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Legal Dictionary

chattel mortgage

Legal Definition of chattel mortgage

  1. When an interest is given on moveable property other than real property (in which case it is usually a "mortgage"), in writing, to guarantee the payment of a debt or the execution of some action. It automatically becomes void when the debt is paid or the action is executed.

Definition of chattel mortgage

Further reading

Chattel mortgage (sometimes abbreviated to CM) is the legal term for a type of loan contract used in some states which have adopted the English law concept.

Under a chattel mortgage, the purchaser borrows funds for the purchase of movable personal property (the chattel) from the lender. The lender then secures the loan with a mortgage over the chattel. Legal ownership of the chattel is transferred to the purchaser at the time of purchase, and the mortgage is removed once the loan has been repaid.

Chattel Mortgages in Australia

Chattel mortgages are commonly used by businesses (including companies, partnerships and sole traders) in Australia to fund the purchase of cars, commercial vehicles and other business equipment.

Under Australian Taxation Office rules, businesses who account for GST on a cash basis are entitled to claim an Input Tax Credit for all of the GST contained in the purchase price of the chattel on their next Business Activity Statement.

Chattel mortgages in most Australian states attract stamp duty on the repayments.

In the United States

In the United States, chattel mortgages are referred to as secured transactions. Such transactions are governed in most states by Article 9 of the Uniform Commercial Code.

References:

  1. Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.



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