Hypothecations

Part of speech: noun

Definitions

1. A legal mechanism in which property is pledged as security for a debt while the borrower retains possession
2. The act of securing a loan with an asset, allowing for continued use of that asset while it's collateral
3. A contractual arrangement where an item is used as collateral for a loan, ensuring that the lender can claim it if the borrower defaults

Etymology: Roman law drew a distinction that English law later inherited. In a pledge ("pignus"), the creditor took physical possession of the goods. Under a "hypotheca," the debtor kept them, and the creditor held only a legal claim against them if the debt went unpaid. Greek "hypothēkē" meant "deposit" or "security," literally "something placed under," from "hypo-" ("under") and "tithenai" ("to place"). Latin borrowed it as "hypotheca," and the verb "hypothecare" passed into Late Latin and then into English. The legal sense probably appeared in English in the 17th century, though the exact date is uncertain. The same Greek root lies behind "hypothesis," which originally meant a foundation or supposition, something set down underneath an argument. Both words grew from the image of placing something beneath something else: one as a support for reasoning, the other as a support for a debt.