Equitable Mortgage Meaning

Mortgages that aren't legal may still qualify as equitable.

An equitable mortgage is one that would not qualify as a mortgage under law, but has sufficient similarity to a legal mortgage to justify mortgage treatment by courts of equity. Those with specific equitable mortgage questions should contact an attorney.

Courts of Equity

English jurisprudence is comprised of two types of courts: courts of law and courts of equity. Courts of law can only offer remedies justified by statutes or case law. Courts of equity, on the other hand, will sometimes offer petitioners relief based on more flexible ideas of equity and justice. Most American jurisdictions have merged these two courts into one.

Legal Mortgage

A mortgage is a legal arrangement in which a debtor offers a creditor certain rights to property if the debtor fails to pay. Each state sets its own requirements for a legal mortgage.

Equitable Mortgage

When a debtor-creditor transaction operates in the same manner as a mortgage, but does not fulfill all of the jurisdiction's legal mortgage requirements, a court may choose to treat the transaction as an equitable mortgage. An equitable mortgage grants similar rights to the parties, but a legal mortgage-holder's rights to property will trump those of an equitable mortgage-holder in case of default.

References

• The Free Dictionary: Equitable Mortgage
• WordIQ.com: Equity Defined
• "Black's Law Dictionary (Seventh Edition)"; Bryan Garner;1999
• U.S. Legal: Equitable Mortgage Law and Legal Definition