What Are My Options To Enforce A Legal Charge?

• Published date: 28 April 2023
• Subject Matter: Finance and Banking, Insolvency/Bankruptcy/Re-structuring, Charges, Mortgages, Indemnities, Insolvency/Bankruptcy
• Law Firm: Myerson Solicitors LLP
• Author: Myerson Solicitors LLP
• topic: Bankruptcy and Insolvency,Contracts,Civil Procedure,Real Estate

We often have conversations with clients who ask what their options are to enforce a legal charge.

Ordinarily, the client will have lent money to a third party, entered into a formal Facility Agreement concerning the loan and secured the loan by way of a legal charge against a property.

The borrower will have failed to repay the loan on the repayment date, and the client wants their money back together with any interest and costs.

The first step is to ensure that the client (lender) has the right to enforce the security and to ascertain when it can be enforced.

Does a formal demand need to be made before the lender can take enforcement action, or can they proceed straight to enforcement? It will be necessary to undertake a full review of the security documents to ascertain what the position is.

Assuming the lender can enforce the security, then there is normally a suite of options available to the lender, including:

• Appointing a receiver;
• Appointing an administrator;
• Selling the property;
• Taking possession; and
• Foreclosure

Appointing a receiver

If the lender has a fixed charge, they can appoint a receiver to enforce the security. The charge normally has...