Charge for Substituted Security

Charges by Way of Substituted Security

The purpose of a charge by way of substituted security is to release property from a charge and, at the same time, replace it with other property. Deeds of substituted security are most commonly encountered in leasehold merger situations, where it is agreed that a charge affecting the leasehold estate should be “carried up” and registered against the reversionary estate. The documents to be lodged are:

(i) the deed of substituted security (Precedent 8.L) prepared in duplicate and executed by all parties;
(ii) the existing Certificate of Charge;
(iii) the Land Certificates for both properties;
(iv) any other relevant documents (for example, transfer, applications for merger etc.); and

PRECEDENT 8.L
DEED OF SUBSTITUTED SECURITY

LAND REGISTRY

Folio: 1234 (“the original Folio”)
County:
Folio: 6789 (“the substituted Folio”)
County:

Registered Owner: AB

THIS DEED is made the .......... day of .......... 20 .......... BETWEEN XY BUILDING SOCIETY of ...... (“the Society”) of the one part and AB the above-named registered owner (“the Borrower”) of the other part.

  1. This Deed is supplemental to a Deed of Charge (“the principal Deed”) dated  .......... 20.. made between the Borrower and the Society and registered as a burden on the original Folio on .......... 20..
  2. The sum of £.......... is now owing to the Society on the security of the Principal Deed.
  3. The Society hereby releases the land comprised in the original Folio (“the Original Property”) from the said charge.
  4. The Borrower as beneficial owner hereby charges the land comprised in the substituted Folio (or that part of the land comprised in the substituted Folio set out in the Schedule hereto) (“the Substituted Property”) in favour of the Society with the repayment of all monies now or to become due under the Principal deed.
  5. ALL the covenants provisions and conditions contained in the Principal Deed shall apply to this Deed and the Substituted Property as if the same were repeated herein at full length to the intent that the Substituted Property may become in all respects substituted for the Original Property.

(To be executed by BOTH parties, and attested.)