“There are only four kinds of consensual security known to English law: (i) pledge; (ii) contractual lien; (iii) equitable charge and (iv) mortgage.
What is a security interest in something?
Security interest is an enforceable legal claim or lien on collateral that has been pledged, usually to obtain a loan. The borrower provides the lender with a security interest in certain assets, which gives the lender the right to repossess all or part of the property if the borrower stops making loan payments.
What type of security interest is a loan?
A security interest is most commonly created when a secured party (such as a lender) takes an interest in personal property of a grantor (such as a borrower), as security for a loan or other obligation.
What is the common term for the security interest that the lender has in the property?
The document granting the security interest can be called by different names, but the most common names are “Mortgage” or “Deed of Trust.”
What is a UCC security interest?
This practice note discusses the requirements for the attachment and perfection of consensual security interests in personal property under Article 9 of the Uniform Commercial Code (UCC). A security interest is said to attach to collateral when it becomes a right that is enforceable against the debtor’s property.
What is a security interest example?
One of the most common examples of a security interest is a mortgage: a person borrows money from the bank to buy a house, and they grant a mortgage over the house so that if they default in repaying the loan, the bank can sell the house and apply the proceeds to the outstanding loan.
How is security interest created?
(a) A security interest shall be created by a security agreement, (b) A security agreement may provide for the creation of a security interest in a future property, but the security interest in that property is created only when the grantor acquires rights in it or the power to encumber it.
Is a pledge a security interest?
The term “pledge” predates the Uniform Commercial Code (UCC), when a pledge involved the creation of a security interest by physical possession of the property. Under the UCC, a pledge agreement is a security agreement.
What is security loan?
A secured loan is a type of loan in which a borrower pledges an asset such a car, property, equity, etc. against that loan. … If in case the borrower defaults the loan, the lender can liquidate the asset and recover the loan amount, making these loans risk-free for the lender.
What is a loan security agreement?
A security agreement refers to a document that provides a lender a security interest in a specified asset or property that is pledged as collateral. … In the event that the borrower defaults, the pledged collateral can be seized by the lender and sold.
What is perfection of security?
A company’s borrowings are typically secured by way of creation of a ‘security’ or ‘charge’ over its assets. … In order to mitigate this risk, the law usually requires the secured party to give some form of public notice and/ or make certain filings – this requirement of public notice is known as perfection of security.
What is an unperfected security interest?
Unperfected Security Interests: When one secured party has a perfected security interest in collateral and another secured party has an unperfected security interest in the same collateral, the perfected interest prevails.
Is a security interest personal property?
A security interest is a property interest over specific assets that secures performance of an obligation, typically the payment of a debt. … In this situation, the borrower may grant a lender a security interest in his personal property in order to obtain the necessary money.