Also known as: security interests
Written by attorneys · grounded in primary & secondary sources — see below
A property interest in personal property or fixtures created by agreement to secure payment or performance of an obligation. The interest grants the secured party rights in the collateral upon default, including foreclosure or repossession, while the debtor retains possession until default occurs.
Sabrina Shah borrows funds from Silverline Industries to purchase a warehouse. She executes a mortgage pledging the warehouse as collateral for repayment. When Shah defaults on the loan payments, Silverline Industries initiates foreclosure proceedings to sell the property and recover the debt.
After Samuel Soto's death, his surviving spouse Sasha Stone petitions the probate court for the exempt property allowance. The estate includes household furnishings subject to a perfected security interest held by Southland Foods. The court calculates Stone's $15,000 allowance using only the equity value above the security interest.
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Skylar Sullivan in state X grants Solstice Ventures a security interest in an automobile located in state Y. Both states apply identical rules on the debtor's right of redemption. The court treats the contacts as if grouped in a single state when resolving the redemption issue.
Sophia Singh buys multiple household items from Sapphire Holdings under installment contracts containing a cross-collateral clause. Each new purchase becomes additional security for prior unpaid balances. When Singh defaults, Sapphire Holdings seeks to repossess all previously purchased goods under the accumulated security interests.
Stella Shapiro obtains a loan from a lender secured by manufacturing equipment. The lender perfects its security interest by filing a financing statement. Upon Shapiro's default the lender enforces its rights in the equipment to satisfy the outstanding obligation.
Sasha Stone grants a security interest in farm equipment to secure a loan from Southland Foods. A neighboring property owner later claims the equipment interferes with access rights. The court recognizes the security interest as valid and enforceable against the neighbor's claim.
A security interest under Article 9 of the UCC attaches to personal property or fixtures by agreement and is perfected by filing or possession. A mortgage creates a security interest in real property and is enforced through foreclosure after recordation. Both secure an obligation but operate under different bodies of law.
The secured party may enforce its interest in the collateral outside the general claims process. In probate the exempt property allowance is calculated only on value exceeding any security interest. The security interest retains priority over unsecured claims.
No. Article 9 permits attachment and perfection without possession when the debtor retains the collateral. Filing a financing statement or other authorized method perfects the interest and establishes priority against third parties.
…Government registers copyrights and patents. State governments and their subdivisions register the title to real property and security interests; they issue driver’s licenses, motor vehicle registrations, and hunting, fishing, and boating licenses or permits. Cases like Rust and Finley are not instructive in analyzing the…