Chattel Mortgage

In real estate and finance, a chattel mortgage is a type of loan arrangement in which personal property is pledged as collateral to secure or guarantee a promissory note. Under this agreement, the borrower retains possession and use of the chattel—such as equipment, machinery, or movable structures—while the lender holds a lien on the property until the debt is repaid. If the borrower defaults on the note, the lender has the legal right to repossess and sell the personal property to satisfy the obligation. Chattel mortgages are commonly used in business and agricultural financing and differ from real estate mortgages, which are secured by real property rather than personal property.