Hypothecation > define

• (n.) The act or contract by which property is hypothecated; a right which a creditor has in or to the property of his debtor, in virtue of which he may cause it to be sold and the price appropriated in payment of his debt. This is a right in the thing or jus in re.
• (n.) A contract whereby, in consideration of money advanced for the necessities of the ship, the vessel, freight or cargo is made liable for its repayment, provided the ship arrives in safety. It is usually effected by a bottomry bond. See Bottomry.

1. An archaic term for pledging that did not involve either possession or title transfer. 2. Any pledge of an asset as collateral for a debt. (An uncommon but correct usage.) 3. The pledge of marketable securities or deposits to secure a loan — particularly the pledge of marketable securities or deposits owned by someone other than the borrower.