Secured transactions in the United States
are an important part of the law
of the country. By allowing lender
to take a security interest
on a collateral owned by a debtor
's asset, the law provides lenders with a legal relief in case of default by the borrower. With such legal remedy available, lenders would therefore be able to lend capital
at lower interest rates
In all fifty states
, article 9 of the Uniform Commercial Code
(U.C.C.) governs secured transactions where security interests are taken on a personal property. It regulates creation and enforcement of security interests in movable property
, intangible property, and fixtures
. Transactions where security interests are taken on real property are regulated not by article 9, but by real property laws that vary among jurisdictions. However, a secured interest in an promissory note that is secured by a deed of trust on real property is regulated by article 9. This latter distinction is important in the context of the sale and purchase of promissory notes secured by real property, where the purchaser does not have enough cash on hand and needs to obtain its own financing (which is governed by article 9).
Security interests are particularly valuable in bankruptcy
, because creditors who have security interests in a bankrupt debtor's estate
take precedence over creditors who lack such interests (unsecured creditors) in the distribution of the debtor's......