This chapter is concerned with limited rights over property that enable a person who is owed a personal obligation by someone with ownership of an asset to exercise powers over that asset, should the personal obligation not be fulfilled. These limited rights are known as ‘security interests’—their effect is to provide additional remedies in the event of breach of the personal obligation and so make performance more secure. The chapter deals first with possessory securities like pledges and liens where the person taking the security has physical or constructive possession of the secured assets. It then goes on to consider non-possessory securities like mortgages and charges, showing the differences between the two and considering both fixed and floating charges.
Chapter
25. Security interests in property
Chapter
22. Real security
This chapter provides an overview of the notion of real security. It looks at the true real security devices recognised by law, which are lien, pledge, charge, and mortgage, before clarifying that the commercial effects of both true security interests and quasi-security interests are the same. Additionally, true security interests are consensual, which ensures that no security interest can be created without the consent of the creditor and debtor. The chapter then looks into the classification of security interests and the forms of possessory security and non-possessory security. It then presents the cases concerned with quasi-security and the retention of title clauses.
Chapter
26. Non-possessory security
D Fox, RJC Munday, B Soyer, AM Tettenborn, and PG Turner
This chapter focuses on non-possessory security. It begins with a discussion of mortgages and their definitions. A mortgage involves the transfer of ownership of property from the mortgagor (the debtor or a third party) to the mortgagee (the creditor) as security for a debt or other obligation. The chapter then considers equitable charges and their definition, which include fixed and floating charges, before moving on to consider equitable liens. The chapter also examines statutory control with respect to non-possessory security, with particular emphasis on the protection of third parties and debtors.
