My articulation is having a hiccup. How do you explain to a lending officer that taking, as collateral, a one-half interest in a piece of equipment (i.e. a combine) is not good practice.

If equipment is owned by two individuals how is he perfecting his security instrument without all owners signing???

Tell the lender to read I Kings 3:16-27

You simply cannot take possession of just your half of the collateral, and you therefore do not have a complete interest protecting the bank from loss. Without a complete interest, the loan is unsecured and the lending policy may be violated.

Seek a hypothecation from the other owner. They can pledge their interest without having an obligation on the debt. If they don't agree with this, you'd never get that collateral back in the first place.

You can perfect a security interest in one half of the equipment, but what is the value of one half of the piece of equipment. Legally it is a secured loan but functionally the collateral is worth nothing.

Thank you everyone! M Cockrell - lol!