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Real Property • Security Interests in Real Estate
PROP#204
Legal Definition
An absolute deed given for security purposes can be treated by the court as an equitable mortgage, which is treated like any other mortgage.
Plain English Explanation
"Absolute deeds" happen when someone needs money but rather than deal with the complexities of getting a mortgage, they opt to "sell" their property to someone with the sneaky understanding that they will repay the person in order to get their property back. That's why it's usually known as an "equitable mortgage," since it isn't legally a mortgage, but the courts will treat it equitably as a mortgage because it is the right thing to do.
Usually a court will identify the sale of property as an equitable mortgage when there is evidence that the debtor plans to pay the lender back in exchange for getting their property back, and when the property was sold for a price substantially lower than its market value (what the owner could have gotten if they really wanted to sell it, permanently, on the open market).
Usually a court will identify the sale of property as an equitable mortgage when there is evidence that the debtor plans to pay the lender back in exchange for getting their property back, and when the property was sold for a price substantially lower than its market value (what the owner could have gotten if they really wanted to sell it, permanently, on the open market).
Related Concepts
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