Charge
Law Firm

A charge is a secured equitable interest which may be taken by a lender over real property (ie immoveable property), chattels or intangible property. The property itself is left in the hands of the owner of the property and thus is not conveyed to the person taking the charge. The interest obtained by the charge in favour of the creditor is such that the creditor is entitled to sell the property and apply to proceeds to replay the debt that the charge secures, if the debt is not paid when it is due. Unlike a mortgage, a charge does not involve a transfer of the property or asset. Charges over assets owned by a company must be registered with Companies House within 21 days from the date they are granted. Failure to register a charge will render it void against a liquidator and other creditors. Charges must be recorded in the statutory books of the company.

A charge may either be a legal or equitable. In order to obtain a legal charge, the chargee must be the legal owner of the property and formal requirements must be satisfied. Legal charges cannot be defeated by later persons taking an interest in the subject property. 

Equitable charges may taken over an equitable interest in property, however they may be defeated by a bona fide purchase for value without notice of the charge.