Enforcing mortgages and charges

Legal and equitable mortgages and charges

The terms ‘mortgage’ and ‘charge’ are often used as though they are interchangeable. Strictly speaking, they are not. Both are security for the payment of a debt or other obligation. However, while a mortgage confers an interest in property, a charge is the appropriation of property without giving the creditor either a general or special interest in, or possession of, the subject of the security. The classic description of a mortgage is ‘a conveyance of land…for the payment of a debt or the discharge of some other obligation for which it is given’. See Practice Note: Mortgages and land—an introduction to mortgages and legal charges over land.

Priority between interests

In addition to ensuring its security has been validly created and perfected, a secured party will want to ensure its security ranks as it expects against any other competing security interests. Disputes as to priority arise less commonly than might be expected due to the use of deeds of priority and intercreditor agreements. However, these are only of use if the creditors are aware of each others’ security interests

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