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Another form of security interest which flourished in the United States in the late 19th century and the first half of the 20th century was the conditional sale, the ancestor of what U.S. lawyers now call the purchase money security interest (PMSI). [30] It was popular in that era among creditors for two reasons. [30]
Contractual agreements can be secured by either a purchase money security interest (PMSI) loan, where the creditor takes a security interest in the items purchased (i.e. vehicle, furniture, electronics); or, a non-purchase money security interest (NPMSI) loan, where the creditor takes a security interest in items that the debtor already owns.
If the security agreement is for a purchase money security interest in consumer goods, perfection is automatic. Otherwise, the lender must record either the agreement itself, or a UCC-1 financing statement , in an appropriate public venue (usually the state secretary of state or a state business commission under that person's authority).
A security interest becomes enforceable against the collateral as soon as it attaches. Attachment requires three things: (i) that the debtor have rights in the collateral or the power to convey rights; (ii) that value be given; and (iii) in most cases, that the debtor have authenticated a security agreement that adequately describes the collateral.
In the United States, when a U.C.C. collateral term is used in the security agreement, usually the courts will apply the Article 9 term meaning rather than the common one. [14] Various types of property can serve as collateral for a security interest, such as a when a person takes a mortgage out to purchase a house the house becomes collateral.
vendee's lien—a buyer's lien on the purchased land as security for repayment of purchase money paid in, enforceable if the seller cannot or does not convey good title. vendor's lien—a seller's lien on land as security for the purchase price (sometimes called an unpaid vendor's lien). voluntary lien—a lien created with the lienee's consent.
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