Enforceability of consensual lien on real property

     Like the security interest in personal property, enforceable consensual security in real property requires: (1) agreement; (2) that the secured party give value to the debtor; and, (3) the debtor have rights in the real property in which the lien is granted.  Unlike personal property security, these concepts may derive in part from common law rather than from statute. Moreover, vocabulary may differ from that used in Article 9. For example, in the real property context, one hears of the necessity for "an underlying obligation" rather than the language in U.C.C. 9-203(b)(1) referring to the giving of value.

     Like the non-possessory security interest in personal property, a consensual lien on real property is unenforceable absent a prescribed writing.   See, e.g., Cal. Civ. Code 2922, 1091, and 2948.  There is no modern counterpart to the personal property possessory security interest in the context of real property security. Thus, a written agreement is required for the enforceability of all security interests in real property. Although one hears the expression "mortgagee in possession", such a mortgagee is one who has taken possession of real property after the debtor has defaulted, not at the inception of the transaction. Historically this was not always the case. Early in the development of the use of real property as security, a debtor would convey title to (and sometimes surrender possession of) her real property to a lender on condition subsequent; upon repayment of the loan, the lender would be obligated to reconvey title, and surrender possession, to the debtor. Eventually, this structure was replaced by the non-possessory security device, a mortgage or deed of trust, in which the debtor retains possession of the property.

     Other aspects of a real estate transaction may also be subject to a Statute of Frauds. For example, an agreement to retain a real estate broker or to purchase real property must be in writing. Cal. Civ. Code 1624(c),(d). And, in the case of a purchase of real property secured by the property being purchased, the underlying indebtedness of the purchaser is unenforceable absent a prescribed writing. Cal. Civ. Code 1624(f).