assignment vs assignment by way of security

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Assignment (by way of security) definition

What does assignment (by way of security) mean, view the related checklists about assignment (by way of security), perfecting security in real estate finance transactions—checklist.

Perfecting security in real estate finance transactions—checklist This Checklist sets out the steps which property lawyers need to take to perfect security in a real estate finance transaction. Real estate finance lenders will typically want to take a full security package over all of the assets relating to the real estate. A real estate lawyer in a multi-disciplinary team will likely be responsible for arranging or inputting into the following securities and documentation: • security over the land, rental income, insurance proceeds, development and construction and contractual rights • reviewing the management agreement and negotiating a duty of care agreement (although in a multi-disciplinary team, this is sometimes handled by the banking and finance lawyer) • dealing with completion undertakings and post completion registration of the legal charge at Companies House and HM Land Registry as well as giving third party notices regarding rent payment, notice of charge where necessary of assignment of contractual rights or warranties See Practice Notes: Security in real estate finance transactions, Taking security over land...

Real estate finance—checklist

Real estate finance—checklist This checklist sets out the key issues to consider when acting for the lender or the borrower on a real estate finance transaction. It assumes that the property being acquired and/or developed is situated in England or Wales. Principal issues include: • ensuring that the documents received from the seller of the property are sufficient to obtain good title to, and effect registration of, the property • confirming that the parties have the power and authority to enter into the transaction • considering whether the transaction involves any entities incorporated or formed overseas that want to buy, sell or otherwise transact with the property. See Practice Note: The register of overseas entities and its impact on loan transactions (Economic Crime (Transparency and Enforcement) Act 2022), and • considering whether the transaction involves the development of a property and whether, in particular, it involves a ‘higher-risk building’. See Practice Note: Building Safety Act 2022—implications for finance transactions involving real estate and real estate development • Ensure that the following...

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Priority between security interests—practical examples.

Priority between security interests—practical examples This Practice Note sets out examples of how the rules on priority could work in practice with reference to the relevant priority rules under English law. It complements and should be read in conjunction with our other Practice Notes on priority. Additional examples are added to this Practice Note on a regular basis. If you come across a priority situation in practice that you would like us to include, please use the LexisAsk function to let us know. Practice Note: Priority between security interests sets out the rules on priority from a more technical perspective and should be used for information about the black letter law which underpins the practical examples in this Practice Note. It is important to note that English law priority rules are complex and are generally accepted not to be clear in every respect. The rules can also be affected by the actions of the parties meaning that law firms will often not give an opinion on the...

Ireland—Key features of debentures

Ireland—Key features of debentures Debentures are used in many types of financing where it is desirable to take security over all of the assets of a particular entity. They are a form of umbrella document, incorporating many types of security over a broad range of assets. What is a debenture and when do you use one? What is a debenture? In the context of secured lending, the term 'debenture' means a form of security agreement that grants security interests over a broad range of the security provider's assets as collateral for either the security provider's own obligations or the obligations of a third party. The term 'debenture' can also refer to a document that either creates or acknowledges a debt. This Practice Note deals with debentures as a form of security in the context of secured lending. In particular, it considers: • the formalities required for a debenture • the legal principles to be considered • the fixed security normally secured in a debenture • the floating security under a...

Discover our 69 Practice Notes on Assignment (by way of security)

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Assignment of intellectual property rights (asset purchase) (long form).

Assignment of intellectual property rights (asset purchase) (long form) This Agreement is made on [insert date] (Commencement Date) between the following parties (each a ‘party’ and together the ‘parties’): Parties 1 [insert Assignor name] a company incorporated in [England and Wales] whose registered number is [insert company number] and whose registered office is at [insert registered office] (Assignor); and 2 [insert Assignee name] a company incorporated in [England and Wales] whose registered number is [insert company number] and whose registered office is at [insert registered office] (Assignee) Background (A) [Assignor has entered into an agreement with Assignee [dated [insert date]] for the sale of [the [insert name] business and/or certain business Assets] by Assignor as seller to Assignee as buyer OR [insert other description of relevant transaction (referencing any relevant related agreements)]] (Transaction). (B) Assignor has agreed to assign, and Assignee has agreed to take an assignment of, the Assigned IPR on the terms and conditions of this Agreement. (C) [This Agreement and the assignment under it is...

Ireland—Debenture: single company chargor—bilateral—all monies

Bilateral debenture for a chargor incorporated as a limited company in Ireland to secure the chargor’s obligations to the lender on an all monies basis Using this Precedent Debenture This is a precedent bilateral Debenture which can be used to take security over all of the assets of a company. This drafting note explains the context in which this precedent Debenture might be used as well as the features of this precedent Debenture and the assumptions on which it is based. Negotiating a security package—general principles A lender's primary concern is that it is repaid. If a borrower fails to repay a loan the lender may have to go to court to obtain a judgment for payment of the sum owed to it. Even if it obtains such judgment this does not mean that the lender will be repaid in full or even in part. For example, if the borrower is insolvent, the lender may have to share the borrower's available assets with other creditors and will only receive part...

Dive into our 17 Precedents related to Assignment (by way of security)

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How could the funder of a ‘first purchaser’ of a construction development obtain rights against the construction/design team.

