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How to distinguish between mortgage and pledge?
In real life, many people cannot distinguish between pledge and mortgage.
Pledge means that the debtor or a third party transfers its movable property or rights to the creditor and uses it as a security for the creditor's right. When the debtor fails to perform the debt, the creditor has the right to convert the movable property or rights to the creditor or to auction or sell the creditor in accordance with the law. The price of movable property or rights is paid first.
Mortgage means that the debtor or a third party does not transfer the possession of the property, and the property is used as the security for the creditor's right. When the debtor fails to perform the debt, the creditor has the right to discount the property or the price of auctioning or selling the property in accordance with the law. .
The following example illustrates this problem.
A borrows one million from B. B said, now that there are so many old people, who would dare to lend you so much money, unless you have something to stake.
A said, no problem.
In the first case, A is a house with a value of 2 million. A and B went to the real estate trading hall to apply for a certificate of other rights to the house and handed it over to B, and agreed in the loan contract that if A fails to repay B's principal and interest on time, the mortgaged house ownership will belong to B, and A. Must assist in property transfer procedures. This is called a mortgage.
In the second case, A has a Xuande furnace in hand, with an appraisal certificate from an authoritative department, worth two million.
A handed over the Xuande furnace to B, and B issued a receipt. Both parties agreed in the contract that if A did not return the principal and interest on time, the Xuande furnace would be owned by B unconditionally. After the repayment, the pledged Xuande furnace must be returned to A. This situation is a pledge.