Partials Hypothecation Method - Have you used it and why?

[Brett Burky]

We're working on something and have come to love the idea of the Hypothecation method for closing partial notes. We're trying to get an expert opinion on it to be more well rounded on the subject as we dive deeper into that. 

Has anyone ever run into any snags, what would be worse case scenarios with it, do you like that over other closing methods? 

Really just trying to do a deep dive on the subject matter. Thanks in advance. 

[Jay Hinrichs]

I have done hypothecations for my projects when I wanted to pull cash out of an owner finance deal. I did them with my bank.. pretty simple and bullet proof.. only risk is if my buyer defaults I have personal guarantee on the money I borrowed through the hypo  although my bank would only front 50% of the note .. so while if we had a default I would theoretically have equity to cure but the interim cash flow stoppage would need to be addressed.. IE my buyer stops and I have to continue paying my bank