Paralegal Advanced Competency Exam (PACE) Practice Exam

What does it mean to leave an item of property in the custody of another in legal terms?

1. To lease the item

2. To pledge the item as collateral

3. To consign the item

4. To donate the item

The correct answer is: To consign the item

Leaving an item of property in the custody of another refers to the legal concept of consignment. In this context, when an item is consigned, the owner (the consignor) gives possession of the property to another party (the consignee) for a specific purpose, often the sale of that property, while retaining ownership until it is sold. The consignee is responsible for caring for the item and selling it on behalf of the owner, who typically receives payment from the sale. This legal arrangement establishes a relationship where the consignee has temporary custody but does not own the item. The consignor retains some rights over the property, which differs from leasing, where the lessee gains the right to use the property and may take on risks associated with ownership. In contrast, pledging an item as collateral involves using property to secure a loan, where the lender can take possession if the borrower defaults. Donating an item means transferring ownership without expecting anything in return, which is fundamentally different from simply leaving an item in someone else's custody where the ownership and rights are not transferred.