K
Ka Pilo
Can someone explain to me in laymans terms the difference between antichresis and mortgage?
thanks.
thanks.
So lender will not return the property until the debt is fully paid. In short, they used your property yet you still need to pay for said debt.Given the description provided by Marc from WIKI (which jibes with my vague memory):
Mortgage (note the actual spelling) DOES mean the borrower stays in possession until the note is paid off or until the borrower defaults and the property is lost to the creditor (foreclosure)
I think this is preferrable.Antichresis might be likened to borrowing money on farmland where the farmland is turned over to the lender to farm until the debt is repaid. The proceeds of farming are considered the interest on the loan.
Compare antichresis to a single payment lease of the same farmland where the income from farming is sufficient to pay interest and principal on a comparable loan and the property is returned to the owner at the end of the lease term.
I sense you misunderstand. With a mortgage, the borrower is always in possession of the real estate and its income unless or until he default (does not make repayment of the loan), in which case, he still has to be forced off by a court decision.So lender will not return the property until the debt is fully paid. In short, they used your property yet you still need to pay for said debt.
Not quite:Perhaps an example based on Wes's farmland idea might help.
Mortgage:
I want a farm and borrow the money to buy it with from a lender. I pay the lender a monthly amount which covers the loan, and interest. The lender owns the farm, but I use it and live off its profits. The farm is "collateral". If I fail to pay the monthly amounts, the lender can go to court and take the farm away from me to pay off the debt.
Antichresis:
I want a farm. I give one year's rent to the owner of the farm I want. I use the farm and live off its profits for a year. At the end of the year we do it again or I vacate the farm.
Antichresis: (leaseback)
I own a farm. I want to invest capital in it. I can either borrow the capital from the bank or do leaseback, a form of antichresis:
I sell the farm to a "lender" (for an amount equal to the capital I want to invest) with an agreement that they will sell it back to me after one year (or five years, or whatever) for a small amount, and let me use it if I pay them a monthly rent. I use the farm and live off the profits, and have my capital investment. The idea is to juggle the figures so that (provided the capital investment is profitable) I end up making more money than I would have had I just borrowed the capital from the bank.
The preferable one depends upon the situation and how the local tax laws work.
As Marc said, antichresis is not a term we use much in the west. If we knew why you're asking we'd perhaps be able to give better answers by giving examples that are relevant to you.
Hope this helps,
Pat