Answer ... The principal forms of security interest that are taken over assets by a secured creditor include:

• mortgages;
• hypothecation charges;
• assignments;
• liens;
• grants;
• indentures of trust;
• trust receipts;
• transfers; and
• conveyances executed as security for financial assistance granted or to be granted to the borrower by the secured creditor.

In the case of immovable property, a security interest may be created by:

• a simple mortgage;
• a mortgage by conditional sale;
• a usufructuary mortgage (where the mortgagor delivers the possession and right to enjoy income of and from the property to the mortgagee);
• an equitable mortgage; or
• a mortgage by deposit of the title deeds.

In case of movable property, a security interest can be created by instruments such as:

• pledge;
• hypothecation;
• charge; and
• lien.

Answer ... The enforcement of a security interest is subject to the terms and nature of the security and the creditor. A security interest can be enforced with or without the intervention of the court or by operation of law.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 sets out a procedure for the enforcement of a security directly by a lender without the intervention of the court. Likewise, in case of a security over movable assets, enforcement is subject to the terms of the hypothecation.

However, in the case of certain kinds of mortgages – such as an equitable mortgage – the mortgagor must first apply to the court for a decree to sell the property for recovery of the debt.

The enforcement of security with the intervention of the court entails additional costs and time, and often serves as an impediment to enforcement.