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Some common types of secured transactions include mortgage and car loans. When a debtor borrows money to purchase a car, the vehicle is the collateral for the loan. The creditor has a security interest in the vehicle and the creditor can repossess and sell the car if payments are not made.
To overly simplify the basic commercial transaction, the three documents necessary to create a secured transaction are: (1) the promissory note; (2) the security agreement and (3) the financing statement. The promissory note is the document that creates the obligation.
Under Article 9 of the UCC, the steps of a secured transaction are 1) getting collateral, 2) attachment, and 3) perfection and priority.
Article 9 contains a statute of frauds which requires a security agreement to be in writing unless it is pledged. See § 9-203(1) of the code. A pledged security agreement arises when the borrower transfers the collateral to the lender in exchange for a loan (e.g., a pawnbroker).
The place to file a UCC document is listed in I.C. 26-1-9.1-501. If you are unsure of the appropriate place to file, you should seek legal counsel. To record a new UCC with our office, fill out and submit the UCC Financing Statement form.
The law of secured transactions consists of five principal components: (1) the nature of property that can be the subject of a security interest; (2) the methods of creating the security interest; (3) the perfection of the security interest against claims of others; (4) priorities among secured and unsecured creditors? ...