What does a mortgage payable represent?

A mortgage payable represents a written promise that pledges real property as security for the payment of a debt. In the context of real estate financing, a mortgage is a legal agreement where the borrower receives funds from a lender to purchase property and, in return, the property itself is used as collateral. If the borrower defaults on the loan, the lender has the right to foreclose on the property to recover the amount owed. This arrangement ensures that the lender has a secured interest in the property, which is fundamental to lending practices in real estate.

The other options mention various aspects of mortgages and real estate transactions but do not accurately describe the essence of a mortgage payable. For instance, while it is true that a mortgage can be categorized under types of business loans, it is more specifically a secured promise linked directly to the property as collateral. Legal documents related to real estate transfer, such as deeds, do not define the obligation represented by a mortgage. Meanwhile, a payment plan refers to the structured timeline for paying off a debt and does not encompass the legal and financial implications inherent in a mortgage payable.