Also known as:absolute deed · equitable mortgage · absolute deed equitable mortgage · deed absolute · deed absolute as mortgage · equitable mortgage doctrine
Written by attorneys · grounded in primary & secondary sources — see below
A security device by which a grantor conveys legal title to real property by an absolute deed to secure repayment of a debt. The grantor retains an equitable right of redemption. Courts admit parol evidence to determine the parties' intent and treat the deed as a mortgage for purposes of redemption and foreclosure.
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Common Law
Restatements
Course Outlines
How it applies
Common Examples
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Deed to Bank Treated as Mortgage
Aisha Ahmed conveyed her apartment building to Anchor Bank by absolute deed after falling behind on payments. She remained in possession, collected rents, and sent the bank monthly statements showing a declining balance. The bank prepared internal draft reconveyance deeds for use after repayment. When Aisha tendered full payment, the bank refused to reconvey. A court treated the deed as an equitable mortgage, allowing Aisha to redeem and requiring reconveyance upon satisfaction of the debt.
Absolute Deed as Security for Loan
Albert Allen conveyed his farm to a lender by absolute deed in exchange for funds to avert foreclosure. Contemporaneous writings described the transfer as temporary security for repayment, and Albert stayed in possession while making payments labeled as loan interest. After full repayment, the lender refused to reconvey. The court admitted the writings to find an equitable mortgage and ordered reconveyance upon tender.
Prue v. Royer67 A.3d 895 (Vt. 2013)
Common questions
Frequently Asked
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What evidence shows an absolute deed was intended as security rather than a sale?+
Courts examine the presence of a debt, continued possession by the grantor, payments labeled as loan interest or amortization, and any side writings or statements promising reconveyance upon repayment. A substantial disparity between the amount advanced and the property's value also supports finding a mortgage. No single factor controls, but the totality of circumstances determines intent.
Supporting sources
Is parol evidence admissible to prove an absolute deed functions as a mortgage?
Yes. Courts routinely admit extrinsic evidence, including oral statements, emails, side letters, and board minutes, to show the deed was intended only as security. The parol evidence rule does not bar such proof because the question is the true character of the transaction rather than a contradiction of the deed's terms.
Supporting sources
What rights does the grantor retain after an absolute deed is treated as an equitable mortgage?+
The grantor retains an equitable right of redemption. Upon tender of the full debt plus any accrued interest, the grantee must reconvey legal title. The grantee holds only bare legal title as security and cannot retain ownership after repayment.
Supporting sources
Does recording an absolute deed prevent a court from treating it as a mortgage between the original parties?+
No. Recording protects subsequent purchasers and lien creditors, but between the original grantor and grantee the court may still recharacterize the deed based on parol evidence of security intent. The absence of a recorded mortgage does not defeat the equitable right of redemption.
Supporting sources
interest that requires foreclosure.”); Aldrich v. Lincoln Land Corp. , 130 Vt. 372, 374, 294 A.2d 853, 854 (1972) (“The legal title in this lessor is viewed as a security interest held for…
equitable mortgage
on property owned by Debtors Daniel and Sheryl Sutter. We AFFIRM the judgment of the district court. I. BACKGROUND A. The World Wide
Mortgage
In September 1994, Daniel and…
Real PropertyMortgages/security devices · Types of security devicesUBEFoundational