Asset Securities
1.1. Introduction to Asset Securities
1.2. Creation of Asset Securities
1.3. Obligations and Rights in Securities
1.4. Ranking
1.5. Catholic and Secondary Securities
1.6. General and Special Securities
1.7. Transfer of Rights in Security
1.8. General Enforcement of Security
1.9. Extinction of Rights in Security
1.10. Pledge
1.11. Lien
1.12. Hypothec
1.13. Reform of Securities
1.14. Quasi-Securities
, Introduction to Asset Securities
Recall the rationale for securities – they ensure payment and thereby encourage lending and permit
further borrowing. We now come to examine asset (or ‘real’) securities which allow the creditor a
right in a particular piece of property.
These can be further divided into:
o 1. Asset securities where the creditor takes ownership of the secured subject (a ‘right of
retention’). The classical example of this the retention of title clause.
o 2. Asset securities where the creditor has a ius in re aliena – i.e. a right in the property of
another. Gretton describes these securities as “a real right in the property of another person
which secures performance of an obligation”. Its key characteristics are:
1. Property of another
The property must not belong to the creditor. But it needs not necessarily
belong to the debtor (e.g. a Smith-type case). Conceptually this is important.
The right which is secured is separate – it is distinct from the real liability on
the asset.
2. Personal liability cf. real liability
The debtor’s liability is distinct from the liability of the asset. The liability of
the asset is encapsulated in a right in rem. The debtor’s liability is a right in
personam.
Thus where the debtor dies, their personal liability is vested in the estate.
Thus where the asset is transferred, the real right subsists because it is
attached to the property.
If the personal liability is not fulfilled, the real liability can be realised.
3. Accessory rights
Securities are parasitic. They depend for their existence on an obligation
which is secured. If the obligation is extinguished, then the security is
extinguished (recall Albatown and the two year missives).
Recall the one caveat – if there is a fluctuating account, then the account
going into credit does not require the security to be re-granted.
4. Secures “obligations”
A right in security must secure obligations. The typical secured obligation is
a loan – e.g. a debt loaned to the debtor with the creditor taking a right in
security.
However, the law extends beyond simply a monetary obligations. It is
possible to secure an obligation ad factum praestandum (e.g. a positive
obligation to do something). See CoFRe(S)A 1970 s.9.
In practice, obligations ad factum praestandum are not secured – the remedy
the creditor gets is purely financial and cannot ensure that the obligation ad
factum praestandum is done.
5. Real rights
1.1. Introduction to Asset Securities
1.2. Creation of Asset Securities
1.3. Obligations and Rights in Securities
1.4. Ranking
1.5. Catholic and Secondary Securities
1.6. General and Special Securities
1.7. Transfer of Rights in Security
1.8. General Enforcement of Security
1.9. Extinction of Rights in Security
1.10. Pledge
1.11. Lien
1.12. Hypothec
1.13. Reform of Securities
1.14. Quasi-Securities
, Introduction to Asset Securities
Recall the rationale for securities – they ensure payment and thereby encourage lending and permit
further borrowing. We now come to examine asset (or ‘real’) securities which allow the creditor a
right in a particular piece of property.
These can be further divided into:
o 1. Asset securities where the creditor takes ownership of the secured subject (a ‘right of
retention’). The classical example of this the retention of title clause.
o 2. Asset securities where the creditor has a ius in re aliena – i.e. a right in the property of
another. Gretton describes these securities as “a real right in the property of another person
which secures performance of an obligation”. Its key characteristics are:
1. Property of another
The property must not belong to the creditor. But it needs not necessarily
belong to the debtor (e.g. a Smith-type case). Conceptually this is important.
The right which is secured is separate – it is distinct from the real liability on
the asset.
2. Personal liability cf. real liability
The debtor’s liability is distinct from the liability of the asset. The liability of
the asset is encapsulated in a right in rem. The debtor’s liability is a right in
personam.
Thus where the debtor dies, their personal liability is vested in the estate.
Thus where the asset is transferred, the real right subsists because it is
attached to the property.
If the personal liability is not fulfilled, the real liability can be realised.
3. Accessory rights
Securities are parasitic. They depend for their existence on an obligation
which is secured. If the obligation is extinguished, then the security is
extinguished (recall Albatown and the two year missives).
Recall the one caveat – if there is a fluctuating account, then the account
going into credit does not require the security to be re-granted.
4. Secures “obligations”
A right in security must secure obligations. The typical secured obligation is
a loan – e.g. a debt loaned to the debtor with the creditor taking a right in
security.
However, the law extends beyond simply a monetary obligations. It is
possible to secure an obligation ad factum praestandum (e.g. a positive
obligation to do something). See CoFRe(S)A 1970 s.9.
In practice, obligations ad factum praestandum are not secured – the remedy
the creditor gets is purely financial and cannot ensure that the obligation ad
factum praestandum is done.
5. Real rights
