What Is a Legal or Equitable Charge for the Purposes of Securing a Loan?

Charges are security for payment of debt or a commitment for the performance of obligation. The creditor gets certain rights against the debt or such as the right to be paid out of a specific fund of a right to be paid from the proceeds of the sale of property. The fundal property is then charged with the debt which is going to be paid out of it. The person giving the charge is not lose ownership of the property charged, and the lender does not have possession of all legal title to the property. These forms of security can be classified as either legal or equitable, and fixed or floating.

Legal or equitable charges include a mortgage of land in the Torrens title or a statutory charge in contrast to the charge created by private agreement. In this context, the term refers to a charge created by legislation. Some legislation imposes a statutory charge in favour creditors. For example, governments and local councils have a statutory charge of the land unpaid rates and taxes. If a person has received money or property of a bankrupt under a transaction which is already can search trustee in bankruptcy, the official receiver has a statutory charge over the property. When property comes under the bankruptcy legislation, it is subject to this form of secutiry. Third parties have can have a charge in relation to insurance money is paid by the insurer to the insured under a third party liability insurance policy. A mortgage of a ship is also a security of this type. Proceeds of crime legislation in the Commonwealth level also creates a statutory charge to secure payment to the Commonwealth over property covered by a restraining order.

An equitable charge imposes a burden on property. It arises under an agreement enforceable iniquity that is not involve a change of ownership. An equitable charge includes a floating charge recharger of the company property as in section 9 of the corporations legislation. This must be registered under the corporations legislation in sections 262 and section 9. A lender who has an equitable charge over land is entitled to the surplus left over after a mortgagee who exercises its power of sale has been repaid when the land is sold, the judge is converted to a charge of the proceeds. Equitable charges in Victoria and Western Australia are a security interest and as such are regulated by legislation in the states. The security interest as a motor vehicle, an equitable charge should be registered.

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