What does a pawn represent in legal terms?

In legal terms, a pawn represents a deposit for security. This arrangement involves an item of value being given to a pawnbroker as collateral for a loan. The pawnbroker holds this item until the borrower repays the loan, along with any agreed-upon interest. If the borrower fails to repay the loan, the pawnbroker has the legal right to keep and sell the pawned item to recover the amount loaned.

The concept of a pawn is rooted in the idea that the item itself serves as a security interest, ensuring that the pawnbroker is protected in case the borrower defaults on the loan. This relationship is distinct from a gift of property, which implies a transfer without expectation of repayment, or a transfer of ownership, which denotes a complete and permanent change of ownership rights. Similarly, a rental agreement refers to leasing property rather than collateralizing it for a loan. Thus, recognizing a pawn as a deposit for security accurately reflects its role in these transactions.