Chattel Mortgage in United States

Chattel Mortgage Definition

At common law, a sale of a chattel on a condition subsequent, upon performance of which the title revests in the mortgagor, and upon breach of Xyhich the mortgagee’s title becomes absolute. It differs from a pledge, in that the title to the property, rather than the possession thereof, constitutes the security. 87 N. Y. 209; 37 Mich. 484. It differs from a vendor’s lien in that a lienor has no title to the property. 23 Ohio St. 114; 40 Me. 412. It differs from a sale wherein the title is retained by the seller until the performance of some condition, in that no title passes from the debtor to the creditor, but the creditor simply retains a title which the debtor never had. 88 111. 447; 16 Ind. 380. It differs from a sale with a right of repurchase in that the latter transaction is not a security for an obligation. It differs from an assignment for the benefit of creditors, which is not a security, but implies an absolute appropriation of the property to the payment of the indebtedness. Hammon, Chat. Mortg. §§ 1-7.

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At common law, a sale of a chattel on a condition subsequent, upon performance of which the title revests in the mortgagor, and upon breach of Xyhich the mortgagee’s title becomes absolute. It differs from a pledge, in that the title to the property, rather than the possession thereof, constitutes the security. 87 N. Y. 209; 37 Mich. 484. It differs from a vendor’s lien in that a lienor has no title to the property. 23 Ohio St. 114; 40 Me. 412. It differs from a sale wherein the title is retained by the seller until the performance of some condition, in that no title passes from the debtor to the creditor, but the creditor simply retains a title which the debtor never had. 88 111. 447; 16 Ind. 380. It differs from a sale with a right of repurchase in that the latter transaction is not a security for an obligation. It differs from an assignment for the benefit of creditors, which is not a security, but implies an absolute appropriation of the property to the payment of the indebtedness. Hammon, Chat. Mortg. §§ 1-7.

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This definition of Chattel Mortgage is based on The Cyclopedic Law Dictionary. This entry needs to be proofread.

Practical Information

Note: Some of this information was last updated in 1982

A mortgage (in U.S. law) on tangible personal property (in U.S. law)(chattels). A chattel mortgage is distinguished from other instruments of conveyance by the condition contained in it that if the debt is paid by a day specified, the conveyance is void, and if payment is not made, the transfer is absolute. In some jurisdictions, a chattel mortgage, like a real estate mortgage, is not a conveyance transferring title (in U.S. law) but merely a LIEN given as security for the debt. If the debt is not paid when due, or if some other condition of the mortgage has not been complied with, the mortgagee enforces his or her lien by a foreclosure (in U.S. law) sale. In some states, the foreclosure of a chattel mortgage, like the foreclosure of a real estate mortgage, can be effected only through court procedure. In many states the chattel mortgage must be recorded. The chattel mortgage does not in itself constitute notice of the mortgagee’s rights in the chattel. Hence, the creditor who wants to protect his or her rights against third parties, must give public notice of his interest in the chattel. The creditor does this by filing the chattel mortgage or a true copy of it in a prescribed public place. The duration of a chattel mortgage is limited in some states sometimes to three or four years, after which time it becomes void automatically unless renewed. See also conditional sale (in U.S. law); recording (in U.S. law) (of Conditional Sale Contract).

(Revised by Ann De Vries)

What is Chattel Mortgage?

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