Also known as: security interest · security interest's
Written by attorneys · grounded in primary & secondary sources — see below
A consensual lien in property granted to secure payment of a debt or performance of an obligation. The holder may foreclose or repossess upon default to satisfy the underlying debt.
Stella Shapiro borrowed funds from Synergy Systems to purchase a residence. She executed a mortgage pledging the property as collateral. When Stella defaulted on the payments, Synergy Systems initiated foreclosure proceedings to recover the outstanding balance from the sale of the home.
After Sebastian Santos died, his surviving spouse Sylvia Santos selected household furnishings and an automobile from the estate. A creditor held a security interest in the automobile. The probate court valued the items in excess of that security interest to determine the allowable exempt property amount under the statutory cap.
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Santiago Sanchez, a resident of State X, granted a security interest in his automobile located in State Y to Sapphire Holdings. Both states applied identical rules on a debtor's right of redemption. The court treated the contacts as if they occurred in a single state when resolving the redemption issue.
Spencer Silver purchased appliances on credit from Southland Foods and granted a security interest in the goods. Southland Foods sought to repossess the appliances through a prejudgment writ without providing Spencer an opportunity to be heard. The court held that the procedure violated due process even though it protected the creditor's security interest.
Sarah Sullivan purchased multiple items of furniture from Solstice Ventures under successive installment contracts. Each contract stated that payments would be applied pro rata across all outstanding balances and that title to every item remained with the seller until all debts were paid. When Sarah defaulted on one account, Solstice Ventures attempted to repossess all items under the cross-collateral clause.
Sylvia Santos advanced funds to her employer Synergy Systems secured by a lien on equipment the company held. After termination, Sylvia sought to enforce the security interest against the equipment. The court examined whether the employment relationship altered the enforceability of the independent security arrangement.
A mortgage pledges real property to secure a debt while a security interest under Article 9 typically encumbers personal property or fixtures. Both allow the secured party to foreclose or repossess upon default.
A security interest may continue in goods that become fixtures attached to real property unless the goods qualify as ordinary building materials incorporated into an improvement. Priority then turns on proper perfection and recording rules.
A license or access right coupled with a security interest in chattels generally cannot be assigned without conveying the security interest itself. Separation of the two violates the coupling requirement.
When two states have the same local law on an issue such as redemption rights, the court treats the multistate contacts as if they occurred in a single state for choice-of-law purposes.
…all the items previously purchased by the same purchaser, and each new item purchased automatically became subject to a security interest arising out of the previous dealings. On May 12, 1962, appellant Thorne purchased an item described as a Daveno, three tables, and two lamps, having total stated value of $391.10. Shortly…