A loan secured by property is known as an equitable mortgage. The borrower pledges their property as collateral and promises to repay the borrowed amount. In case of default, the lender has the right to seize the property. Even if the loan agreement is not documented like a conventional mortgage, a court can still consider it as such if it appears to be the intention.
An equitable mortgage is a mortgage that is treated as such by a court of equity, even if it does not meet the formal requirements of a mortgage. For instance, if a borrower uses their property as collateral for a loan by transferring the title to the lender, but the transaction is not officially recorded as a mortgage, the court can still consider it an equitable mortgage. This allows the lender to foreclose on the property in case of default by the borrower. Another example of an equitable mortgage is when a borrower sells their property to a buyer under a contract where the buyer pays only a portion of the purchase price upfront and agrees to pay the remaining amount in installments. In this scenario, the buyer holds an equitable mortgage on the property until the full purchase price is paid.
An equitable mortgage is a type of mortgage that is created by an agreement between the borrower and the lender, without the need for a formal legal document.
A legal mortgage is created by a formal legal document, while an equitable mortgage is created by an agreement between the borrower and the lender.
An equitable mortgage can be created quickly and easily, without the need for a formal legal document. It can also be less expensive than a legal mortgage.
An equitable mortgage may not provide the same level of legal protection as a legal mortgage. It may also be more difficult to enforce in court.
An equitable mortgage is enforced through a court order, which may require the borrower to repay the loan or forfeit the property.
Yes, an equitable mortgage can be transferred to another lender, but the borrower must agree to the transfer.
Yes, an equitable mortgage can be used to secure a commercial loan, but the terms of the loan must be agreed upon by both the borrower and the lender.
If the borrower defaults on an equitable mortgage, the lender may seek a court order to foreclose on the property and recover the outstanding debt.
Yes, an equitable mortgage can be used to secure a second mortgage, but the terms of the loan must be agreed upon by both the borrower and the lender.
An equitable mortgage can be created by an agreement between the borrower and the lender, which should be documented in writing and signed by both parties.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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