contractual hypothec

A contractual hypothec is a legal agreement, primarily found in civil-law countries, that serves as security for a debt without granting ownership or possession of the property to the creditor. This concept originated in Roman law, where it was used by renters to pledge items like tools as security for rent payments. The creditor could only take possession if the rent was not paid.1

Modern hypothecs function similarly to mortgages but do not transfer title. While historically applied to real estate, they can now extend to movable property. The creditor has the right to seize and sell the property if the debt is not repaid. In France, contractual hypothecs are made between individuals and require notarization. Other types include judicial hypothecs, ordered by a court, and legal hypothecs, which protect specific individuals like married women or children.1