equitable mortgage

This is a mortgage whereby the mortgagee does not acquire the legal estate. The mortgagor acquires an equitable interest in the subject property. All mortgages which are not legal mortgages are equitable. Thus an instrument creating a mortgage which does not satisfy the requirements of the Law of Property Act (1925) or because the instrument does not satisfy formal requirement for a legal mortgage will be equitable.

An equitable mortgage may be created by handing the deeds of title in property to another person in exchange for a loan. The lender may thereby acquire an equitable mortgage over the property specified by the deeds of title. There is no writing in such a transaction, and therefore the transaction cannot satisfy the formal requirements for a legal mortgage. Also, a beneficiary to a trust may only grant an equitable mortgage over trust property. 

Usage: The owner of the trade mark handed the certificate of registration for the trade mark to the lender with the intention that the certificate would serve as security and thereby created an equitable mortgage over the trade mark.

Related Words: equity; equitable interest; legal mortgage; mortgage; legal mortgage; equitable mortgage; security interest; equitable mortgage; real property; personal property; equitable charge; legal charge; lien; charge; fixed charge; floating charge; pledge; asset; beneficial owner; fiduciary relationship; court of equity.