Security—an introductory guide
Security—an introductory guide

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Security—an introductory guide
  • What is meant by security and what are the advantages of taking it?
  • What is security?
  • Security, securities and quasi-security
  • Why take security?
  • Common examples of secured finance transactions
  • Main considerations when taking security
  • Identify the type of security
  • Draft and negotiate the security document(s)
  • Perfect the security to protect its validity and priority
  • More...

This Practice Note provides a basic introduction to security and covers the following:

  1. what is security

  2. why do lenders take security

  3. who can provide security

  4. what types of assets can be the subject of security

  5. what types of security can be given

  6. what is perfection and why it is important to perfect security

  7. 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.

What is meant by security and what are the advantages of taking it?

What is security?

Security is often taken by lenders and other creditors over assets of a borrower or other debtor, or a third party who has agreed to provide security for another’s debt. 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

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