Possessory Collateral (Banking & Finance Glossary)

Summary

Collateral which only needs to be possessed by the Secured Party in order to Perfect the Security Interest in the Collateral. While this Collateral can be perfected by the filing of a Financing Statement as well, possession generally grants a higher priority. The Secured Party has a right to remain in possession of the Collateral under the Lien until the debtor has satisfied the debt. The most common type of Possessory Collateral in lending transactions is a Stock Certificate.