Chattel Mortgage Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Chattel Mortgage, written in plain English, along with examples of how it is used.
What is Chattel Mortgage?
Chattel refers to all the personal asset which is not a freehold. It can range from book, pencil, pen, shirt etc. Any document which induces a legal right into such personal tangible asset that can be used as a security or mortgage towards a loan is known as Chattel mortageg. These days it has been well replaced for the purpose of well being of the lender.
History and Meaning of Chattel Mortgage
A Chattel Mortgage is a type of loan agreement that involves personal property used as collateral. This type of loan has been in existence for centuries and has long been used to secure loans for agricultural equipment and vehicles. The term "chattel" refers to movable property that is not real estate.
The concept of chattel mortgages dates back to medieval times when farmers would use their livestock as collateral for loans. In the United States, chattel mortgages were commonly used in the 19th century to finance the purchase of farm equipment and machinery.
Today, chattel mortgages are still used to finance the purchase of equipment and vehicles, but they can also be used to secure loans for other types of personal property, such as boats and RVs.
Examples of Chattel Mortgage
A farmer takes out a loan to purchase a tractor and uses the tractor as collateral for the loan with a chattel mortgage agreement.
A small business owner takes out a loan to purchase a work vehicle and uses the vehicle as collateral with a chattel mortgage agreement.
A fisherman takes out a loan to purchase a boat and uses the boat as collateral with a chattel mortgage agreement.
Legal Terms Similar to Chattel Mortgage
Security Agreement - This is a legal document that gives a lender the right to take possession of property if a loan is not repaid.
Lien - A lien is a legal claim against property as security for the repayment of a debt.
Pledge - The act of giving something as security for a loan or other obligation.