Understanding Chattel Paper: A Key Component In Secured Transactions

Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement of these documents.

What Is Chattel Paper?

The term "chattel" refers to movable personal property. Common examples include vehicles, equipment, and computers. Chattel property can also include intangible property, such as leases, financial assets, trademarks, copyrights, and patents.

In basic terms, what is chattel paper? It's a legal record evidencing both a monetary obligation and a security interest in specific goods. For instance, when you purchase a car, these documents record a buyer's obligation to pay for the vehicle over time. They also record the corresponding seller's interest to keep certain