The 'Mendacious' Common-Law Mortgage

The common-law mortgage has been much maligned. Legal historians have called it everything from “clumsy” to “mendacious.” Following their lead, the current Restatement (Third) of Property: Mortgages, and the leading treatise on mortgage law, denounce the modern incarnation of the common-law mortgage – the “title theory” of mortgages – in favor of the “lien theory”. As many states have adopted this view, the common-law mortgage has been nearly eliminated from the modern legal landscape. But the consensus is wrong. Critics of the common-law mortgage have failed to appreciate the historical background of secured lending and execution of civil judgments that explains the mortgage's basic form, and they failed to appreciate changes that the mortgage underwent over time. By understanding the legal and social context of the turn of the seventeenth century, one can appreciate how the original common-law mortgage made sense. By then comparing the original common-law mortgage with that of roughly the late-nineteenth century, one can see how certain problematic characteristics of mortgages were not characteristics of the common-law device, but rather a side-effect of well-intentioned interventions by judges sitting in equity. Appreciating these realities shows how the common-law mortgage was a logical and clever device, undeserving of the criticism to which it has been subject; it also provides of cautionary tale of judges disregarding parties' clearly stated intent in contracts; and it highlights the need for a reassessment of basic mortgage doctrine in the present. In the course of demonstrating these points, this article also provides a useful summary of the basic contours of secured lending and execution of civil judgments at common law in force from approximately the late-medieval period to the nineteenth century