Security interest
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In law and finance, a security interest is a legal right that a secured party has over secured assets. Security interests most often arise where a debtor grants an interest over collateral to a creditor to secure the loan, such that the creditor will have enforceable rights in the event of the debtor's default or non-performance.
In the event that the debtor is unable to perform their contractual obligations, the secured creditor may not only sue the debtor for contractual damages or recovery of debt, but may also enforce their proprietary rights over the assets (e.g. by seizure and sale) and obtain priority over unsecured and subordinate creditors in the event of insolvency.
The most common security interest is the mortgage, which often involves a creditor bank securing an interest in a debtor homeowner's land for the payment of a loan used to finance the purchase of the home. Although most security interests are created by agreement between the parties, it is also possible for a security interest to arise automatically by operation of law.