[Mailman] NUMBER ONE Success System

[Tommy Lee]

http://www.noss123.com/


Equitable Lien

Equitable liens are slightly amorphous forms of security interest that only
arise by operation of law in certain circumstances. Academically it has been
noted that there seems to be no real unifying principle behind the
circumstances that give rise to them.[23]

An equitable lien takes effect essentially as an equitable charge, and they
arise only in specified situations, (e.g. an unpaid vendor's lien in
relation to property is an equitable lien; a maritime lien is sometimes
thought to be an equitable lien). It is sometimes argued that where the
constitutional documents of a company provide that the company has a lien
over its own shares, this take effect as an equitable lien,[24] and if that
analysis is correct, then it is probably the one exception to the rule that
equitable liens arise by operation of law rather than by agreement.

[edit] Hypothecation

Hypothecation, or "trust receipts" are relatively uncommon forms of security
interest whereby the underlying assets are pledged, not by delivery of the
assets as in a conventional pledge, but by delivery of a document or other
evidence of title. Hypothecation is usually seen in relation to bills of
lading, whereby the bill of lading is endorsed the secured party, who,
unless the security is redeemed, can claim the property by delivery of the
bill.

[edit] Security interest vs. general obligation

Some obligations are backed only by a security interest against specific
designated property, and liability for repayment of the debt is limited to
the property itself, with no further claim against the obligor. These are
referred to as "nonrecourse obligations".

Other obligations (i.e., recourse obligations) are backed by the full credit
of the borrower. If the borrower defaults, then the creditor can force the
obligor into bankruptcy and the creditors will divide all assets of the
obligor.

Depending on the relative credit of the obligor, the quality of the asset,
and the availability of a structure to separate the obligations of the asset
from the obligations of the obligor, the interest rate charged on one may be
higher or lower than the other.
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