other creditors and only receive part of what it is owed as a result.
Lenders will often take security as support for a borrower's obligations under a loan. Taking security means that they will have certain rights over the secured assets in the event that the borrower fails to repay the loan.
This Practice Note explains:
what security is
why lenders take security
the key features of the four types of security recognised under English law
the distinction between legal security and equitable security
A security interest confers rights in the security provider's assets in favour of the secured party as security for its own or a third party's obligation. The nature of the rights conferred by a security interest will depend on the type of security taken.
Security is different to quasi-security which only creates rights against a person (see Practice Note: Difference between security and quasi-security).
The main advantages to a lender in taking security from a security provider are
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