Charge (Legal Charge)

A legal charge is a formal security interest registered against an asset (typically property) in favour of a lender. It gives the lender the right to sell the asset and recover the outstanding debt if the borrower defaults. Charges are registered at HM Land Registry (for property) or Companies House (for company assets).

A first charge has priority over a second charge on the same asset. If a property is sold following default, the first charge holder is repaid first. Second charge lenders carry more risk (as they may not recover the full debt if the sale proceeds are insufficient after the first charge is repaid) and therefore typically charge higher rates.

A debenture is a type of charge used to secure business lending against the company's assets collectively - including property, equipment, and book debts. It gives the lender broad security over the business rather than a single identified asset.

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