Define: General Equitable Charge

General Equitable Charge
General Equitable Charge
Quick Summary of General Equitable Charge

A general equitable charge is a legal concept that refers to a right or interest secured over property to secure the repayment of a debt or obligation. Unlike a legal charge, which involves a specific asset or property, a general equitable charge attaches to all of the debtor’s assets, present and future, as security for the debt. This means that if the debtor fails to repay the debt, the creditor has the right to pursue any of the debtor’s assets to satisfy the obligation, rather than being limited to a particular property. General equitable charges provide creditors with a broad level of protection and security, although they may be subject to certain limitations or priorities in the event of insolvency or bankruptcy proceedings.

What is the dictionary definition of General Equitable Charge?
Dictionary Definition of General Equitable Charge

Under the Land Charges Act (1972), the ‘general equitable charge’, or class C(iii) charge, is an interest in unregistered land that is not secured by a deposit of title deeds and does not fall into any other category of equitable charge. In order to prevent class C(iii) from becoming a dustbin for all kinds of equitable interests, some important interests are specifically excluded. In particular, you can’t register an interest under a trust in class C(iii). Probably the only interest that is likely to be encountered in this class now, and then only rarely, is an equitable mortgage.

Full Definition Of General Equitable Charge

A general equitable charge is crucial in property law, particularly regarding secured transactions and equitable remedies. This overview aims to provide a comprehensive understanding of the nature, characteristics, creation, enforcement, and implications of a general equivalent charge, focusing on the legal landscape in the United Kingdom. We will delve into its distinctions from other charges, its application in various legal contexts, and its role in protecting the interests of creditors and other stakeholders.

Understanding General Equitable Charges

Definition and Nature

A general equitable charge is a form of security interest over an asset or property not registered at Companies House or the Land Registry but is recognised and enforced by the courts based on equitable principles. Unlike legal charges, which confer legal title to the creditor, an equitable charge provides the creditor with a beneficial interest in the charged property. This interest ensures that the debtor cannot dispose of the property without satisfying the charge, thereby securing the creditor’s claim.


  • Equitable Nature: As the name suggests, a General Equitable Charge is grounded in equity rather than statutory law. This means it is subject to fairness and justice principles, giving the courts much discretion in enforcing them.
  • Flexibility: Equitable charges can be created over various assets, including personal property, real estate, and intangible assets.
  • Priority: According to the “first in time, first in right” principle, the order of creation determines the priority of an equitable charge. However, notice and registration can impact priority in certain circumstances.
  • Non-possessory: The debtor retains possession of the property subject to the charge, unlike a mortgage, where possession may transfer to the mortgagee.

Creation of a General Equitable Charge

Methods of Creation

  • Express Agreement: An equitable charge is most commonly created through an express agreement between the debtor and creditor, documented in a deed or contract. The document’s language must clearly indicate the intention to create a charge.
  • Conduct of the Parties: In some cases, a charge may arise through the parties’ conduct, where their actions imply an intention to create such an interest.
  • Court Order: The court can also impose equitable charges to achieve justice in specific cases, such as when resolving disputes involving trusts or equitable mortgages.


While there are no rigid statutory formalities for creating an equitable charge, it is essential that the intention to create the charge be clear and unequivocal. Documentation typically includes:

  • Description of the Property: A precise description of the asset or property subject to the charge.
  • Secured Obligations: Details of the debt or obligation secured by the charge.
  • Parties Involved: Identification of the debtor and creditor.

Enforcement of General Equitable Charges

Legal Remedies

The enforcement of an equitable charge is primarily through equitable remedies, which include:

  • Foreclosure: This involves the creditor obtaining a court order to take possession and ownership of the charged property.
  • Sale: The court may order the sale of the charged property, with the proceeds used to satisfy the debt.
  • Appointment of a Receiver: A receiver may be appointed to manage or liquidate the charged assets to repay the creditor.

Judicial Discretion

The enforcement process is subject to the discretion of the courts, which will consider the principles of equity and fairness. Courts may tailor remedies to ensure justice is served, taking into account factors such as the parties’ conduct and the case’s overall circumstances.

Distinctions from Other Forms of Charges

Legal Charges vs. Equitable Charges

  • Title: Legal charges involve transferring legal title to the creditor, while equitable charges confer a beneficial interest without transferring title.
  • Registration: Legal charges are typically registered at relevant registries (e.g., Land Registry), whereas equitable charges are often not registered, although notice may be given to establish priority.

Fixed vs. Floating Charges

  • Scope: Fixed charges attach to specific assets, while floating charges cover a class of assets that can change over time.
  • Control: Under a fixed charge, the debtor cannot deal with the asset without the creditor’s consent. Floating charges allow the debtor to manage the assets in the ordinary course of business until crystallisation.

Application in Various Legal Contexts

Corporate Finance

In corporate finance, equitable charges secure loans and other financial obligations. They offer flexibility and can be tailored to cover a wide range of corporate assets, including shares, intellectual property, and inventory.

Real Estate Transactions

Equitable charges are also prevalent in real estate transactions, providing security interests over land and buildings. These charges can be used to secure property development loans or ensure compliance with contractual obligations.

Trusts and Estates

Equitable charges can protect beneficiaries’ interests in trusts and estates. They ensure that trustees or executors fulfil their fiduciary duties and secure the proper administration of trust assets or estates.

Implications for Creditors and Debtors

Advantages for Creditors

  • Security: Provides a secured interest over the debtor’s property, reducing the risk of default.
  • Flexibility: Can be applied to various types of assets and tailored to specific needs.
  • Equitable Remedies: Access to a range of equitable remedies in case of default.

Considerations for Debtors

  • Asset Encumbrance: The property subject to the charge is encumbered, limiting the debtor’s ability to freely dispose of it.
  • Potential for Foreclosure: Risk of losing the property if the debt is not satisfied.

Case Law and Legal Precedents

Landmark Cases

  • Crédit Suisse v. Allerdale Borough Council (1997): This case clarified the principles surrounding creating and enforcing equitable charges in the context of local authority finance.
  • Knox v. Gye (1872) established important precedents regarding the priority of equitable charges and the rights of equitable charge holders in insolvency proceedings.

Recent Developments

Recent case law continues to evolve, particularly in complex financial instruments and corporate restructurings. Courts have increasingly emphasised the importance of clear documentation and parties’ intentions in determining the validity and enforceability of equitable charges.


A general equilibrium charge is a versatile and powerful tool in secured transactions, providing creditors with a beneficial interest in the debtor’s property while preserving equitable principles. Its application across various legal contexts underscores its significance in modern finance and property law. Understanding the nuances of its creation, enforcement, and implications is essential for legal practitioners, creditors, and debtors alike, ensuring that such charges are effectively utilised and properly managed within the legal framework of the United Kingdom.

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This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 11th June 2024.

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