Attachment (Creation of an Enforceable Security Interest)

Question 1

Attachment

Answer 1

When the security interest is enforceable

Question 2

What are three requirements for attachment? (VCR)

Answer 2

VALUE must be given by creditor
CONTRACT (security agreement) must evidence the secured transaction, unless the secured party has taken possession of the collateral, in a RECORD that must:
(i) be authenticated by debtor
(ii) reasonably identify the collateral
RIGHTS in the collateral. Debtor must have this.

Note: Art. 9 allows for early filing and later attachment, which “relates back” to filing date for priority purposes

Question 3

What is an “after-acquired collateral clause”?

typical language

Answer 3

Also called a “floating lien” that covers not only presently owned property but also anticipated property (enforceable). This is helpful when security interest is under collateralized.

Example: taking a lien in “Staples inventory, whether now held or hereafter acquired”