Which form of security is required when taking real estate as additional collateral?

• A. Mortgage or deed of trust
• B. Promissory note only
• C. UCC-1 financing statement only
• D. Trust agreement with no mortgage

Answer: (A)

When real estate serves as collateral, the lender must attach a lien to the property itself. That lien is created through a mortgage or a deed of trust, which is filed of record to perfect the security interest and establish priority against other claims. A promissory note alone is just the borrower's promise to pay and does not encumber the property. A UCC-1 financing statement is used to perfect security interests in personal property, not real estate. A trust agreement that does not involve a mortgage does not attach a lien to the real property either. So, the instrument that correctly secures real estate as collateral is a mortgage or deed of trust.