In such a case Steve, financial collateral is authorized as pledges in most likely to acquire a mortgage. The lender’s protection is vested in the interest of a specified belonging that may be repossessed in cases where the borrower defaults on the mortgage repayment. These forms of lending are known as secured loans and they grant a safety curiosity that is assumed to be equal to the business loans, auto loans, and mortgages. Other forms of loans which are unsecured include credits cards. This is because the lender cannot repossess what was purchased on the card.
Dane will receive the whole amount ($3,000) as the security interest or repossess for non-compliant of the borrower. On the other hand, Liv will receive nothing from the sold collateral car. The explanation for this is that Dane filed a financial statement declaring the collateral before Liv. Thus, a financial statement filed by the latter is void and not acceptable. Both lenders had made a secured transaction as safety curiosity was granted. However, such transactions should be “formalized” by filing in the financial statement to avoid duplication of collateral for the same assets by different buyers. The Uniform Commercial Code provides three conditions that validate a security interest. First, the protection interest should have a quoted price. Second, the borrower to own the collateral and third, the safety agreement should be signed by the borrower.
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Most significantly, the agreement should specify or describe the collateral. At this point, the lender must “superb” the security interest to avoid circumstances where other lenders will claim equal rights to the collateral. Liv had the responsibility to ensure that Steve signed the safety agreement and declaring the car as the protection interest. With such a safety curiosity agreement, it would have invalidated any protection claim by other lenders or parties.
References
BIBLIOGRAPHY Security interest. (n.d.). Retrieved from http://securedtransactions.uslegal.com/personal-property/perfection/
Security Interest. (n.d.). Retrieved from http://www.investopedia.com/terms/s/security-interest.asp
THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL. (n.d.). Retrieved from http://www.drat.tn.nic.in/Docu/Securitisation-Act.pdf
