hypothecation
Hypothecation is a legal mechanism by which a borrower offers an asset as security for a loan without giving ownership or possession of the asset to the lender. The borrower retains title and typically continues to use the asset, while the lender holds a security interest that can be invoked if the borrower defaults. Hypothecation is common in secured lending and is often used with movable property, such as inventory or equipment, and with financial assets like accounts receivable or shares.
A hypothecation is created by a contractual agreement and may be perfected by filing a notice with
Hypothecation differs from a pledge, in which possession of the asset is transferred to the creditor, and