Secured Lending
At Herrington Carmichael, our secured lending solicitors are experts in the legal framework surrounding secured finance transactions.
Secured lending involves borrowing money using an asset as collateral. The lender often holds a legal charge, or other such security over the asset until the loan is fully repaid.
This type of lending is widely used in areas such as property finance, commercial lending, and business investment. It offers added security for lenders, reducing their risk if the borrower fails to meet repayment obligations. As a result, borrowers often benefit from more favourable loan terms compared to unsecured borrowing.
A solid understanding of the legal principles behind secured lending is crucial for both parties involved.
At Herrington Carmichael, our secured lending solicitors are experts in the legal framework surrounding secured finance transactions. Our job is to step in and protect your interests, whether you are a lender trying to recover funds, or a borrower facing legal action.
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Frequently Asked Questions
Find answers to your most pressing questions about our services and processes.
What types of assets can be used as security?
Common types of security include:
- Property;
- Shares or other investments; and
- Personal guarantees backed by individual assets.
What are the main types of security documents?
The main forms include:
- Legal charge / mortgage;
- Debenture;
- Fixed charge;
- Floating charge;
- Charge over shares; and
- Guarantee and indemnity.
Do security interests need to be registered?
Yes. For a company, most charges must be registered at Companies House within 21 days of execution. Failure to do so can render the charge void.
What happens if the borrower defaults?
If the borrower defaults, the lender may be entitled to enforce its security. This could involve:
- Appointing a receiver (for fixed charges);
- Taking possession of the secured asset;
- Selling the asset to recover the debt;
- Appointing an administrator or pursuing insolvency proceedings; and
- Enforcing personal guaranty against personally held assets.