Creditor of Production Equipment as Mortgagee

February 2, 2015

Is there anything definitive that states that a secured creditor of large production equipment (not permanently installed) can or cannot be listed as a mortgagee on a commercial property policy?

I believe the loan can be characterized as a chattel mortgage. My view is that a mortgagee can be on either real or personal property, it just needs to be some type of secured loan.

Louisiana Subscriber

We agree with your view. In the ISO Mortgageholders E&O Coverage Form, CP 00 70, “mortgageholder's interest” is defined as “your interest, as mortgageholder, in real or personal property, including your interest in any legal fiduciary capacity.” This acknowledges that the property can be real or personal. There is nothing in the ISO Commercial Lines Manual rules stating that a mortgage must be only on real property, so it is our opinion that it can be on real or personal property.