Pledgee

A pledgee is the party to whom something is pledged or mortgaged as security for a debt or obligation. This individual or entity has a legal claim on the asset until the debt is satisfied. The pledgee holds a right to possess, use (if agreed upon), and eventually sell the pledged asset to recover the debt if the pledgor defaults on their obligations. Their role is crucial in secured transactions, protecting their investment.

Pledgee meaning with examples

• The bank, as the pledgee, held the deed to the property as collateral for the mortgage. Should the homeowner fail to make payments, the bank had the right to foreclose and sell the house to recover the outstanding loan amount. The bank's rights and the homeowner's obligations are detailed in the mortgage agreement.
• When securing a loan for his business, the entrepreneur named the lending institution as the pledgee on all of his company's assets. This agreement gave the pledgee a lien on the equipment, inventory, and accounts receivable until the loan was fully repaid. This ensured the lender's security.
• In a stock purchase agreement, the investment firm acted as the pledgee for the shares held by the seller, ensuring a repayment plan. The investment firm, as the pledgee, had control over the assets to ensure repayment of the loan to be guaranteed by the pledged stock.
• The pawnshop acted as a pledgee when the customer brought in their jewelry. The pawnshop gave the customer money, and they retained possession of the item, with the agreement that it would be returned upon repayment of the loan and any associated interest within an agreed period. They would become the owner if the loan was not repaid.