Some terms and conditions have a charging clause, which provide that the debtor provides a charge over his, her or its personal and/or real property to secure any outstanding debts.
For the purpose of the Limitation Act 2005, this amounts to a mortgage and the creditor has 12 years to commence an action to recover the debt before it become irrecoverable.
This can allow a registration of the interest in personal property on the personal property security register. and a caveat to be placed on any real property owned by the debtor.
However, the caveat should be known as a “subject to claim” caveat, which allows dealings as long as they are made subject to the claim in the caveat, as opposed to as “absolute caveat” which prevents all dealing.
The Courts have held that an absolute caveat goes beyond what is reasonably necessary to protect the interests of the caveator and can be defeated.
We have a client who is about to do just that to get rid of a caveat.
For help with terms that allow caveats and PPSR registrations and defeating them as well, see Michael Paterson & Associates