A Secured Transaction is a Loan Transaction in which a lender is provided with collateral by a buyer. The lender takes a security interest in the collateral. As a result, if the loan is not paid back, then the lender may foreclose or may repossess on the item that is acting as the collateral. If the debtor declares bankruptcy, the lender is also protected because of the security interest in the collateral. The lender may sell the item to recover the money that was discharged in the bankruptcy filing.
Secured Transactions involving personal property (not real estate) are governed by Article 9 of the Uniform Commercial Code. It is important to understand the process of entering into a Secured Transaction as well as to understand the implications in terms of both your rights and obligations. An experienced attorney at Lotzar Law Firm, P.C. can help clients in Yuma and throughout Arizona who are borrowers or lenders in Secured Transactions, both in drafting the initial contractual agreement and in enforcing the security interest. Call or contact us online today to speak with a member of our legal team and to learn more.
Secured Transactions
Secured Transactions involve Contractual Agreements, so the parties who are entering into the transaction must follow all rules of contract formation. Secured Transactions must be in writing, unless the Agreement is pledged. An Agreement is pledged if the debtor who is entering into the transaction actually physically gives the lender the collateral so it is in the lender’s possession. An example of a Pledged Security Transaction is a situation where a pawn broker issues a loan with a diamond ring acting as collateral. The borrower may give the diamond ring to the pawn broker to keep until such time as the loan is paid back.
If the Agreement is not a Pledged Security Transaction, then the written contract between the two parties must specify the specific terms of the Loan Arrangement as well as the security interest in the collateral that is being transferred to the lender. Car Loan documents are an example of documents created in Secured Transactions. Contractual terms will generally be enforced provided the requirements of creating the Agreement were fulfilled by all parties.
An experienced attorney can help clients to understand how a Secured Transaction in Yuma works and what impact Secured Transactions have on their legal rights. We can also help you to draft a Contractual Agreement for a Secured Transaction. To speak with an experienced business law professional to learn more about Secured Transactions in Yuma, call or contact Lotzar Law Firm, P.C. today.
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