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Fixed and Floating Charge

Discussion in 'General Investing Discussion' started by lapsapfler, 30th Apr, 2012.

  1. lapsapfler

    lapsapfler New Member

    Joined:
    3rd Mar, 2012
    Posts:
    1
    Location:
    Perth, WA
    Hi all,

    InvestEd newbie here, so hopefully this isn't a dumb question..

    I work in Property Finance in one of the banks..when we fund a property investment (say an industrial lot), we will take a mortgage over the property as security..

    but, we also take a Fixed and Floating Charge (FFC) over the related company A i.e. the owner of the property asset as per the Certificate of title..

    Why is this so? Doesn't the mortgage already cover the property? Why not take just a mortgage, or just a FFC over company A?

    PS: I know the Personal Property Securities Act (PPSA) has already been implemented, so technically this question is outdated, but I would just like to know as this will lead to more queries in regards to the PPSA
     
  2. MikeF

    MikeF Member

    Joined:
    1st Feb, 2008
    Posts:
    12
    Location:
    Sydney, NSW
    Hi
    A fixed and floating charge gives you more control as the charge would cover other assets of the company such as cash, plant & equipment as well as sale & option agreements which may be of value and relate to the land.

    It also allows you as a lender to appoint a receiver who can also consider issues such as insolvent trading as well as the payment of preferential payments.