Security
Under English law and in most common law jurisdictions derived from English law (the United States is the exception as explained below), there are nine major types of proprietary security interests: (1) 'true' legal mortgage; (2) equitable mortgage; (3) statutory mortgage; (4) fixed equitable charge, or bill of sale; (5) floating equitable charge; (6) pledge, or pawn; (7) legal lien; (8) equitable lien; and (9) hypothecation, or trust receipt. The United States also developed the conditional sale of personal property as another form of security interest, which is now obsolete.
Security interests at common law are either possessory or nonpossessory, depending upon whether the secured party actually needs to take possession of the collateral). Alternatively, they arise by agreement between the parties (usually by executing a security agreement), or by operation of law.
The evolution of the law of nonpossessory security interests in personal property has been particularly convoluted and messy. Under the rule of Twyne's Case (1601) transferring an interest in personal property without also immediately transferring possession was consistently regarded as a fraudulent conveyance. Over two hundred years would pass before such security interests were recognized as legitimate.
The following discussion of the types of security interest principally concerns English law. English law on security interests has been followed in most common law countries, and most common law countries have similar property statutes regulating the common law rules.
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