What does hypothec mean?
A hypothec is chiefly a Scots legal term for security granted over property to protect a creditor against an unpaid debt. The property remains in the debtor's possession, but the creditor may enforce the security if the debt is not satisfied. In its narrower sense, a hypothec is a mortgage or charge over immovable property, such as land or buildings. The term comes from the same Greek root as hypothesis, although its legal meaning has developed independently and refers to security rather than a tentative explanation. Outside Scottish legal contexts, the word is uncommon, and the related international term hypothecation is often preferred. Its distinctive feature is that it combines the practical protection of collateral with the debtor's continued possession of the secured property.
nounIn Scots law, a hypothec is a security interest in property granted to a creditor to secure repayment of a debt. It is a form of security over immovable property that does not transfer possession of the property to the secured creditor.
- A security interest in property, especially immovable property, granted to secure the repayment of a debt.
- A mortgage or charge over property under Scots law.
"The bank obtained a hypothec over the property as security for the outstanding loan."
"The lender registered a standard security and took a hypothec over the buyer's property."
"The agreement prohibited the granting of any hypothec over the land without the company's consent."
The plural is hypothecs, though the word appears chiefly in legal documents and formal discussion.
"The lender's rights under the hypothecs were unaffected by the restructuring."
A hypothec secures a debt without handing over the keys: the property backs the loan, but the creditor does not receive possession.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does hypothec come from?
The word comes through Latin from Greek hypothēkē, meaning a pledge or security. The Greek element hypo- expresses the idea of placing something under a claim of security. Hypothesis derives from the related Greek hypothesis and likewise involves placing an idea or proposition beneath examination, while hypothecate and hypothecation preserve the sense of pledging property to secure an obligation.
Related word forms
How hypothec is actually used
The term is principally used in Scottish legal and property law. In modern international usage, the related word hypothecation is more common when referring broadly to a security arrangement in which property is pledged without transfer of possession.
Easily confused with hypothec
A hypothesis is a proposed explanation or proposition, whereas a hypothec is a legal form of security granted over property.