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Security Interest in Personal Property - Explained

The Process for Taking an Interest in Personal Property of a Debtor

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What is a security interest in personal property?Discussion QuestionPractice QuestionAcademic Research

What is a security interest in personal property?

A security interest in personal property involves using any form of personal property or fixture to secure a debt. A borrower signs a promissory note that identifies the personal property that will serve as collateral to secure the loan. Personal property that may serve as collateral includes tangible and intangible assets, commercial paper, and commercial liens.

Tangible Assets - Consumer goods, business equipment, farm products, and inventory.

Commercial Paper - Documents of title, chattel paper, and negotiable instruments.

Intangible Assets - Intellectual property, accounts receivable, and general intangibles.

Floating Liens- After-acquired collateral, future advances on collateral, and proceeds from the sale of collateral.

Note: Security interests in personal property are governed by the state law version of Article 9 of the Uniform Commercial Code. Article 9 does not cover security interests that are not commercial in nature.

Next Article: Attachment of a Security Interest Back to: SECURED TRANSACTIONS

Related Topics

  • What is a security interest in personal property?
  • How does one establish a security interest in personal property?

Discussion Question

Can you think of any business transaction that gives rise to a security interest in personal property? Hint: Think about financing situations that go beyond the traditional borrower-lender relationship.

Practice Question

Curtis wants to borrow money and is concerned over what he can provide as collateral for the loan. Can you describe to him that types of personal property that can serve as collateral for a secured loan?

Academic Research


security interest in personal property personal property security interest

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