Security interest

A security interest is most commonly created when a secured party (such as a lender) takes an interest in personal property of a grantor (such as a borrower), as security for a loan or other obligation. The security interest means the secured party can take the personal property (known as the collateral) if the secured obligation is not met.

Security interests can only arise when there is agreement between the grantor and the secured party. There are a small number of other types of transactions that also create security interests known as deemed security interests.