What is a security interest?

A security interest is an interest in property—real estate or otherwise—that secures payment of a debt or performance of some other obligation. If the party that grants the security interest fails to fulfill its obligation, then the holder of the security interest can normally take possession of the asset in question and sell it in order to recoup any losses.

A common example of a security interest is a real estate mortgage. Here, the borrower pledges the property as collateral for securing repayment of the mortgage loan to the lender.

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