This post explains what a security interest is, how it is used, and why it is significant.
A security interest is an interest in an asset that is intended to secure performance of an obligation. Typically, the obligation that is secured is payment of a debt.
Terminology: The person who owes money is called the debtor. The person to whom money is owed is the creditor.
Many of us grant a security interest when we buy a house. In exchange for providing money for the purchase, the lender receives a mortgage (or, in California, a deed of trust). This is a type of security interest. (more…)