What is a secured transaction?

A secured transaction is a type of transaction in California debtor and creditor law in which a creditor is given security or collateral for a debt. This is done to protect the creditor in case the debtor fails to repay the debt. In a secured transaction, the debtor must give the creditor specific property or rights to particular property as security for the debt. The debtor is then obligated to transfer the property or rights to the creditor in the event of a default on the debt. The creditor has the right to take ownership of the property or rights upon default, which is also referred to as foreclosure. Secured transactions are most commonly used in the context of lending money, where the lender holds the property or rights as security for the loan. This ensures that the lender will not suffer a financial loss if the borrower defaults on the loan.

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