Definition of Mortgage (Rahn)
Mortgage (رهن) is pledging an asset as security for a debt. Mortgagee (creditor) holds asset in trust and has priority right to liquidate if mortgagor (debtor) defaults.
Key Principles
- Trust Capacity: Mortgagee holds asset in trust — cannot use for personal benefit.
- Ownership Retention: Mortgagor retains ownership; mortgage doesn't transfer ownership.
- Priority Right: Upon default, mortgagee can liquidate asset without debtor consent.
- Redemption: Mortgagor can recover asset by repaying debt anytime before liquidation.
- Insurance: Mortgagor responsible for insuring asset; mortgagor bears force majeure loss (unless mortgagee negligent).
- Maintenance: Mortgagee bears costs of maintaining mortgaged asset.
Mortgageable Assets
Real estate, vehicles, equipment, securities, cash accounts, intellectual property, debt (accounts receivable). Any tangible or identifiable valuable asset.
Termination
- Debt repayment → mortgage terminates
- Mortgagee releases → mortgage terminates
- Creditor forgives debt → mortgage terminates
- Asset liquidated → remaining balance owed by mortgagor