An agreement between a borrower and a lender where by the borrower pledges asset as collateral on a loan without the lender taking possession of the collateral. It especially applies to mortgages; the borrower hypothecates when he/she pledges the house as collateral for payment of the mortgage, or he/she may hypothecate the mortgage in order to borrow against the value of the house. In both situations, the borrower retains possession of the house, but the lender has the right to take possession if the borrower does not service the debt.

Hypothetical refers to creation of securities of movable goods, where the borrower continues in possession of goods and uses the goods for his business. A hypothecation agreement (letter of trust) is made in favor of the creditor where the creditor step into the shoe of the borrower in case of default.

Hypothetical refers to creation of securities of movable goods, where the borrower continues in possession of goods and uses the goods for his business. An agreement between a borrower and a lender where by the borrower pledges asset as collateral on a loan without the lender taking possession of the collateral. In hypothecation, there must be an intention of the parties to create a security on the property on which the money has been lent. If that intention can be established, equity gives effect to it.

Dear Friend > Hypohenation agreement Hypothetical refers to creation of securities of movable goods, where the borrower continues in possession of goods and uses the goods for his business. A hypothecation agreement (letter of trust) is made in favor of the creditor where the creditor step into the shoe of the borrower in case of default. The creditor can seize and sell the goods in case of default. Normally, stock-in–trade and vehicles are being HYPOTHECATED. Thanks

**HYPOTHECATION AGREEMENT** Hypothecation agreement is a document by which legal property in goods passes to the person who lends money on them, but the possession does not pass. This form of transfer is not regulated in India by any statute. Neither the Transfer of Property Act, 1882, nor the Indian Contract Act, 1872, nor the Sale of Goods Act, 1930, recognize the non-possessory hypothecation of immovables and the rights and remedies of the parties are regulated by the courts according to the general law of contract. In hypothecation, there must be an intention of the parties to create a security on the property on which the money has been lent. If that intention can be established, equity gives effect to it. A hypothecation not merely of moveable existing on the premises at the time but also in respect of moveable which might be subsequently acquired and brought there, is valid though it is not governed by the Transfer of Property Act or by the Indian Contract Act, 1872. An oral or written hypothecation is permitted under the law in India. Thanks

> Hypothecation Agreement An agreement between a borrower and a lender where by the borrower pledges asset as collateral on a loan without the lender taking possession of the collateral. It especially applies to mortgages; the borrower hypothecates when he/she pledges the house as collateral for payment of the mortgage, or he/she may hypothecate the mortgage in order to borrow against the value of the house. In both situations, the borrower retains possession of the house, but the lender has the right to take possession if the borrower does not service the debt. Hypothecation agreements also occur in trading; a broker will allow an investor to borrow money in order to purchase securities with those securities as collateral. The investor owns the securities, but the broker may take them if the debt is not serviced or if the value of the securities falls below a certain level.