Legal Definitions - hypotheca

Definition: Hypotheca is a type of mortgage in Roman law where the debtor is allowed to keep the property but cannot sell or transfer it to someone else. This means that the creditor has a right to the property if the debtor fails to pay back the loan.

Example: John takes out a loan from a bank to buy a house. The bank puts a hypotheca on the house, which means that John can still live in the house and use it as his own, but he cannot sell it or transfer ownership to someone else until he pays back the loan. If John fails to pay back the loan, the bank can take possession of the house.

Explanation: This example illustrates how hypotheca works in practice. The bank has a right to the property as security for the loan, but John can still use the property until he pays back the loan. If he fails to do so, the bank can take possession of the property and sell it to recover the money owed.