Charge

A charge is an encumbrance, lien or other financial obligation that is attached to some property. In the UK, charge is especially used to denote the document evidencing a mortgage security. A fixed charge refers to a defined set of assets, while a floating charge (sometimes called a chattel mortgage in the US) refers to other assets that change from time to time, e.g. cash or inventory, which become a fixed charge after a default. In which case the floating charge is said to crystallize or attach to that corpus of assets. For example, a person who files a lien against a piece of property might say that he has a charge against that property.

Second charge is the UK term for a mortgage ranking behind a first mortgage. In the US this is called a second loan or second mortgage. If more than one loan is secured against a property, the lender with the first charge has the first call on the property in the event of default. Second charges and loans from subsequent lenders get the remains of the equity.

Charge may also be used to mean a request payment for a service or product, e.g. “The firm is going to charge us for their services on an hourly basis.” In finance, to charge means to make a purchase on credit, e.g. “We will charge the vacation on our credit card.” In criminal law, to charge is to make a formal accusation against a defendant, “The charge is burglary”.