Security Deed

In most commercial and/or industrial real estate closings, a borrowing entity will execute a promissory note (or notes) agreeing to pay the lender a specific amount of money over a given period of time according to the terms and conditions of said note/s. In order to protect its interests, the lender, depending on the state in which the property is located, will require the borrowing entity to execute a mortgage, security deed or similar document.

A mortgage is an interest in real estate created by a written document providing security to a lender for the performance under the terms of the note/s. The legal title to the property remains with the borrowing entity, while the lender has an interest in the real estate to the extent of the amount of the note/s.

A Security Deed, or Deed to Secure Debt, (security instrument of choice, in Georgia), is similar to a mortgage but transfers legal title to the lender for the term of the note/s.

In the event of default, by a borrowing entity, a security deed provides the lender the opportunity to foreclose or seize the commercial and/or industrial property without having to take the borrowing entity to court. The mortgage also allows foreclosure but requires that the lender use a judicial foreclosure process to convert its interest in the real estate into legal title.

In Georgia, borrowing entities execute a security deed. However, in New York, for example, borrowing entities execute a mortgage. While both a mortgage and security deed require the lender to provide notice to the borrowing entity in the event of default, the foreclosure process is usually quicker through a security deed.

 
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