Equitable Charge
A security interest created in equity over property, without transferring legal title. Common in land transactions where formalities for a legal mortgage are not met. Enforceable as an equitable interest.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
The Insolvency Service's official technical guidance for official receivers defines the concept directly: an equitable charge arises where a chargee is entitled to look to an asset or class of assets to discharge a liability. Unlike a legal mortgage, it differs from an equitable mortgage in that there is no agreement to create a charge or mortgage and the property may only be sold by order of the court — the chargee cannot simply exercise a contractual power of sale as a mortgagee typically can.
Equitable charges commonly arise where the formalities needed to create a legal mortgage were not properly completed, or where a court order has imposed a charge over previously unsecured property (such as a charging order made to secure a judgment debt). If the charge is registered, it can nonetheless take priority as usual against later dealings with the property, despite its equitable rather than legal status.
Example
If a lender attempts to take a legal mortgage over a property but a defect in the paperwork means the formalities are not properly satisfied, the court may nonetheless treat the arrangement as an equitable charge, entitling the lender to look to the property to satisfy the debt even though no legal mortgage was validly created.
Related terms
Official sources
This explanation is drawn from the official sources below; every substantive statement is verified against them. For advice on a specific matter, see our find help page.