Legal Definitions - hypothecary

Definition: Hypothecary refers to something that involves hypothecation, which is the act of pledging property as security for a debt.

Examples:

• When you take out a mortgage to buy a house, the lender will have a hypothecary interest in the property until the loan is paid off.
• A business might hypothecate its inventory or accounts receivable to secure a loan from a bank.

These examples illustrate how hypothecary relates to the concept of hypothecation, which is a legal arrangement where a borrower pledges collateral to a lender in exchange for a loan. In both cases, the lender has a hypothecary interest in the property or assets that are pledged as security.