10:41
another week without NYU DLS :(
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Simple English definitions for legal terms
financing statement
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A quick definition of financing statement:
A financing statement is a document that is filed in public records to let other people know that someone has a security interest in something, like property or goods. This is usually done to inform potential buyers or lenders. It's different from a financial statement, which is a document that shows a person or company's financial situation.
A more thorough explanation:
A financing statement is a legal document that is filed in public records to inform potential buyers and lenders about a secured party's interest in a property or goods. This document is governed by the Uniform Commercial Code (UCC) and is used to protect the interests of the secured party.
For example, if a business takes out a loan to purchase equipment, the lender may file a financing statement to notify other potential lenders or buyers that they have a security interest in that equipment. This helps to ensure that the lender will be paid back if the business defaults on the loan.
Another example would be if a person buys a car and finances it through a bank. The bank would file a financing statement to let others know that they have a security interest in the car. This helps to prevent the car from being sold or used as collateral for another loan without the bank's knowledge.