Difference Between Pledge and Mortgage – In everyday language, pledge and mortgage are taken to mean the same but, from the legal point of view, there is a big difference between the two. The following table classifies the distinction between the two
Pledge – The bailment of goods as security for payment of a debt or performance of a promise is called pledge’. The bailor is, in this case, called the ‘pawnor’ or ‘pledger’ and the bailee is called the ‘pawnee’ or ‘pledgee’.
Difference Between Pledge and Mortgage
| Sr. No. | Basis | Pledge | Mortgage |
| 1 | Nature | Pledge is always of movable property. | Mortgage is only for immovable property. |
| 2 | Transfer | It involves physical transfer of goods, not the ownership of goods. | The ownership of property can be transferred under certain conditions. |
| 3 | Written Contract | The contract is not essential to be in written form. | It is essential for the contract to be written, testified by two witnesses and registered. |
| 4 | Right To Use | The pawnee cannot use the goods kept in pledge. | The mortgagee has the right to use the property mortgaged to him. |
| 5 | Number Of Loans | An item can be kept in pledge for only one loan. | The mortgagor can take more than one loan not exceeding the value of the property mortgaged. |
| 6 | Re- Loan | The pawnee cannot pledge the goods in his possession to another person against a loan. | The mortgagee can transfer his interest in the mortgaged property to another person by a sub-mortgage. |
| 7 | Right | The pawnee has the right, in the event of a default on the part of pawnor, only to sell the goods kept under pledge. | The mortgagee who has given the loan first, has the right to claim the amount of his loan first, in case the property is mortgaged to more than one mortgagee. |
| 8 | Restrictions | The pawnor cannot impose any restrictions on the goods under pledge. | The mortgagee can, in some circumstances, impose restrictions on the property mortgaged. |
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