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Simple English definitions for legal terms
tacit mortgage
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A quick definition of tacit mortgage:
A mortgage is when someone borrows money to buy property and uses that property as collateral. This means that if they don't pay back the money, the lender can take the property. There are different types of mortgages, like adjustable-rate mortgages where the interest rate can change, or fixed-rate mortgages where the interest rate stays the same. A tacit mortgage is a type of legal mortgage where the creditor has a lien on the debtor's property, but it's not explicitly stated in a contract.A more thorough explanation:
Definition: A type of legal mortgage that arises by operation of law on the debtor's property, without the need for a formal agreement. It is a lien against property that is granted to secure an obligation (such as a debt) and that is extinguished upon payment or performance according to stipulated terms.
Example: If a person takes out a loan from a bank and uses their property as collateral, a tacit mortgage is created on the property. This means that if the person fails to repay the loan, the bank can foreclose on the property to recover the debt.
Explanation: The example illustrates how a tacit mortgage works in practice. When a person uses their property as collateral for a loan, a tacit mortgage is created on the property. This means that the lender has a legal claim on the property until the loan is repaid. If the borrower fails to repay the loan, the lender can foreclose on the property to recover the debt. The tacit mortgage is extinguished once the loan is repaid according to the stipulated terms.