§ 9402 Secured Party Liability Limits

• •If someone owes you money and you have a right to take something they own if they don’t pay, you’re not automatically responsible for their mistakes or bad actions.
• •Just because you have a security interest (like a lien on a car or house) doesn’t mean you’re on the hook if the person who owes you money does something wrong.
• •This law protects lenders or secured parties from being blamed for the borrower’s actions just because they have a claim on their property.

You lend money to your friend to buy a car, and you get a lien on the car as security. Your friend then gets into a car crash while driving recklessly.

You won’t be held responsible for the crash or any damages just because you have a lien on the car. The law says your security interest doesn’t make you liable for your friend’s bad driving.