lender's claim to assets pledged by a borrower securing payment of an obligation. A lender's interest, also known as a lien, is said to attach to the borrower's property, and consists of two limited rights: foreclosure and priority. A lender who files a financing statement, which is often the same document as the security agreement, with the appropriate state or county official gives legal notice to other creditors that a lien has been filed. This process, known as perfecting a lien, commonly is done in commercial lending of a lien that is valid against claims of other creditors and most third parties.

document filed with a lender detailing personal property taken as collateral from a borrower. The financing statement, a standard document under the Uniform Commercial Code is filed with the secretary of state or other designated public official. The document is time stamped, the filing date is noted, and a file number is assigned, securing the lender's claim to the assigned collateral.

document giving a lender a security interest in assets or property pledged as collateral. This agreement, signed by the borrower, describes the collateral and its location in sufficient detail so the lender can identify it, and assigns to the lender the right to sell or dispose of the assigned collateral if the borrower is unable to pay the obligation. The security agreement may contain loan covenants governing the advancement of funds, and a schedule for repayment of principal and interest, or require the borrower to obtain insurance coverage for the assets pledged.

The security agreement may cover nonpossessory liens in intangible property such as accounts receivable, or a possessory lien, in which the lender holds the collateral, for example, stock certificates, until the loan is fully paid. In some loans, the security agreement is also the financing statement filed with a public records office, if it has the signatures of both borrower and lender.

security interest in collateral securing a debt protected from claims by third parties. To properly file a lien and take a security interest in property owned by the borrower, a lender must file the lien with the appropriate legal authority. Perfection of a lien on real estate is accomplished by recording the mortgage deed of trust in public land records of a municipality, such as a town clerk's office.

Perfecting a lien on stocks, bonds, or other assets owned by the borrower (known as personal property, as opposed to real property, or real estate) occurs when the lender files a financing statement listing the type of collateral securing the loan, and its location, in a designated filing place, generally the office of the Secretary of the State or a county recorder's office.

The lender's financing statement gives the lender priority status ahead of creditors filing subsequent liens, and is valid for a five-year period. The filing date is recorded, and the lender's documents are assigned a file number. These documents contain a detailed record of the collateral pledged or taken by the lender, establishing the lender's claim against assets by the borrower in event that the borrower defaults or goes bankrupt.