Legal Definitions - general mortgage

A general mortgage is a type of mortgage that creates a lien on all of a borrower's real property, or a broad category of their real property, rather than being limited to a single, specific piece of real estate. This stands in contrast to the more common specific mortgage, which is tied to a particular parcel of land and its improvements. General mortgages are less common in typical residential lending but can appear in commercial or corporate financing arrangements where a lender seeks broad security across multiple assets.

Here are some examples to illustrate this concept:

• Corporate Financing: A large manufacturing company seeks a substantial line of credit from a bank to fund its operations and expansion. As part of the security agreement, the company grants a general mortgage over all its existing and future real estate assets. These assets include its primary factory complex, several regional distribution warehouses, and various undeveloped land parcels it owns for future projects. This means the bank's lien applies to all these properties collectively, providing comprehensive security without the need for individual mortgages on each specific property.

  This illustrates a general mortgage because the security for the loan is not limited to one specific building or plot of land, but rather encompasses all the company's real estate holdings, providing the lender with broad coverage.

• Agricultural Business Loan: A family-owned agricultural enterprise, which operates several distinct farms under one corporate umbrella, needs a significant loan to invest in new equipment and expand its crop production. The lender requires a general mortgage that covers all the land owned by the enterprise. This includes multiple fields, barns, silos, and even the residential properties associated with the farming operations, all located in different parts of the county. This approach simplifies the collateralization process compared to taking out separate mortgages on each individual parcel of land.

  This demonstrates a general mortgage because the loan is secured by a single instrument that encumbers all the diverse real estate assets (multiple farms, barns, residences) owned by the agricultural business, rather than just one specific farm.

• Real Estate Developer's Portfolio: A real estate development company, which owns a portfolio of undeveloped land parcels intended for future residential communities and several completed commercial buildings that generate rental income, seeks a large construction loan. To streamline the collateralization process for the new project, the developer agrees to a general mortgage that encumbers all the real property currently held by their development company. This provides the lender with broad security across their entire real estate portfolio, ensuring that if the developer defaults, the lender has a claim against all these assets.

  This example highlights a general mortgage because the security for the construction loan extends to all the developer's real estate holdings—both undeveloped land and income-generating commercial properties—rather than being tied to just the specific parcel where the new construction will occur.