Final answer:
An assignment of credit involving personal and real property must be legally documented and recorded or registered to be binding against third parties. This process includes a security agreement and public notice. Real estate transactions typically require recording with the local government, while personal property assignments are governed by the UCC's Article 9.
Step-by-step explanation:
An assignment of credit involving personal and real property must take a legally recognized form to be binding against third parties. This includes creating a security agreement and often making a filing with a state or, for real estate, recording the interest with the local recorder's office. The precise formal requirements vary by jurisdiction but typically involve some degree of public notice, such as registration or recording, to alert third parties to the assignment's existence and prevent secret liens. If the assignment involves collateral, the bank or lender usually requires that it be documented and sometimes insured, ensuring the bank's right to seize and sell the property if the loan is not repaid is protected.
When it comes to personal property, Article 9 of the Uniform Commercial Code (UCC) may govern the creation and perfection of security interests. In contrast, real estate transactions often need to be documented by a deed of trust or mortgage, which is then filed with the appropriate government office.