A mortgage can be legal or cheap. Under a legal hypothec, legal ownership of the property is transferred to the lender. An adequate mortgage is usually established when a transaction does not meet the formal requirements of a legal hypothec but is registered in equity (for example, a mortgage on real estate that the mortgage debtor does not yet own – a legal mortgage can only be created on real estate existing at that time); or if the mortgage concerns real estate that is only included in equity (for example, an equity interest – a legal mortgage cannot be assumed on real estate that is registered only in equity). The main feature of a fixed fee is that it gives the lender control of the encumbered asset. This control is crucial for the nature of a solid load – without sufficient control, the load is considered floating. As a rule, a document that creates a fixed commission gives the lender the right: the asset of the security provider is the right to demand the repayment of the debt of the deposit-holding bank (the bank of the account) or the recovery of a variable commission, on the other hand, weighs on a class of assets or future assets and acts as a deferred right, use these assets to settle a debt. Until an event occurs that results in the variable charge being fixed on these assets, the borrower is free to dispose of and supplement the assets in the ordinary course of his business. When the event occurs and variable fees are fixed, it depends on the assets that make up that class at that time. A variable charge has the following characteristics: Receipt of the royalty should ensure that the encumbered assets are identified as accurately as possible. As part of a set of securities covering all of an entity`s assets in derivatives transactions, cash recognised with CCPs as financial collateral to cover members` claims and/or floating charges, as the name suggests, floats on a changing set of assets. While fixed fees can be created by anyone, variable fees can only be created by businesses, LLPs and, under the Farm Credits Act, farmers.
Individuals cannot grant variable charges on their assets. Fees can be fixed or floating. The type of charge (whether fixed or variable) is particularly important if the borrower becomes insolvent. As part of a fixed charge, an asset that is identified and determined, or that can be identified and defined, can be used to settle a debt once the lender acquires an interest in it. A legal hypothec transfers ownership of the property to the mortgagee so that it cannot be sold to third parties without releasing the mortgage and transferring ownership to the mortgagee. Alternatively, the buyer may agree to purchase the property subject to the existing mortgage, which is unusual. Legal hypothec: This is the safest and most complete form of security. As we have seen, it transfers ownership to the bank (the mortgagee), thus preventing the borrower (the mortgagee) from handling the mortgaged property while it is subject to the mortgage.
The formalities required to create a legal hypothec depend on the type of property to be secured, but include: The holder of the Full Title Account hereby transfers to the lender absolutely all of his right, title and interest in and to the deposit as continuous security for the payment and repayment of the secured amounts. If, at any time, the secured amounts have been paid and settled in full and the Lender is not subject to any obligation, obligation or liability of any kind (present or future, actual or potential) with respect to the Facility Agreement, the Lender will, at the request and expense of the Account Holder, return, at the request and expense of the Account Holder: the deposit to the account holder or otherwise pay the security established hereunder. Despite the inherent weaknesses of a floating charge, it is generally important for a lender to take a floating charge whenever possible. A variable charge has three important advantages: Therefore, a statutory assignment should be expressed as an absolute assignment with the provision that these rights are reallocated once the debt in question has been discharged. However, if an assignment is made “for consideration” and not as security, it takes effect only on an equitable basis. Unlike assets, which are secured by a fixed charge, assets secured by a variable charge are described in very general terms – for example, the borrower`s “business shares” or his “company and assets”. This group of assets may fluctuate from time to time, either by the borrower disposing of them in the ordinary course of its business or by acquiring other assets in this class after the variable charge has been created. This flexibility is the big advantage of a variable commission, but the freedom to manage the assets presents the lender with the problem of how to prevent the borrower from selling all these assets. For this reason, lenders prefer, if possible, to charge a fixed fee on certain assets. Lenders have limited ability to control variable encumbered assets in certain circumstances – a floating asset is attached to encumbered assets that exist when a particular event occurs, either by operation of law or by agreement of the parties fixing the commission. At this point, variable fees cease to hover over the pool of assets and are instead tied to the assets that exist at that time.
Depending on the circumstances, the bank has the option of providing collateral on some or all of the company`s assets.