Choice of Law with Perfection Flashcards
What is the General Rule for the Law that Governs Perfection?
The law of the state where the debtor is located generally governs perfection of the security interest. Therefore, the secured party must generally file the financing statement in that state.
How is the Location of the Debtor Determined?
- Debtor is Individual — Debtor is located in the state of their principal residence. If the debtor is a registered organization
- Debtor is Registered Organization — Debtor is located in the state under whose laws it is organized (where its articles of incorporation are filed)
- Debtor is Unregistered Organization — Debtor is located at its place of business if it only has one place of business or at its chief executive office if it has more than one place of business.
What is the Rule for Posessory Security Interests in Fixtures and Timber to Be Cut for Choice of Law?
Law of the state in which the collateral is located
What is the Choice of Law Rule for Goods Covered by Certificate of Title?
Law of the state issuing the most recent certificate of title governs perfection.
What is the Choice of Law Rule for Deposit Accounts?
Unless the debtor’s agreements with the bank provide otherwise, the law of the state in which the bank has its chief executive office governs perfection.
What is the Choice of Law Rule for Investment Accounts?
Certified Security: The law of the state where the certificated security is located governs perfection.
Uncertified Security: Unless the debtor’s agreements with the issuer provide otherwise, the law of the state where the issuer was organized governs perfection.
Securities Account: Unless the debtor’s agreements with the securities intermediary provide otherwise, the law of the state where the securities intermediary’s chief executive office is located governs perfection.
What is the Exception to the General Choice of Law Rule for Investment Accounts?
Perfection by Filing or Automatic Perfection: If a security interest in investment property is perfected by filing, or if it’s automatically perfected by a securities intermediary, the law of the state where the debtor is located governs perfection.
What is the Choice of Law Rule for Agricultural Liens?
Law of the state in which the farm product covered by the lien is located
What are the Choice of Law Rules for When Collateral is Moved from One State to Another State?
Collateral in Which Perfection Is Governed by Debtor’s Location
A) Relocation of Debtor: If the perfection of a security interest is governed by the law of the state in which the debtor is located, and the debtor moves from one state to another, the security interest generally will become unperfected 4 months after the debtor’s move unless the secured party files a financing statement in the new jurisdiction before that 4-month period is up.
B) Debtor in Different State: If collateral is transferred to a new owner who is located in a different state, the security interest will become unperfected one year after the collateral moves unless the secured creditor files a financing statement in the new jurisdiction before that one-year period is up.
Other Collateral
A) Collateral in Which Security Interest Is Perfected by Possession: If a perfected security interest in collateral is a possessory security interest (which is governed by the law of the state in which the collateral is located), and the collateral is moved from one state to another, the security interest will remain perfected without any further action as long as the security interest is also perfected by possession under the laws of the new state
B) Certificate of Title Property (Automobiles and Other Vehicles): If a vehicle is moved from one state to another and is covered by a certificate of title issued by the new state, a security interest in the vehicle that was properly perfected in the original state lasts as long as it would have if the vehicle had not been covered by the new certificate of title
C) Deposit Accounts, Uncertificated Securities, and Securities Accounts: If the bank, issuer, or securities intermediary moves to a new state, perfection of an interest in the deposit account, uncertificated security, or securities account continues until the earlier of:
- The time when the security interest would have become unperfected in the original state if the bank, issuer, or securities intermediary had not moved to the new state
- 4 months after the bank, issuer, or securities intermediary moves to the new state
