Pledge Information
A pledge creates a form of security interest in personal property without transferring ownership to the lender. The borrower (pledgor) gives possession of the asset—such as stock certificates, jewelry, or equipment—to the lender (pledgee) until the debt is paid. Once the obligation is fulfilled, the pledged property must be returned. If the borrower defaults, the lender has the right to sell or otherwise dispose of the collateral to recover the debt. Pledges are common in secured loans, business financing, and personal lending arrangements.
Florida Legal Definition
Under **Florida’s Uniform Commercial Code (Chapter 679, Florida Statutes)**, a pledge is a form of **security interest** created when personal property is delivered to a creditor as collateral for a debt. The creditor retains possession until the obligation is satisfied. Florida law requires that the pledge agreement clearly define the property pledged and the terms of the obligation. The pledgee must act in good faith and with reasonable care in maintaining and returning the pledged property once the debt is discharged.
How It’s Used in Practice
In practice, pledges are used to secure loans or obligations where the borrower provides tangible or intangible assets as collateral. Banks may accept pledged securities for short-term loans, or individuals may pledge personal items to secure repayment. In Florida, pledge agreements are governed by the UCC and may require filing a **financing statement** to perfect the lender’s security interest. If the borrower defaults, the lender can enforce their rights through sale or possession of the pledged asset.
Key Takeaways
- A pledge involves transferring possession of property as security for a debt or obligation.
- Ownership remains with the borrower, but possession stays with the lender until repayment.
- In Florida, governed by Chapter 679 of the Florida Statutes (Uniform Commercial Code).
- The lender must handle pledged property with reasonable care.
- Upon default, the lender may sell or retain the collateral to satisfy the debt.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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