June 7th, 2011 by Questions
Could you please define what a “secured loan” is. Does it have to be registered?
Posted from: Nova Scotia
June 07, 2011 at 6:47 am, A licensed trustee said:
A secured debt is one that you have pledged some form of collateral against the loan. For example a mortgage is a type of secured debt – if you fail to make your payments the lender may seize your house (the collateral). Car loans are the most common type of secured debt, but just about anything can be used for collateral if you are buying it new.
The registration question is a bit trickier – for a security interest to be “perfected” the lender either has to take possession of the collateral or register a lien with the provincial registry. If they do not perfect their security and someone else comes along after the fact and registeres a new security interest the new one will take priority.
The failure to register doesn’t necesarily mean the lender loses their security – it just makes it vulnerable to other lneders registering.
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