Collateral

Property that is promised as security for the satisfaction of a debt.

Common law – The legal system that originated in England and is now in use in the United States that relies on the articulation of legal principles in a historical succession of judicial decisions. Common law principles can be changed by legislation.

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Additional Sources

Duhaime Legal Dictionary

Property which has been committed to guarantee a loan and which will transfer to the lender if the loan is not paid.

FindLaw

Property pledged by a borrower to protect the interests of the lender in the event of the borrower's default.

Law.com Dictionary

Property pledged to secure a loan or debt, usually funds or personal property as distinguished from real property (but technically collateral can include real estate). 2) adj. referring to something that is going on at the same time parallel to the main issue in a lawsuit or controversy which may affect the outcome of the case, such as adoption of a new federal regulation or a criminal trial of one of the parties. Example: John has filed a lawsuit in New Mexico, where he lives, to establish that he is not the father of Betty's child, while Betty has filed for divorce in Colorado asking that John pay child support for the child. The New Mexico paternity suit is collateral to the Colorado divorce action.

Lect Law Library

An asset that a borrower agrees to give up if he or she fails to repay a loan.

Wikipedia

In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan[1][2]. The collateral serves as protection for a lender against a borrower's risk of default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation. If a borrower does default on a loan (due to insolvency or other event), that borrower forfeits (gives up) the property pledged as collateral - and the lender then becomes the owner of the collateral. In a typical mortgage loan transaction, for instance, the real estate being acquired with the help of the loan serves as collateral. Should the buyer fail to pay the loan under the mortgage loan agreement, the ownership of the real estate is transferred to the bank. The bank uses a legal process called foreclosure to obtain real estate from a borrower who defaults on a mortgage loan obligation.