Debt and Loan: Are They Different?

What is healty? According to Merriam Webster (9th Edition) “healty” means the right to recover a claim of debt, grant, or assignment by any person. It is an right possessed by a debtor when the time comes for the debtor to pay off his debt; in legal terminology, it is called a “promise to repay.” In other words, a borrower has a specific legal “duty to repay.” In real estate, real property, and other types of property, where there is a debt to be repaid, the borrower may assert a lien or interest against the property to secure the debt.

The debtor usually sells or disposes of his property to satisfy the debt, and at the same time retains the ownership. This gives him the right to recover the full amount from the lender, even if the property is no longer on the real estate market. While the property is no longer on the market, the debtor may still assert a lien against the property for the balance of the debt. The lender, on the other hand, possesses the lien in the event that the debt is not satisfied; if the debt cannot be satisfied within a reasonable period of time, the lender may foreclose on the property and repossess the real estate.

The distinction between healty and the lending of money is important to recognize. While a mortgage gives the lender the right to seize the property in the case of default, healty protects the debtor’s ownership in the property. A mortgage protects the lender’s interest in the property as long as the loan is repaid; healty is different. When a debtor sells or transfers real estate, he is released from the liability of paying the debt. Healty attaches only to the property when the borrower secures the debt with a lien or interest.

There are certain circumstances under which healty does not exist. A mortgage does not give a lender the right to foreclose; healty exists if the mortgage is paid in full and the loan is not defaulted. Also, healty is only created for specific types of debt. Mortgage refers only to secured loans, whereas healty encompasses unsecured loans. If the property is transferred to an unrelated party without first securing the loan, this transfer does not create healty but may transfer the liability of the lender.

One very significant difference between healty and mortgage is that healty does not strip the lender of all rights to the property; it simply attaches to the debt until the debt is satisfied. As previously stated, healty does not strip the lender of his ownership in the property. Healty attaches only to specific debts that can be satisfied. This means that even though a lien is placed on the property for the balance of a debt, the lender retains the legal rights to ownership.

When there is no ownership of the property, either because the creditor has no claim or the debt cannot be satisfied, or because the property is transferred to an unrelated third party without first securing the loan, the debt remains with the lender until it is paid in full. This ensures that the lender obtains full legal rights to the debt. A lien is nothing more than a claim on a property until it has been paid in full to satisfy it. Healty, on the other hand, strips the creditor of all rights to the debt so that the property reverts back to the lender.