Attachment Flashcards
Attachment
The creation of an Article 9 security interest. Created by a security agreement (an agreement between debtor and the secured party). A creditor is not a secured creditor until attachment
Written Security Agreement
Unless the collateral is in the possession or control of the secured party pursuant to an agreement, a written (or electronically stored) security agreement is required. This is the most common type of security agreement
Oral Security Agreement
If the collateral is in the possession of the secured party pursuant to an oral security agreement, this meets the security agreement requirement. Called a pledge. Common in the pawn shop scenario
Necessary Elements to a Written Security Agreement
1) Security Agreement that is: written with an intent to create a security interest, authenticated (signed) by the debtor, with a description that reasonably identifies the collateral.
2) Secured party must have given value
3) Debtor must have rights in the collateral
Future Advances
Debt secured may include future advances (future loans to the debtor) if the security agreement contains a future advance clause. This means that a new security agreement is not needed when a future advance is made.
After-Acquired Property
A secured party often will want to obtain a security interest not only in debtor’s present property, but also in property that the debtor will obtain in the future. This is possible if the security agreement contains an after-acquired property clause.
A security interest does not attach under an after-acquired property clause to consumer goods unless the debtor acquires rights in them within 10 days after the secured party gives value.
After-acquired property clause is ineffective as to commercial tort claims.
Proceeds
Includes whatever is received upon the sale, exchange, collection, or other disposition of collateral or proceeds. Unless otherwise agreed, a security interest automatically gives the secured party a right to identifiable proceeds.
