What is a hypothec?

A hypothec refers to a right linked to a property that is granted to ensure an obligation is met, typically in the context of securing a debt. It involves placing a charge on an asset while allowing the owner to retain possession of that asset. This means that if the obligation—often a loan—is not fulfilled, the creditor has the legal right to sell the property to satisfy the debt. This concept is prominent in many legal systems, particularly those influenced by civil law traditions, and is often used in real estate transactions where securing loans is essential.

The options relating to a type of mortgage loan, a legal term for property ownership, and a financial investment strategy do not accurately capture the essence of what a hypothec entails. While a mortgage can involve a hypothec, they are not synonymous, as mortgages specifically refer to the type of loan secured by the property rather than the rights granted. Therefore, the definition of a hypothec encompasses the broader legal framework surrounding the rights associated with real property, making it the correct choice in this context.