Collateral is an essential component of loan transactions. Realty (i.e., real estate) or personalty (i.e., personal property) can serve as collateral. The creditor’s (i.e., lender) interest in the collateral depends on the transaction, loan, property, and law. The debtor (i.e., borrower) will acknowledge that it is conveying an interest to the creditor. In real estate transactions, the security agreement acknowledging the conveyance is well known as a “mortgage.”

Agreements to convey real estate are not fully performed or “executed” until closing. At closing, the purchaser pays the sales price, and the seller conveys the title to the purchaser by signing a deed.

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