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Simple English definitions for legal terms
indemnity mortgage
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A quick definition of indemnity mortgage:
An indemnity mortgage is a type of legal document that is used to secure a loan for a property. It is similar to a mortgage, but it involves a third party who acts as a trustee to hold the property until the loan is repaid. If the borrower fails to repay the loan, the trustee can sell the property to recover the debt. This type of mortgage provides extra protection for the lender, as they are guaranteed to receive their money back even if the borrower defaults on the loan.A more thorough explanation:
Definition: An indemnity mortgage is a type of mortgage where the borrower is responsible for repaying the loan, but the lender has the right to take possession of the property if the borrower fails to repay the loan. The borrower is also required to indemnify the lender against any losses that may occur if the property is sold for less than the amount owed on the loan.
Example: John wants to buy a house but doesn't have enough money to pay for it outright. He takes out an indemnity mortgage with a bank, which means that he is responsible for repaying the loan, but the bank has the right to take possession of the house if John fails to repay the loan. If the bank sells the house for less than the amount owed on the loan, John is required to indemnify the bank for any losses.
Explanation: This example illustrates how an indemnity mortgage works. The borrower is responsible for repaying the loan, but the lender has the right to take possession of the property if the borrower fails to repay the loan. The borrower is also required to indemnify the lender against any losses that may occur if the property is sold for less than the amount owed on the loan.