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Simple English definitions for legal terms
common-law mortgage
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A quick definition of common-law mortgage:
A common-law mortgage is a type of legal document called a deed of trust. It is used to secure a loan for real estate by transferring the title to a trustee until the loan is repaid. This type of mortgage is similar to a regular mortgage, but it involves a third party trustee who holds the title to the property until the loan is paid off. This helps protect the lender's investment in case the borrower defaults on the loan.A more thorough explanation:
A common-law mortgage is a type of mortgage where the borrower gives the lender a deed of trust as security until the loan is repaid. This type of mortgage is similar to a trust deed or an indemnity mortgage.
For example, John wants to buy a house but doesn't have enough money to pay for it in full. He takes out a loan from a bank and gives the bank a common-law mortgage on the house. This means that if John fails to repay the loan, the bank can foreclose on the house and sell it to recover the money owed.
Another example is when a business takes out a loan to purchase a property for their operations. The lender may require a common-law mortgage as security for the loan.