a1 Brooklyn College and the Graduate Center, City University of New York
When entering into a legal agreement, it is not unusual for one of the parties to ask the other to provide some security so as to ensure that the latter's obligations under the agreement will be fulfilled. There are two basic forms of security, personal and real. In personal security for a loan, the borrower arranges for a third party to come forward and to promise the lender that he will fulfil the borrower's obligations in the event that the borrower does not make interest payments or repay the principal. In real security, the borrower pledges some of his property, either movable or immovable, as security to the creditor. If the borrower defaults, the creditor has the right to seize the property pledged as security, and, if he wishes, to sell it for cash in lieu of repayment.