Secured transactions related to real estate involve a lender’s interest in a borrower’s property, providing collateral for a loan. For example, a mortgage grants the lender a security interest in the house, allowing them to foreclose and sell the property if the borrower defaults on the loan. This security interest is typically documented and perfected through legal filings to establish priority over other potential creditors.
These mechanisms are vital for promoting financial stability and economic growth. They enable individuals and businesses to access capital for property acquisition and development, while mitigating lender risk. Historically, the development of robust systems for securing real estate transactions has been crucial for fostering trust and facilitating larger, more complex transactions. This has been a key driver in the expansion of real estate markets and overall economic activity.