1. The pledging of property as security for a debt or obligation without transfer of possession or title to the creditor.
Usage: legal/finance term; common in maritime and commercial law
2. In maritime law, the right of a shipowner to borrow money using the ship as security, with the lender having a claim on the ship if the loan is not repaid.
Usage: nautical; specialized legal context

Examples

• The bank accepted the hypothecation of the equipment as collateral for the business loan.
• Under the contract, the borrower agreed to hypothecation of the property to secure the mortgage.
• Hypothecation allows creditors to have a claim on assets without taking immediate possession.
• The shipping company used hypothecation to finance the vessel's purchase.
• In commercial transactions, hypothecation is a common method of securing credit.
• The creditor's rights in hypothecation are typically recorded in a security agreement.