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Simple English definitions for legal terms
equitable mortgage
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A quick definition of equitable mortgage:
An equitable mortgage is a type of loan where someone borrows money and uses their property as security. It's like a promise to pay back the money, and if they don't, the lender can take the property. Even if the loan isn't written down like a traditional mortgage, a court can still treat it like one if it looks like that was the intention.A more thorough explanation:
An equitable mortgage is a type of mortgage that has the intent but not the form of a mortgage, and that a court of equity will treat as a mortgage. This means that even if the transaction is not technically a mortgage, a court can still treat it as one.
For example, if a borrower transfers the title of their property to a lender as security for a loan, but the transaction is not recorded as a mortgage, a court can still treat it as an equitable mortgage. This allows the lender to foreclose on the property if the borrower defaults on the loan.
Another example of an equitable mortgage is when a borrower signs a contract to sell their property to a buyer, but the buyer pays only a portion of the purchase price and agrees to pay the rest in installments. In this case, the buyer has an equitable mortgage on the property until the purchase price is fully paid.