Quiz 18: Security Interests in Property
Perfection relates to the steps required be taken in order to make a security interest effective against the claims of third parties and/or to retain the effectiveness in case the grantor of the security interest defaults. A creditor can let other creditors know of her interest in the collateral by perfecting its interest in two ways: a) By filing a financing statement in the appropriate public office giving public notice to the third parties. Such financing statements must comprise the names of the debtor and the secured party, and the nature of the collateral covered. b) By taking possession of the collateral until the repayment of the loan by debtor.
Security interest refers to any interest in private property which secures performance or payment of an obligation. A secured party refers to seller, lender, or any other person in whose support there will be a security interest. It also includes the people to whom chattel paper or accounts have been sold. A security agreement refers to the agreement which provides or creates a security interest among a secured party and a security. Financing statement refers to the document set by a secured creditor and filed with local or state official. It provides notice to the public about the security interest hold by the creditor in the security belonging to the debtor mentioned in the statement.
Security Interest: It refers to the interest of a creditor in securing the asset listed as collateral, in order to obtain the repayment his loan the creditor will acquire a security interest in the asset. Secured Party: The Secured party will be the creditor because he can be assured about the repayment of his loan by perfecting the security. Security Agreement: A security agreement is a contract between the lender and the debtor, the debtor will be offering assets in order to provide security to obtain the loan. The Security agreement contains all the details of the asset offered as security and its description etc. Financing Statement: A financing statement contains all the information about the amount offered as loan and the terms and conditions under which it is offered. Also, it offers the full details of the parties under agreement and the date of entering the contract.
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