Exploring Real Security: A Comprehensive Guide to Its Legal Definition

Q: How does real security differ from personal security?

Real security is tied to physical assets, while personal security relies on an individual&#039;s promise to pay.

Q: Can I use real security for a business loan?

Yes, businesses can use real security, such as property or equipment, to secure loans.

Q: What happens if I default on a loan secured by real security?

The lender may take possession of the secured asset through foreclosure or repossession.

Definition & Meaning

Real security refers to a type of security interest in property, as opposed to relying on a surety or guarantor. This means that real security is directly tied to tangible assets, such as real estate or corporate properties, which can be claimed if a debt is not repaid. Corporate mortgages are considered a form of real security, just like individual mortgages. The term has been recognized in U.S. law since at least 1824.

Table of content

Legal Use & context

Real security is primarily used in the context of property law and finance. It is relevant in various legal practices, including:

Real estate transactions
Corporate financing
Bankruptcy proceedings

Users can often manage their own real security agreements by utilizing legal templates available through resources like US Legal Forms, which provide guidance drafted by qualified attorneys.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A business takes out a loan to purchase a commercial property and secures the loan with a mortgage on that property. If the business fails to repay the loan, the lender can claim the property.

Example 2: An individual secures a personal loan with their home as collateral. If they default on the loan, the lender can initiate foreclosure proceedings to recover the debt. (hypothetical example)

State-by-state differences

Examples of state differences (not exhaustive):

State	Variation
California	Requires specific disclosures in mortgage agreements.
New York	Has unique foreclosure laws that affect real security claims.
Texas	Allows for non-judicial foreclosures under certain conditions.

This is not a complete list. State laws vary and users should consult local rules for specific guidance.

Comparison with related terms

Term	Definition	Key Differences
Real security	Security interest in tangible property.	Directly tied to physical assets.
Personal security	Security based on a person's promise to pay.	Relies on the creditworthiness of a guarantor.
Collateral	Asset pledged as security for a loan.	Can be either real or personal property.

Common misunderstandings

What to do if this term applies to you

If you are considering using real security for a loan or transaction, follow these steps:

Identify the asset you want to use as security.
Consult with a legal professional to understand the implications.
Utilize legal templates from US Legal Forms to draft necessary documents.
Ensure all agreements are properly filed with the relevant authorities.

For complex situations, seeking professional legal help is advisable.

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Quick facts

Typical fees: Varies by state and type of transaction.
Jurisdiction: State-specific laws apply.
Possible penalties: Loss of the secured asset in case of default.

Key takeaways

Frequently asked questions

What is real security?

Real security is a legal claim on tangible property used to secure a loan or obligation.