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Legal Dictionary

mortgage

Legal Definition of mortgage

Noun

  1. An interest given on a piece of land, 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. In some jurisdictions, it entails a conveyance of the land until the debt is paid in full. The person lending the money and receiving the mortgage is called the mortgagee; the person who concedes a mortgage as security upon their property is called a mortgagor.

Definition of mortgage

Pronunciation

  • (US) IPA: /moɹ'gədʒ/, /moɹ'gɛdʒ/, /moɹ'gɪdʒ/
  • Audio (US) [?]

Etymology

    1390, Old French mortgage, from mort ("dead") + gage ("pledge"). Verb attested 1467.[1]

Noun

mortgage (plural mortgages)

  1. A special form of secured loan where the purpose of the loan must be specified to the lender, to purchase assets that must be fixed (not movable) property such as a house or piece of farm land. The assets are registered as the legal property of the borrower but the lender can seize them and dispose of them if they are not satisfied with the manner in which the repayment of the loan is conducted by the borrower. Once the loan is fully repaid, the lender loses this right of seizure and the assets are then deemed to be unencumbered.

Verb

to mortgage (third-person singular simple present mortgages, present participle mortgaging, simple past and past participle mortgaged)

  1. As in "to mortgage a property", to borrow against a property, to obtain a loan for another purpose by giving away the right of seizure to the lender over a fixed property such as a house or piece of land.

Related terms

  • mortgagee
  • mortgager

References

Notes:

  1. "mortgage" in the Online Etymology Dictionary, Douglas Harper, 2001

Further reading

A mortgage is the transfer of an interest in property (or the equivalent in law - a charge) to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

This comes from the Old French "dead pledge," apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure.[1]

In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than on other property (such as ships) and in some jurisdictions only land may be mortgaged. A mortgage is the standard method by which individuals and businesses can purchase real estate without the need to pay the full value immediately from their own resources. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.

Note:

  1. Coke, Edward. Commentaries on the Laws of England. "[I]f he doth not pay, then the Land which is put in pledge upon condition for the payment of the money, is taken from him for ever, and so dead to him upon condition, &c. And if he doth pay the money, then the pledge is dead as to the Tenant"

References:

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



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