Michigan Collections Manager License Practice Test

When enforcing a non-judicial foreclosure, what document must the secured party record?

1. A notice of sale

2. A copy of the security agreement

3. The deed of title

4. A foreclosure application

The correct answer is: A copy of the security agreement

The correct answer is that the secured party must record a copy of the security agreement when enforcing a non-judicial foreclosure. The security agreement is a vital document that establishes the terms under which the secured party has a right to enforce its claim against the collateral, which can include real property in the case of a non-judicial foreclosure. Recording the security agreement provides public notice of the secured party's interest in the property, which is essential for establishing priority over other claims against the property. This ensures that any subsequent buyers or lenders are aware of the existing lien or security interest, thereby protecting the rights of the secured party. In contrast, other options such as a notice of sale, deed of title, or a foreclosure application do not serve the same fundamental purpose regarding the establishment and enforcement of the security interest. While a notice of sale is typically a step in the foreclosure process, it does not initiate the security interest's enforceability. The deed of title pertains to ownership transfer rather than the legal framework of the secured interest, and the foreclosure application is not a standardized document that must be recorded as part of the non-judicial foreclosure process.