Attachment & Perfection

Question 1

Attachment

Answer 1

Attachment secures the creditor’s rights in the debtor’s collateral, making the security interest valid and enforceable.

Question 2

Valid Attachment

Answer 2

1) creditor extends value to the debtor
2) debtor has rights in the collateral
3) the parties agree to create a security interest

Question 3

Security Agreement

Answer 3

1) evidenced in record to show intent
2) Authenticated by debtor (signature)
3) Description must reasonably identify collateral

Question 4

Perfection

Answer 4

Gives notice of the creditor’s rights in the collateral.

cannot be perfected unless attached

Question 5

Enforcing a Security Interest

Answer 5

depends on
1) attachment
2) perfection

attaches when it becomes enforceable

Question 6

Obtaining Perfection

Answer 6

Typically obtained by filing a financing statement with the Secretary of State.

enhances secured party’s rights

Question 7

Financing Statement

Answer 7

1) name of debtor and secured party
2) indicates collateral
3) filed by person authorized to file

Question 8

Financing Statement Compliance

Answer 8

A financing statement that substantially complies with requirements is effective.

Question 9

Minor Errors in Financing Statement

Answer 9

Will not render the statement ineffective UNLESS the errors make the statement seriously misleading

Question 10

PMSI

Answer 10

Creditor extends value for debtor to acquire collateral and creditor retains a security interest in the collateral.

Question 11

PMSI Consumer Goods

Answer 11

PMSI’s in consumer goods enjoy automatic perfection and a creditor will not need to file a financing statement to perfect his interest.

Question 12

PMSI Non-Consumer Goods

Answer 12

Person files financing statement before or within 20 days after debtor receives delivery of collateral –> priority interest