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Simple English definitions for legal terms
hypothecary
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A quick definition of hypothecary:
Term: hypothecary
Definition: Hypothecary means something that involves hypothecation. Hypothecation is when you give something as security for a loan. So, hypothecary is used to describe things that are related to this process of giving security for a loan.
A more thorough explanation:
Definition: Hypothecary refers to something that involves hypothecation, which is the act of pledging property as security for a debt.
Examples:
- When you take out a mortgage to buy a house, the lender will have a hypothecary interest in the property until the loan is paid off.
- A business might hypothecate its inventory or accounts receivable to secure a loan from a bank.
These examples illustrate how hypothecary relates to the concept of hypothecation, which is a legal arrangement where a borrower pledges collateral to a lender in exchange for a loan. In both cases, the lender has a hypothecary interest in the property or assets that are pledged as security.