Personal Property And Securities Act In Harris
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A secured transaction is created when a buyer or borrower (debtor) grants a seller or lender (creditor or secured party) a security interest in personal property (collateral).
The PPSA applies to security interests in relation to personal property. Understanding the PPSA therefore starts with understanding these two concepts. Where a security interest in personal property exists, there can be important consequences if the secured party fails to take steps to protect its interest.
Examples of tangible personal property include vehicles, furniture, boats, and collectibles. Digital assets, patents, and intellectual property are intangible personal property. Just as some loans—mortgages, for example—are secured by real property like a house, some loans are secured by personal property.
Other types of intangible personal property include life insurance contracts, securities investments, royalty agreements, and partnership interests.
A security interest generally is created with a security agreement, which is a contract governed by Uniform Commercial Code (UCC) Article 9, as well as other state laws governing contracts.
Most security interests are granted by the person who owns the property to secure their own indebtedness. But it is also possible for a person to grant security over their property as collateral for the debts of another person (often called third party security).
In order to have an enforceable security interest, the party's security interest must first "attach." Attachment occurs when (1) the creditor gives value, (2) debtor has rights in the collateral, and (3) there is an authenticated and signed security agreement, or the party takes control or possession of the collateral.
