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Simple English definitions for legal terms
specialty debt
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A quick definition of specialty debt:
Specialty debt is a type of debt that is due, or acknowledged to be due, by an instrument under seal, such as a deed of covenant or sale, a lease reserving rent, or a bond. It is a specific sum of money that is owed by agreement or otherwise. This type of debt is different from simple-contract debt, which is either oral or written but not of record and not under seal. Specialty debt is also known as debt by special contract, debt by specialty contract, or specialty debt.A more thorough explanation:
Specialty debt is a type of debt that is due, or acknowledged to be due, by an instrument under seal, such as a deed of covenant or sale, a lease reserving rent, or a bond. This means that the debt is backed by a legal document that has been signed and sealed by both parties.
Examples of specialty debt include:
- A bond issued by a corporation
- A lease agreement that requires the tenant to pay rent
- A mortgage that is secured by a property
These examples illustrate how specialty debt is different from other types of debt, such as simple-contract debt, which is not backed by a legal document. Specialty debt is considered more secure because it is backed by a legal agreement that can be enforced in court if necessary.