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
25. Possessory security
D Fox, RJC Munday, B Soyer, AM Tettenborn, and PG Turner
This chapter deals with possessory security. It begins with a discussion of a pledge (which normally secures repayment of a debt but, in principle, there is no reason why it should not secure performance by the pledgor of some other obligation), before considering the concepts of delivery and re-delivery of possession. It also examines re-pledge by the pledgee, realisation, and statutory control before turning to liens. In particular, it explains how a lien arises and how it is enforced, terminated, and registered. Finally, it looks at the proposed legal reform with respect to possessory security.
