Secured Transactions.

 A security interest refers to a legal claim or right that a creditor or lender holds over a borrower's property or assets to secure a debt or obligation. It is a form of collateral that provides the creditor with legal recourse if the borrower fails to fulfill their repayment obligations.

When a borrower obtains a loan or financing from a lender, the lender may require the borrower to provide security to protect their interests. This security can take various forms, such as a mortgage on real estate, a lien on a vehicle, or a pledge of shares or other assets. By taking a security interest, the lender has the right to seize and sell the secured property to recover the outstanding debt if the borrower defaults on their payments.

The creation and enforcement of security interests are governed by laws and regulations that vary across jurisdictions. In many countries, a security interest must be documented and registered to be enforceable against third parties. The registration process typically involves filing a notice or a financing statement with a designated government authority, such as a secretary of state's office or a registry of personal property.

Having a security interest gives the lender priority over other creditors in the event of the borrower's default or bankruptcy. In other words, if multiple creditors have claims against the same property, the one with the first registered security interest generally has the first right to recover their debt from the proceeds of the sale of the property.

It's important for both borrowers and lenders to understand the implications of security interests, as they can significantly affect the rights and remedies of each party. Consulting with legal professionals is advisable to ensure compliance with applicable laws and to protect one's interests when dealing with security interests.