Also known as: unsecured creditor · unsecured debt
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
An arrestee who is not physically restrained or confined at the time of a search. The status determines whether officers may search a vehicle incident to arrest without a warrant.
An arrestee who is not physically restrained or confined at the time of a search. The status determines whether officers may search a vehicle incident to arrest without a warrant.
Select any source to read its text and confirm it supports the definition.
A debt or obligation that lacks collateral or a security interest to secure repayment. The absence of security leaves the creditor with only a personal claim against the debtor.
Select any source to read its text and confirm it supports the definition.
A debt or obligation that lacks collateral or a security interest to secure repayment. The absence of security leaves the creditor with only a personal claim against the debtor.
Each sense below has its own examples, sources, and questions.
Officers arrest Umar Usmani for drug possession. Usmani remains unsecured and within reaching distance of his vehicle. Because Usmani is unsecured, officers may search the passenger compartment incident to arrest without a warrant.
Police may search the passenger compartment only if the arrestee remains unsecured and within reaching distance or if evidence of the offense of arrest is reasonably believed to be inside. A search is invalid once the arrestee is secured and no evidentiary basis exists.
Supporting sources
Unity Capital buys inventory from a supplier on open account without granting a security interest. The supplier later becomes insolvent. Unity Capital qualifies as a buyer in ordinary course because the purchase occurred on unsecured credit in the ordinary course of business.
Utopia Pharmaceuticals transfers a promissory note to a new holder but fails to assign the accompanying mortgage on its factory. The note becomes unsecured in the hands of the transferee, leaving the holder with only an unsecured claim against the maker.
Uliana Ustinova pays off a partner's personal loan to the partnership after the partner defaults. Because the obligation was unsecured, subrogation allows Ustinova to step into the creditor's shoes and pursue the partner directly for repayment.
No. A buyer in ordinary course may purchase for cash, by exchange, or on secured or unsecured credit, provided the purchase occurs in good faith and in the ordinary course from a seller in the business of selling goods of that kind.
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The note becomes unsecured. Separating the obligation from the mortgage results in a practical loss of efficacy and confers an unwarranted windfall on the mortgagor.
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Yes. Subrogation may arise when one pays an unsecured obligation owed by another if denying recovery would produce unjust enrichment, though the doctrine is most commonly applied to obligations secured by mortgages.
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Partner loans are treated at parity with other unsecured creditor claims. The partnership must discharge all creditor obligations, including those owed to partners, before any distributions to partners on account of capital or profits.
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