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What is security interest in 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. The security interest means the secured party can take the personal property (known as the collateral) if the secured obligation is not met.
When does a security interest become a secured party?
A creditor has a security interest in collateral, and becomes a secured party, if and when a security interest 鈥渁ttaches.鈥?Under the UCC, a security interest generally does not attach unless three basic requirements are met. In simplest form, the requirements are that: value be given for the security interest.
What does it mean to perfect a security interest?
By perfecting its security interest, a secured party seeks to gain priority over other parties regarding the collateral. The precise details of how to perfect a security interest depend in part on the local jurisdiction where the collateral is located.
What is a security interest over property called?
The use of the term 鈥渃harge鈥?over property is taken to be a reference to a security interest that has attached to either a 鈥渃irculating鈥?or 鈥渘on-circulating鈥?asset. A security interest in a circulating asset is analogous to a floating charge whereas a security interest in a non-circulating asset is analogous to a fixed charge.