fereiowa.blogg.se - Secutiry interest of home purchase

The next prerequisite is that there must be value given. The first prerequisite to the attachment of a security interest is that there must be a security agreement. For example, a security agreement describing collateral as “Furniture as per attached listing,” but with no listing attached fails to sufficiently describe the collateral and therefore is not an enforceable security agreement. To be enforceable, a written security agreement must be signed by the debtor and reasonably describe the collateral. The agreement of the creditor and the debtor that the creditor shall have a security interest in the goods must be evidenced by a written security agreement unless the creditor retains what is known as a possessory security interest by taking possession of the collateral.

The debtor must have rights in the collateral (for example, he must own it or be leasing the collateral).Ī security interest is not enforceable unless the collateral is in the possession of the secured party or the debtor has signed a security agreement that contains a description of the collateral, value has been given, and the debtor has rights in the collateral.

There are three prerequisites to the attachment of a security interest: An example would be a central air conditioning unit within a commercial building.Ī security interest is said to attach at the time it becomes enforceable. A fixture is personal property that has become so attached or adapted to real estate that it has lost its character as personal property and is deemed to be part of the real estate. Personal property is basically anything that is not real property.

The creditor (the secured party) requires the debtor to secure the obligation with collateral so that if the debtor does not pay as promised, the creditor can take the collateral, sell it, and apply the proceeds against the unpaid obligation of the debtor.Ī security interest is an interest in personal property or fixtures that secures payment or performance of an obligation. A security interest allows a creditor to repossess and sell the collateral if a debtor fails to pay a secured debt.Ī secured transaction involves a sale on credit or lending money where a creditor is unwilling to accept the promise of a debtor to pay an obligation without some sort of collateral.

A secured transaction is created when a buyer or borrower (debtor) grants a seller or lender (creditor or secured party) a security interest in personal property (collateral).