Hypothecation Agreement Legal Definition

Although ownership of the property is not transferred, the assumption justifies the creditor`s right to liquidate the property in the event of default. If the debt is not repaid, the creditor may have the property seized to satisfy the debt, although the person who suspects the property is not personally liable if the security thieves do not re-use the debts. Because the assumption provides a guarantee to the lender based on the borrower`s mortgaged collateral, it is easier to secure a loan and the lender may offer a lower interest rate than an unsecured loan. The term “hypothesis” is used primarily in civil law. It is defined as a right that a creditor has over something that belongs to another and has the power to sell it to pay its claim on the product. A rental property can be. B as collateral for a mortgage issued by a bank. Although the property remains the guarantee, the bank is not entitled to the rental income that is in serthenen; However, if the lessor is late in the loan, the bank can seize the property. The granting of margins on brokerage accounts is another common form of assumption.

When an investor chooses margin or sell-short, he accepts that these securities can be sold if necessary if there is a margin call. The investor holds the securities in his account, but the broker can sell them if he issues a margin call that the investor cannot satisfy to cover the losses of investors. The hypothesis arises when an asset is mortgaged as collateral to secure a loan. The owner of the asset does not waive property, property or property rights, such as . B, income generated by assets. However, the lender can seize the asset if the terms of the agreement are not met. Re-library by banks and financial institutions is now less common due to the negative effects this practice had during the 2007-08 financial crisis. When banks and brokers use hypothetical bonds to support their own transactions and negotiate with their clients` agreement to guarantee a lower credit charge or a discount on fees.

This is called a rehypotheque. If the value of all hypothetical securities in progress at the close of a transaction exceeds the mortgage limit (this surplus, the “Rehypothecation Excess”), BnpP PB, Inc. Hypothecation is most often used for mortgages. The borrower technically owns the house, but since the home is mortgaged as collateral, the mortgage lender has the right to seize the home if the borrower cannot meet the terms of repayment of the loan agreement – which happened during the enforcement crisis. Auto loans are similarly secured by the underlying vehicle. On the other hand, unsecured loans do not work with the assumption, as there is no guarantee to claim in the event of default. The mortgage is an agreement in which a person establishes guarantees to secure another person`s debts. This means that a person (not the debtor) accepts that a piece of real estate owned by him will be a guarantee for a debt. If the debt is not settled, the creditor may have the seized property confiscated for debt satisfaction, although the person who suspects the property is not personally liable if the guarantee does not satisfy the debt. Thus, the property in the mortgage is responsible for the debt, not the person who guarantees the debt.

The Importance of Mortgages in Article VIIIWe have already found that the bankruptcy court, which the dictionary of the leading law defines to mortgage as promising.11 Strong support for this definition is also found in the main dictionary of the English language12. If the seller does not react or agrees to hire him, the guarantee agreement expires immediately and the agreement on the standard trust contract and on the default escrow account and the “receivables” transmitted pursuant to the terms of the contract to the Hypothecate Cum Deed of Hypothecation expires on its terms.