pledgee

Pledgee is the party in a pledge arrangement who receives property pledged as security for an obligation. The pledgee holds a security interest in the pledged asset and may take possession or control of the property to protect the creditor’s interest, depending on the terms of the pledge and applicable law. The pledgor is the owner who offers the asset to secure performance or repayment.

In a typical pledge, the pledgor transfers possession or control of the collateral to the pledgee while retaining ownership, subject to the pledge. The pledgee’s rights and duties arise from the pledge agreement and relevant security-law rules. Upon default, the pledgee may sell or dispose of the collateral to satisfy the debt, following due process and statutory requirements. Proceeds from any sale are applied to the indebtedness, with any surplus returned to the pledgor; shortfall may give the pledgee a deficiency claim, depending on the jurisdiction and agreement. The pledgee also has a duty to exercise reasonable care in protecting the collateral during the period of the pledge.

Pledgees are common in various contexts, including pawn transactions, secured lending, and corporate arrangements where property such as jewelry, real estate, shares, or receivables is pledged as collateral. The term is primarily used in common-law systems, though similar concepts exist in civil-law jurisdictions under different terminology.

Etymology: the term derives from pledge, with the suffix -ee indicating the recipient or holder of a benefit or duty. Related terms include pledgor (the pledging party), collateral, lien, and security interest.