The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
This Practice Note provides a basic introduction to security and covers the following:
what is security
why do lenders take security
who can provide security
what types of assets can be the subject of security
what types of security can be given
what is perfection and why it is important to perfect security
what other steps can a lender take to improve its position in the order of priority
In this Practice Note, the term ‘security provider’ refers to the person or entity that grants the security over its assets. The term ‘secured party’ refers to the person or entity with the benefit of the security. The secured party will often be a lender under a loan and this Practice Note assumes that security is being taken in connection with a lending transaction. However, security can be provided for any type of debt.
Security is often taken by lenders and other creditors over assets of a borrower or other debtor. A common example is a mortgage provider taking a mortgage over a house in return for lending the purchaser money to buy it. When a lender or other creditor takes security over a borrower’s assets, what it gains is a collection of rights over those
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