Attachment

Question 1

What is a security interest

Answer 1

Security interest arises when a debtor uses property as collateral to secure repayment of funds to a secured party

Question 2

What is attachment

Answer 2

Attachment is the process by which a security interest is created. A security interest is created by a contract between the debtor and the secured party.

Question 3

Requirements for a security interest

Answer 3

1. security agreement or possession of collateral by the secured party
2. attachment

Question 4

Requirements for a Security Agreement

Answer 4

1. In writing
2. authenticated (signed) by debtor
3. contains a granting clause
4. contains a sufficient description of the collateral (sufficient if description “reasonably identifies what is described” )

Question 5

Attachment by possession

Answer 5

-Secured party must possess collateral with intent to secure a debt
-allows security agreement to be oral

Question 6

Requirements for attachment

Answer 6

1. secured party gives value
2. debtor has rights in the collateral
3. debtor has authenticated a security agreement that sufficiently describes the collateral

Question 7

Description requirements for security agreements

Answer 7

-description of collateral must reasonably identify what is described including by UCC type of goods

Question 8

After-acquired collateral

Answer 8

Security interest attaches to after-acquired collateral if the agreement contains an express after-acquired collateral clause
-exception in the case of after-acquired consumer goods, which requires debtor acquires rights to consumer goods within 10 days of secured party giving value for security interest to attach

Question 9

When is security interest in after-acquired collateral automatically created

Answer 9

-interest in inventory or accounts receivable automatically creates a security interest in acquired collateral

Question 10

Future Advances

Answer 10

Security Agreement can provide that the collateral secured future advances

Question 11

Proceeds

Answer 11

Security interest automatically extends to identifiable proceeds of collateral

Question 12

Purchase-money security interests

Answer 12

Secured party has a PMSI if obligation is incurred:
1. as all or part of the price of the collateral
2. for value given to enable the debtor to acquire or use the collateral, if the value is in fact so used

Question 13

Purchase-money security interests

Answer 13

Secured party has a PMSI if obligation is incurred:
1. as all or part of the price of the collateral
2. for value given to enable the debtor to acquire or use the collateral, if the value is in fact so used

Question 14

How do lien creditors acquire security interests

Answer 14

LCs acquire interest in property by attachment, levy or similar judicial collection procedures

Question 15

When does a security interest attach

Answer 15

The security interest attaches when the secured party gives value, the debtor has rights in the collateral and the debtor has authenticated a security agreement that sufficiently describes the collateral