How could the funder of a ‘first purchaser’ of a construction development obtain rights against the construction/design team? It is standard market practice for warranties to be provided by the construction/design team to the following beneficiaries: • funder of the development • any first purchaser of the whole or a substantial part • any first tenant of the whole or a substantial part • employer (if the warrantor is a consultant or sub-contractor) • freeholder Where a purchaser is the 'first' purchaser from the employer/developer, a typical construction contract will provide, therefore, that the first purchaser will be entitled to receive a collateral warranty equivalent (ie on the same terms) to that given to the employer/developer, from the same contractor/consultant/sub-contractor. Any other beneficiaries not listed above, ie the funder of a first purchaser, would be considered unusual and the warrantor would be likely to resist providing any such additional warranty (although the funder could always request one, the warrantor may agree). See: Collateral warranties—checklist. This differs to the...

Subject to post-Brexit potential changes in enforcing foreign judgments, is it possible to state with certainty that: A) an EU judgment will be enforced against an English company in English courts B) an EU debenture affecting an English company would be enforceable in English courts.

Subject to post-Brexit potential changes in enforcing foreign judgments, is it possible to state with certainty that: A) an EU judgment will be enforced against an English company in English courts B) an EU debenture affecting an English company would be enforceable in English courts. EU judgment In this Q&A we have limited our research to cover the current position under English law; we have not considered the possible position after the UK has left the EU. Current position The rules on jurisdiction and the enforcement of judgments within the EU (including the UK) are currently set out in Regulation (EU) No 1215/2012 (Brussels I Recast) of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I Recast). Brussels I Recast applies only to claims commenced after 10 January 2015 (see art 81). In relation to claims commenced prior to that date, the rules set out in Brussels I continue...

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Insurance & reinsurance monthly highlights—august 2019.

This month’s edition of Insurance & Reinsurance monthly highlights includes analysis of the decision of the High Court to refuse Prudential Assurance Company’s Part VII FSMA 2000 transfer of a portfolio of annuity business. It also includes other news highlights reported over the past month, including items on Brexit; cladding risks; cyber insurance and motor insurance. There is also news on the latest regulatory developments, together with dates for your diary and case trackers.

Corporate weekly highlights—2 August 2018

This week’s edition of Corporate highlights includes LSE guidance for AIM companies on new corporate governance requirements that apply from 28 September 2018, revised FRC guidance for companies preparing strategic reports, and FCA amendments to the Listing Rules and Disclosure Guidance and Transparency Rules.

Read the latest 4 News articles on Assignment (by way of security)

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Bulletins | January 30, 2018

Assignment by way of security – beware of giving away more than you bargained for.

Construction

Assignment by way of security is a concept that comes up on many construction projects; typically as a condition of providing finance a funder will require an assignment by way of security of key construction documents, including building contracts and appointments, with the intention that if the borrower defaults on the loan, the assignment will be perfected and the funder will be entitled to enforce its rights under the constructions documents. How and when exactly such assignment takes place and the interplay with an employer’s rights under its contracts on a project was brought into focus in last year’s case of Mailbox (Birmingham) Limited v Galliford Try Construction Limited ([2017] EWHC 67 (TCC)).

Mailbox (Birmingham) Limited (“Mailbox”), the claimant special purpose vehicle set up to develop the Mailbox in Birmingham (“the Property”), a high-end mixed used development, boasting a Harvey Nichols and the base for BBC Birmingham, engaged Galliford Try Construction Limited (“Galliford”) for refurbishment works at the Property under a building contract dated 23 December 2013. A dispute arose between the parties regarding responsibility for delay, the final account, liquidated damages and Mailbox’s termination which was referred to adjudication, where Galliford were ordered to pay Mailbox £2,477,152.86 plus 75% of the adjudicator’s costs. Galliford did not pay the sums ordered, so Mailbox sought enforcement of the adjudicator’s decision in the High Court.

Did Mailbox have a right to bring an adjudication?

Galliford’s primary defence to the enforcement was that Mailbox had no right to bring the claim, as it had assigned the benefit of the building contract with Galliford to Aareal Bank AG Wiesbaden (“Aareal”) in accordance with the requirements of a debenture dated 10 May 2011. Mailbox raised three defences:

• The building contract was not in existence at the time of the assignment referred to in the debenture. Therefore there could be no assignment;
• Alternatively, any assignment was by way of charge rather than a legal assignment; or
• The contract had been re-assigned from Aareal to Mailbox before Mailbox commenced adjudication proceedings.

Mailbox failed on the first two defences, but won on the third so was able to enforce the adjudicator’s award. However, it was the analysis of the first and second defences and Mrs Justice O’Farrell’s review of the requirements for legal assignment under Section 138 of the Law of Property Act 1925 that are of particular note.

It was held that the wording of the debenture covered future contracts, including the building contract in question. The wording “each chargor with full title guarantee assigns absolutely by way of security in favour of the security trustee” amounted to a full legal assignment rather than an assignment by way of charge and/or a conditional assignment. Further, there was a requirement for notice of the assignment to be served and specific reference to rights being re-assigned, both of which were more akin to an absolute assignment. Express notice was given to Galliford, again consistent with an absolute assignment.  Thankfully for Mailbox, on the day it commenced the adjudication, Aareal had re-assigned the rights under the building contract to Mailbox. If it had not done so, or done so after the adjudication had been commenced, Mailbox would not have been entitled to commence the adjudication.

Practical Tips

When obtaining finance for a project it is crucial to understand what the funder really requires in relation to security over construction documents. If all rights are assigned, the employer no longer has the ability to enforce such rights and may have given away more than he bargained for.

It may be that the use of collateral warranties or third party rights together with a charge will suffice but if not (which is unfortunately still the common position), it is important that any such rights are re-assigned before the employer commences an adjudication or any other proceedings.