In real estate finance, Hypothecate means to pledge property as security for a loan without giving up possession of the property. The borrower retains use and occupancy of the property while the lender holds a legal claim or lien as collateral.
This concept is most commonly associated with mortgages and deeds of trust, where the property serves as security for the debt but remains in the borrower’s possession. Hypothecation allows borrowers to obtain financing while continuing to use the pledged property.
