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Under Article 9 of the UCC, the steps of a secured transaction are 1) getting collateral, 2) attachment, and 3) perfection and priority.

The law of secured transactions consists of five principal components: (1) the nature of property that can be the subject of a security interest; (2) the methods of creating the security interest; (3) the perfection of the security interest against claims of others; (4) priorities among secured and unsecured creditors? ...

Here is the simplest (and most common) scenario: Debtor borrows money or obtains credit from Creditor, signs a note and security agreement putting up collateral, and promises to pay the debt or, upon Debtor's default, let Creditor (secured party) take possession of (repossess) the collateral and sell it.

Creating a security agreement Some key provisions in a security agreement include: Describing the collateral as accurately and as detailed as possible, so both the borrower and the lender agree upon the secured property. How to determine whether and when the borrower is in default under the loan.

There are three requirements for attachment: (1) the secured party gives value; (2) the debtor has rights in the collateral or the power to transfer rights in it to the secured party; (3) the parties have a security agreement ?authenticated? (signed) by the debtor, or the creditor has possession of the collateral.

This is usually accomplished when the debtor, in return for value (a loan or credit) extended from the creditor, puts up as collateral some valuable asset in which she has an interest and authenticates (signs) a security agreement (the contract) giving the creditor a security interest in collateral and allowing that ...