What is the action of promising property while maintaining possession called?

The action of promising property while maintaining possession is known as hypothecation. This term refers to the practice where a borrower pledges an asset as collateral for a loan while still retaining possession of that asset. In the context of real estate, when a property is hypothecated, the owner can continue to use and occupy the property while it serves as collateral for a loan or other obligation.

This concept is crucial for understanding how financing works in real estate transactions, as it allows property owners to leverage their assets without having to relinquish control over them. Hypothecation is often seen in situations such as home mortgages, where the homeowner promises the property to the lender as security for the mortgage loan but continues to live in the home.

Other terms such as encumbrance, leverage, and mortgage, refer to related but distinct concepts in real estate. Encumbrance refers to any claim or liability on the property, such as liens or easements, which can affect the ownership or use of the property. Leverage involves using borrowed funds to increase the potential return on investment. Although a mortgage is a type of hypothecation, it specifically refers to the legal agreement between the borrower and lender that outlines the terms of the loan secured by the