Attachment

Question 1

What is Attachment?

Answer 1

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

Once the security interest has attached the secured party has all of the enforcement rights provided by Article 9.

Question 2

When does a SI attach to the collateral?

Answer 2

When…
(1) SP gives value,
(2) Debtor has rights in the collateral (i.e, (debtor comes to own it/ be in possession of it ), and
(3) Debtor has authenticated a security agreement that sufficiently describes the collateral [reasonably identify- can be by UCC type (not consumer goods in consumer transaction though) but can’t be super generic].

Question 3

Does SI attach to after-acquired collateral?

Answer 3

Only if the agreement says so.

EXCEPTIONS:
(1) SI agreements for inventory or accounts (i.e., include after-acquired collateral)
(2) An after- acquired-collateral clause cannot cover consumer goods unless Debtor gets rights in the good within 10 days of SP giving value.

Question 4

SI rule for future advances

Answer 4

The security agreement can provide that the collateral secured future advances

Question 5

SI rule for Proceeds

Answer 5

SI automatically extends to identifiable proceeds of the collateral