A security interest arises when debtor agrees in a security agreement that the secured party may take specified collateral that is owned by the debtor if the debtor breaches the agreement.
A security agreement is a formal document that creates and evidences a security interest in personal property in order to establish priority in case of debtor default, it being signed by the debtor and assigns the property to the specified party. It describes the collateral and its location in sufficient detail so that its beneficiary can identify it and assigns the right to seize control of the collateral to the beneficiary if the debtor defaults on the secured obligation in order to discharge the debt that the security interest secures.
An abbreviated formal notice to third parties about the contents of a security agreement that is used to publicly name the debtor as assignor and the lender as secured party and to document the fact that the specified party has a security interest in specified personal property owned by the debtor is a financing statement. The UCC-1 financing statement is the standardized form that a creditor files with the respective US state to give public notice of a security interest in specified personal property of the named debtor in order to perfect the creditor's security interest in the collateral.