A form of security interest where property is pledged as collateral for a debt without transferring possession to the creditor. The debtor retains use of the property while the creditor holds a lien.
From Greek 'hypotheke' meaning 'deposit, pledge,' from 'hypo-' (under) and 'tithenai' (to place). Roman law adopted this as 'hypotheca,' distinguishing it from 'pignus' (pledge with possession transfer). The term entered English legal usage through civil law influence.
Hypothecation is like promising your car as collateral while still driving it to work every day - you keep possession but the lender gets a legal claim that can be enforced if you default. It's the opposite of a pawn shop, where you have to hand over the item immediately!
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