A security interest is a special right created by law or agreement over assets to secure performance of an obligation (usually to repay a debt). It gives the beneficiary (e.g., a lender) special rights to cease and dispose of the collateral if the underlying obligation is breached and prevents the party that pledged the collateral from selling or disposing of it.
A security interest is valid, enforceable, and “perfected” when certain documents are filed with the secretary of state or the county clerk. In a Texas real estate transaction, a lender perfects a security interest by preparing, executing, and filing a deed of trust. In a personal property transaction, a secured party perfects their rights by filing a financing statement with the Texas Secretary of State. The lawyers at VLF have assisted many small businesses in the Houston area in preparing and filing documents to perfect a security interest.