Define: Legal Charge

A legal charge, in a financial context, refers to a legal claim or security interest that a lender holds over a borrower’s property or assets to secure repayment of a debt or obligation. It provides the lender with the right to seize or sell the property in the event of default by the borrower. Legal charges are commonly used in various lending transactions, such as mortgages, loans, and lines of credit, to protect the lender’s interests and ensure repayment. The specific terms and conditions of a legal charge are typically outlined in a written agreement between the lender and borrower, including details about the property or assets securing the debt, the amount of the debt, interest rates, repayment terms, and procedures for enforcement in the event of default. Legal charges may take different forms depending on the jurisdiction and the type of property involved, but they generally serve to provide lenders with a legal recourse to recover their funds in the event of non-payment by the borrower.

By allowing someone to take out a legal charge over your property as security for a loan, you are giving that person the right to recover his losses from your property if you default on the repayments. Most modern Mortgages over registered land take the form of a legal charge and are entered as such on the register against the charged land.

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: 29th March 2024.