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Difference between revisions of "Security Agreements"
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Security Agreements (view source)
Revision as of 22:36, 16 September 2018
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When lenders and sellers (called “creditors”) got those rights against the borrower’s property, it was known as “'''getting security'''”. This term is still in use, although sometimes consumers use other language. For example, people talk of a lender taking '''collateral''' over property or a seller getting a '''lien''' over property. The actual legal meaning of these terms is not always the same. In many instances, these terms are very simple expressions for complex and very different legal arrangements. The term “getting security” is used here to mean the situations in which creditors get rights over a debtor’s personal property. | When lenders and sellers (called “creditors”) got those rights against the borrower’s property, it was known as “'''getting security'''”. This term is still in use, although sometimes consumers use other language. For example, people talk of a lender taking '''collateral''' over property or a seller getting a '''lien''' over property. The actual legal meaning of these terms is not always the same. In many instances, these terms are very simple expressions for complex and very different legal arrangements. The term “getting security” is used here to mean the situations in which creditors get rights over a debtor’s personal property. | ||
A creditor who gets security gets special legal advantages. The main advantage arises if the borrower defaults. Creditors who do not have security over a borrower’s property and who want to enforce payment must first sue the borrower and get a judgment. If they get a judgment, they can try to have the borrower’s property seized by a court bailiff. The court bailiff sells the property and gives the money to the creditor. | A creditor who gets security gets special legal advantages. The main advantage arises if the borrower defaults. Creditors who do not have security over a borrower’s property and who want to enforce payment must first sue the borrower and get a [[Enforcing Judgments Against Chattels|judgment]]. If they get a judgment, they can try to have the borrower’s property seized by a [[Bailiffs, Court Bailiffs and Sheriffs|court bailiff]]. The court bailiff sells the property and gives the money to the creditor. | ||
Security agreements allow the creditor to take the borrower’s property immediately upon default. The secured creditor does not have to sue the borrower first and wait to get a judgment before exercising its rights to take the property of the borrower. In practical terms, security agreements are often important because they allow a creditor first claim to the property of the borrower before creditors who do not have security. | Security agreements allow the creditor to take the borrower’s property immediately upon default. The secured creditor does not have to sue the borrower first and wait to get a judgment before exercising its rights to take the property of the borrower. In practical terms, security agreements are often important because they allow a creditor first claim to the property of the borrower before creditors who do not have security. | ||
