Security by Transfer of Ownership Clause Samples

The 'Security by Transfer of Ownership' clause establishes that ownership of certain assets or property is transferred to a creditor as security for a debt or obligation. In practice, this means that the debtor temporarily gives legal title of the asset—such as equipment, inventory, or shares—to the creditor, while typically retaining the right to use the asset unless a default occurs. This arrangement ensures that if the debtor fails to fulfill their obligations, the creditor can sell or otherwise dispose of the asset to recover the owed amount, thereby providing a strong form of security and reducing the creditor's risk of loss.