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  • Taking Security

Taking Security


This book explains how security - the creation and enforcement of proprietary rights to secure the payment of a monetary liability - is taken under English law.

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Listen to Richard Calnan discuss recent developments in his book Taking Security.

 Taking Security explains how security – the creation and enforcement of proprietary rights to secure the payment of a monetary liability – is taken under English law. It offers a detailed explanation of types of security, creation, priority and enforcement.

The book is mainly concerned with property and insolvency law, two areas where security is tested and enforced. Authoritative in approach, this highly respected book provides guidance on both the legal principles and practical issues involved in taking and challenging security.

The book is accordingly broken down into the following parts:
  • Part A: Types of Security (Chapters 2–4): what types of security are available to a creditor, what are the differences between pledges, mortgages and fixed and floating charges, and what are their advantages and disadvantages?
  • Part B: Creating Security (Chapters 5 and 6): how is security created in practice and what requirements are there to register the security?
  • Part C: Priority of Security (Chapter 7): what are the priorities between the creditor and another person who obtains an interest in the secured asset?
  • Part D: Enforcing Security (Chapters 8 and 9): how is security enforced, what liabilities can be incurred as a result of enforcing security, and how can the onset of insolvency proceedings against the debtor affect the enforcement of security?
  • Part E: Security Arising by Operation of Law (Chapter 10): in what circumstances is security created without the necessity for an agreement between the debtor and the creditor?
  • Part F: Alternatives to Security (Chapters 11 and 12): to what extent can a creditor protect himself against the insolvency of the debtor in other ways, for instance, by taking a guarantee from a third party or by relying on a right of set-off?
  • Part G: International Security (Chapters 13 and 14): what issues arise where the transaction is of a cross-border nature?
The new edition includes changes arising from to the rules concerning the registration of charges created by companies and LLPs introduced in April 2013 which has necessitated the substantial re-writing of the chapter on registration and also a number of consequential changes to other chapters, particularly in relation to priorities. Chapter 6 also contains a discussion of the conceptual distinction between secured and outright transactions as an introduction to the discussion of quasi security while in Chapter 7, the discussion of purchase money security interests has been reordered.

 This book is an essential reference for litigation lawyers when disputes arise, and for insolvency lawyers and accountants.



 Types of security
 Mortgages and charges
 Floating charges

 Creating security

 Priority of security
 Enforcing security
 The effect of insolvency

 Security arising by operation of law

 Alternatives to security
Guarantees and indemnities

 International security
 Cross-border security
 Cross-border insolvency
"impressively easy to use...divided over fourteen chapters into seven sections from A to G, which together, cover every conceivable aspect of 'taking security'...detailed table of contents and numbered paragraphs will certainly help with navigation, as will the extensive index...a wealth of additional references in the meticulous footnoting throughout...reliable and detailed text is a real time saver and an excellent guide to a complex area of law...an essential reference."
Phillip Taylor MBE and Elizabeth Taylor of Richmond Green Chambers
Read the full review
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Previous Editions

1st Edition

"The author of this book is a distinguished and experienced observer and commentator...There is a constant need for both a work such as this to deal with both the contemporary issues which have arisen in recent case law as well as taking stock of the more well established principles...extremely practical...this work will be of extreme benefit to practitioners"

Journal of International Banking Law and Regulation

"well-written, clear and comprehensive account"

Journal of Business Law

2nd Edition

"If you or your clients are involved with the matter of securing payment of a sum of money - in property or insolvency law, for example -- you'd be well advised to acquire 'Taking Security: Law and Practice.'.....this book is a real time-saver for busy practitioners, particularly those whose clients are involved in cross-border issues. Clearly written and logically laid out for ease of use..."
 Read the review in full 
Phillip Taylor MBE and Elizabeth Taylor of Richmond Green Chambers

"This is a very clearly laid out and well written text, which should be useful for practitioners who want to understand the legal principles behind the law of security, as well as how it works in practice."
PLC Magazine, July 2012

"The layout is very simple and extremely user friendly...The book is a refreshing reminder of how a good textbook should be organised"

Reviewed by David Marks QC on behalf of Journal of International Banking Law and Regulation

Chapter 3

Mortgages and Charges

Part 1: Introduction

It has been seen in Chapter 2 that the requirement of a pledge that the creditor has possession of the pledged asset severely limits its use in commercial transactions. But this limitation is of little practical importance because of the availability of two other forms of security – mortgages and charges. Although they are conceptually different, they will be treated together because, in practice, the distinctions between them are not great. More important are the factors which link mortgages and charges. They are both created by evidence of the intention of the debtor, they are both effective without any necessity for the creditor to obtain possession of the secured asset and they both give the creditor a proprietary interest in the secured asset which (although the nature of the interest varies depending on whether the security is a legal mortgage, an equitable mortgage or a charge) is effective in the debtor’s insolvency.

What is a mortgage?

A mortgage involves the transfer of the title to an asset as security for a liability.
 The nature of a legal mortgage is described by Lindley MR in Santley v Wilde:
       ‘The principle is this: a mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given. This is the idea of a mortgage: and the security is redeemable on the payment or discharge of such debt or obligation ….’

An equitable mortgage has similar characteristics, the main differences being that it involves the transfer of beneficial (rather than legal) title and that it is available in respect of assets other than land or chattels.
 There are therefore two elements of a mortgage:
  • In the first place, title to an asset must be transferred to the creditor or to someone on his behalf. If it is legal title which is transferred, the mortgage is a legal mortgage. If beneficial title is transferred, it is an equitable mortgage. Either way, the creditor obtains a proprietary interest which remains effective in the insolvency of the debtor. It is not necessary for the creditor to take possession of the asset.
  • The second element is that the transfer must be by way of security. The creditor is not intended to have the absolute entitlement to the asset concerned. It has been transferred to secure a liability and, once that liability has been discharged, the debtor is entitled to have the asset re-transferred to him. This right, which is itself a proprietary interest, is generally referred to as an ‘equity of redemption’. It is considered further in part 6 of this chapter (3.301ff).
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