True or False: The statement 'Chattel mortgage is a consensual contract and the creditor gets possession of the thing mortgaged' is true.

True or False: The statement 'Chattel mortgage is a consensual contract and the creditor gets possession of the thing mortgaged' is true.

• A. True
• B. False
• C. Not stated
• D. Not applicable

Answer: (B)

Chattel mortgage creates a lien on movable property to secure a debt, so the lender has a security interest but does not automatically take possession. The mortgage is a real security instrument formed by agreement, but the mortgaged goods typically stay in the debtor’s possession unless the contract says otherwise or the debtor defaults. The lender’s remedies—such as foreclosure or taking possession—arise from default, not from the mere creation of the mortgage. Because possession does not pass to the creditor simply by establishing the chattel mortgage, the statement is false.

Chattel mortgage creates a lien on movable property to secure a debt, so the lender has a security interest but does not automatically take possession. The mortgage is a real security instrument formed by agreement, but the mortgaged goods typically stay in the debtor’s possession unless the contract says otherwise or the debtor defaults. The lender’s remedies—such as foreclosure or taking possession—arise from default, not from the mere creation of the mortgage. Because possession does not pass to the creditor simply by establishing the chattel mortgage, the statement is false.