Security interest: Difference between revisions
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{{tag|Security}} can take many forms, depending on your legal system. We here are principally concerned with the common law. That is, the proper one. The overweening piece of statute here is the [[Law of Property Act 1925]]. | {{tag|Security}} can take many forms, depending on your legal system. We here are principally concerned with the common law. That is, the proper one. The overweening piece of statute here is the [[Law of Property Act 1925]]. | ||
There are {{tag|legal security}} interests | |||
===Types of security interest=== | |||
There are: | |||
*'''{{tag|legal security}} interests''' — which involve [[Title transfer|transfer]] of the legal title to the [[secured property]] — a good example is a fully registered [[mortgage]], and | |||
*'''{{tag|equitable security}} interests''' — where [[legal title]] is ''not'' transferred but the [[security holder]] acquires enough of a [[beneficial interest]] to take the asset out of the direct insolvency estate of the debtor. Good examples here are [[charge]]s and [[Assignment by way of security|assignments by way of security]] — by their nature are always equitable. | |||
Legal security interests can (and often do) revert to equitable security interests if they fail for formal or procedural reasons. | Legal security interests can (and often do) revert to equitable security interests if they fail for formal or procedural reasons. | ||
==={{t|Collateral}}: A {{t|Trick for young players}}=== | |||
“{{c|Collateral}}” can be represented by, but is ''not'' the same as, a {{security interest}}. A [[title transfer collateral arrangement]] where one party delivers collateral to another as credit support in the expectation that at a later time an [[equivalent]] thing will be returned, is ''not'' a legal security interest. It isn't a security interest at all, in fact. This is good, because there is none of this tedious mucking around with equity, formalities, registration and the fear and loathing of transactional lawyers that accompanies them. The worst that can do is issue veiled threats about the risk of [[recharacterisation]], but this is poor form and really rather passive aggressive behaviour, in this correspondent’s opinion. | |||
{{See also}} | {{See also}} | ||
Revision as of 17:35, 17 January 2018
Security can take many forms, depending on your legal system. We here are principally concerned with the common law. That is, the proper one. The overweening piece of statute here is the Law of Property Act 1925.
Types of security interest
There are:
- legal security interests — which involve transfer of the legal title to the secured property — a good example is a fully registered mortgage, and
- equitable security interests — where legal title is not transferred but the security holder acquires enough of a beneficial interest to take the asset out of the direct insolvency estate of the debtor. Good examples here are charges and assignments by way of security — by their nature are always equitable.
Legal security interests can (and often do) revert to equitable security interests if they fail for formal or procedural reasons.
Collateral: A Trick for young players
“” can be represented by, but is not the same as, a Template:Security interest. A title transfer collateral arrangement where one party delivers collateral to another as credit support in the expectation that at a later time an equivalent thing will be returned, is not a legal security interest. It isn't a security interest at all, in fact. This is good, because there is none of this tedious mucking around with equity, formalities, registration and the fear and loathing of transactional lawyers that accompanies them. The worst that can do is issue veiled threats about the risk of recharacterisation, but this is poor form and really rather passive aggressive behaviour, in this correspondent’s opinion.