What Is the Difference Between a Legal and an Equitable Mortgage?

A legal mortgage is the lender's lien on your property. Your property is subject to seizure by the lender if you fail to make your monthly payments. A legal mortgage in some states requires that the lender be the legal owner of the property until the borrower completes repayment on the mortgage.

An equitable mortgage is a mortgage that does not meet the jurisdiction's legal mortgage requirements. Even if this type of mortgage does not meet the requirements for a legal mortgage in the laws of a certain jurisdiction, courts in that jurisdiction may still treat it similarly to a legal mortgage.

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In some jurisdictions, there might be few differences between a legal and equitable mortgage, such that it is difficult to distinguish between them. Be sure to check your state and local laws regarding mortgages.