Trivia: Oldest Form of Security Arrangement?

Security agreements are made between a lender and a borrower that creates a security interest in property whereby if the borrower does not pay back the loan then the lender can take steps to get the property.  We see this in real estate of course.  But do you know one of the oldest and simplest security arrangement between two people?  It is ….

Pawnbrokers! 

To borrow money from a pawnshop, you give your property to him/her as security for the money the pawnshop gave you.   If you repay the loan within a specific time then you get your item back but if you do not then the item is sold.  The legal term for this arrangement is called “Pledging” where your mother’s pearl necklace would be the “pledge”.

This information is from my colleague Prof. Huber’s amazing real estate book.

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