In a secured transaction, the Grantor (typically a borrower but possibly a guarantor or surety) assigns, grants and pledges to the grantee (typically the lender) a security interest in personal property which is referred to as the collateral.
The document used by lenders to obtain a lien on real property is a mortgage or deed of trust.
Where the collateral remains in the physical possession of the borrower, or where the collateral is intangible (such as a patent.,[1] accounts receivable, or a promissory note), the security agreement must be in writing in order to satisfy the statute of frauds.
In order for a security interest to attach to the collateral in the possession of subsequent purchasers, it must be perfected.
Perfecting the interest creates constructive notice, which is deemed legally sufficient to inform the rest of the world of the lender's rights in the collateral.