Generally speaking, in Virginia, secured transactions questions generally involve credit transactions. Typically one party (the debtor) buys something from another (the creditor or secured party) but does not pay immediately. The creditor wants to be able to rely on something other than the debtor’s promise to ensure payment. A security interest is that something.
A security interest is a limited right in specific personal property (the collateral) of the debtor that allows the creditor to take the property if the debtor fails to fulfill the credit obligation. A security interest is effective between the parties when certain steps are taken to attach the interest. Once the interest attaches, as between the parties, if the debtor defaults, the creditor has some right to take the collateral to satisfy the obligation.
However, attachment does not provide the creditor with any rights with respect to third parties who might also have an interest in the same collateral. To gain rights over such third parties, the creditor must take additional steps to perfect the security interest. Perfection basically serves as a form of notice that the creditor has rights in the collateral superior to certain third parties who might also have an interest in the same collateral (there are rules of priority to determine whose rights are superior.)
As usual, every law has exceptions. Consult with a Charlottesville lawyer to get the full scoop.
Tucker Griffin Barnes P.C.
Charlottesville, VA
434-973-7474
Inquire@TGBlaw.com
http://www.tgblaw.com/
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