A transfer of some legal or equitable right inpersonal propertyas security for the payment of money or performance of some other act. Chattel mortgages have generally been superseded by other types ofsecured transactionsunder theuniform commercial code(UCC), a body of law adopted by the states that governs commercial transactions.
The rights of the lender who gives a chattel mortgage are valid only against others who know or should know of the lender's security interest in the property. Since the borrower possesses the property, others cannot realize that a chattel mortgage exists without notice. Each state, therefore, has developed a system for recording instruments showing the existence of chattel mortgages for particular items of property; these records are usually located in the county clerk's office.
If a recording system is in existence a buyer is presumed to know about a mortgage. Once, therefore, the mortgage is properly recorded, the buyer obtains the debt in addition to the property.