Suppose L has a charge over a rent deposit (ie money is given to L to deposit in a separate account in L’s bank, but the money is declared as belonging to T, and is charged by T to L). If L then assigns its reversion, and the new L moves the rent deposit money into an account at its new bank, is it necessary for there to be a new charge in favour of the new holder of the reversion? In practice, this rarely happens and assignee Ls will simply open the new deposit account, and will not bother to take a new charge nor register it at Companies House.

However, it is worth noting that there is an argument that the ‘asset’ charged has changed, and therefore the benefit of the existing charge cannot simply be assigned. On that logic, a new charge is required (which should also be protected by registration). Whether this is correct depends upon one’s view as to what it is that is actually being charged by the rent deposit (ie is it the actual rent deposit moneys, or is it a chose in action – the obligation of L to repay the balance, plus the right for T to reclaim the balance)? Suffice to say that there is some uncertainty on this point, and the editorial team at practiallaw.com take the view that a new charge is required (although this does seem to be a minority view). For the detailed arguments refer to www.practiallaw.com (subscription service).