Define: Chargee
Chargee refers to the party in a contract that holds a charge over an asset, such as property or shares, as security for a debt or other obligation. The term typically extends to that party's successors and any receiver or manager appointed under the relevant security agreement, ensuring continuity of rights if the original chargee changes.
Legal accuracy standard set & glossary spot-checked by Imad Mohammed Nazar , Skadden-trained M&A lawyer, Legal Engineer at GenieAI
What Chargee Means in a Contract
A chargee is the person or entity that benefits from a charge, meaning it holds a legal or equitable interest over an asset belonging to another party, the chargor, as security for the performance of an obligation, usually repayment of a loan or other debt. The chargee does not automatically own the asset but has the right to enforce the charge if the chargor defaults, which can include taking possession of the asset, selling it, or appointing someone to manage it on their behalf.
In contract drafting, the term chargee is deliberately broad. It is defined to cover not only the original party granted the charge but also anyone who later steps into that role, whether through assignment, transfer of the underlying debt, or the appointment of a receiver or manager. This ensures the security arrangement remains enforceable regardless of changes in who actually holds the benefit of the charge.
How Chargee Is Defined or Measured
Unlike terms that involve numerical thresholds, chargee is defined by reference to legal status and relationship rather than by measurement. A definition clause will typically state that chargee means the holder of a charge created under a specified document, together with its successors in title and any receiver, administrator, or manager appointed under that charge or under the law governing the contract.
The scope of the definition matters because it determines who can exercise enforcement rights. A narrowly drafted definition might limit the chargee to a single named lender, while a broader one anticipates syndication, refinancing, or the transfer of debt portfolios, allowing new entities to inherit the chargee's rights without requiring the underlying agreement to be rewritten.
- Original chargee named at execution of the charge document
- Successors in title following assignment or novation
- Receivers or managers appointed to enforce the charge
Where Chargee Appears in Agreements
The term chargee is most commonly found in security documents such as debentures, mortgages, fixed and floating charges, and share pledge agreements. It also appears in related commercial contracts that reference security arrangements, including facility agreements, intercreditor agreements, and lease documents where a landlord's interest is charged to a lender.
Charges are particularly prevalent in Relevant Circumstances
Relevant Sectors