security agreement

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security agreement

A contract that grants a creditor a lien in personal property belonging to the debtor. Every state has passed some version of the Uniform Commercial Code, Article Nine, which addresses security agreements and their consequences. A mortgage lender will often require a separate security agreement and UCC-1, which is the document filed in the public records to provide evidence of a security agreement.Lenders do this so that if there is later a default and argument regarding whether specific additions to the real estate constitute real or personal property, the lender is covered both ways. Formerly known as a chattel mortgage.