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Equitable Mortgage: A Comprehensive Guide to Its Legal Meaning
Definition & Meaning
An equitable mortgage is a type of mortgage that does not meet all the formal legal requirements, such as proper stamping, filing, or registration. This form of mortgage is recognized under common law, allowing it to protect the rights and responsibilities associated with a mortgage that has not been fully executed according to legal standards. However, it is important to note that an equitable mortgage is subordinate to a legal mortgage, meaning that in the event of a dispute, the legal mortgage takes precedence.
Table of content
Legal Use & context
Equitable mortgages are primarily used in real estate transactions where the formalities of a legal mortgage have not been completed. This term is relevant in various legal areas, including property law and finance. Users may encounter equitable mortgages in situations where they are unable to fulfill all legal requirements for a traditional mortgage but still want to secure a loan against property. Legal templates from US Legal Forms can assist users in creating or managing equitable mortgages.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A homeowner takes out a loan against their property but fails to register the mortgage with the local government. If the lender and homeowner have a written agreement, this may constitute an equitable mortgage.
Example 2: A property owner sells their home but allows the buyer to move in before the mortgage is formally recorded. If the buyer defaults, the original owner may have an equitable mortgage claim (hypothetical example).
State-by-state differences
State
Equitable Mortgage Recognition
California
Recognizes equitable mortgages but requires clear evidence of intent.
New York
Allows equitable mortgages but emphasizes the need for a written agreement.
Texas
Equitable mortgages are accepted, but specific statutory requirements must be met.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Legal Mortgage
A mortgage that meets all legal requirements.
Legal mortgages have priority over equitable mortgages.
Mortgage Deed
A legal document that secures a loan with property.
A mortgage deed is a formal document, while an equitable mortgage lacks some formalities.
Common misunderstandings
What to do if this term applies to you
If you find yourself involved with an equitable mortgage, consider the following steps:
Review any agreements you have to ensure they clearly outline the terms.
Consult a legal professional to understand your rights and obligations.
Explore US Legal Forms for templates that can help you manage or formalize your mortgage situation.
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