3. Perfection: SI Effective Against World Flashcards
Perfected security interest
gives the secured party priority over most other claimants.
Three methods of perfection:
- Filing a financing statement in a public office;
- taking possession of the collateral; or
- taking control of the collateral.
Filing(What)
What should the financing Statement include?
- debtor’s name;
- secured party’s name;
- description of collateral;
- maturity date or lack thereof if collateral is consumer goods and original obligation is less than $5000;
- real property info if collateral is growing crops;
- authorization of debtor.
Filing(What)
Debtor’s Name
Individual-name on ID
Registered org-name in public records-trade name is insufficient
Name change-4 month to amendment statement or property acquired after 4 months window not covered.
Filing(What)
Description of Collateral
generic description is ok (3rd party notice to inquire further)
Filing(What)
Addresses
Filing office can reject if not included, but if accepted it is perfected.
Filing(What)
Errors
no effect unless seriously misleading; debtor name errors almost always seriously misleading unless search would show financing statement.
Filing(Where)
Collateral
collateral related to real property(including uncut timer, mineral crops, and fixtures)
Real property records where property located
Other collateral-state where debtor located (if GA, office of clerk of superior court of any county; if other state, gen filed with secretary of state).
Filing(Where)
Collateral
Individual:
Partnership:
Corporation:
Debtor Moves:
Collateral Moves:
Individual: state of principal residence.
Partnership: state of chief executive office/pl of business.
Corporation: state of incorporation.
Debtor Moves: 4 mo window to re-file in new state.
Collateral Moves: same debtor – no effect; new debtor – 1 yr to fil
Filing(When)
when and how long is a filed financing statement effective for?
A filed financing statement is effective for five years after the date of filing.
Filing(When)
If the financing statement expires without a continuation statement(must be filed within six months) being filed, the financing statement will:
lapse, making the filing statement ineffective and any security interest that was perfected by the filing statement becomes unperfected.
What if Filing of Financing Statement is refused?
If justified, no perfection.
If unjustified, perfected against other creditors but not BFP that buys collateral.
What if the financing statement is in the incorrect index?
No effect on perfection.
Amendment of Financing Statement
change in collateral effective from filing date. There is on extension of original financing statement lapse date.
Termination Statement
if non-consumer goods, secured pty is required to
file or send debtor statement within
(1) 90 days of satisfaction or (2) 20 days of authenticated demand from debtor, whichever earlier.
