I am contracting to sell my big-rig to someone who promises to pay $3000/month for 5 months. He requires title be transferred to him upon formation of the contract, instead of upon completion of all payments, in order to qualify him for insurance. I wish to create a promissory note, a security agreement, and perfect the loan with a financing statement.
Will I be able to retain a security interest on the truck upon transferring title to the buyer (assuming I hire a lawyer and all the appropriate steps are taken to create the promissory note, security agreement and financing statement)?
I'm concerned because I understand (correctly or not) most of the time, creditor's retain title & security. Is it possible to transfer title and retain a security interest as I've described here?
Disclaimer: The materials provided below are informational and should not be relied upon as legal advice.
You certainly should document the outstanding balances with a properly drafted promissory note and security agreement. UCC Financing Statements typically are not used against motor vehicles (except perhaps motor vehicle inventory sitting in a dealership lot). Motor vehicles are governed by the various Certificate of Title Acts in the various U.S. jurisdictions, so the creditor's lien should be noted on the vehicle's title by that jurisdiction's DMV. You should consult your own attorney to protect your legal rights.