What document is prepared to evidence that personal property is pledged to secure a loan?
Correct Answer
B) Chattel mortgage
Chattel Mortgage — because a chattel mortgage is the traditional legal instrument used to pledge personal property (chattels) as security for a loan, and under modern UCC Article 9 terminology, this function is performed by a security agreement. The question asks what document 'evidences' the pledge of personal property as collateral, and a chattel mortgage/security agreement is precisely that document, creating a lien on movable personal property rather than real estate. California has adopted UCC Article 9, so while 'chattel mortgage' is the classic term used on licensing exams, practitioners today execute a 'security agreement' and file a UCC-1 financing statement to perfect the security interest.
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