Contracts - UCC Art 9 - Secured Transactions - Perfection of Security Interests

Question 1

Define “financing statement.”

Answer 1

Document that is filed; needs adequate description; names of debtor and secured party.

Question 2

Explain when a creditor has temporary perfection.

Answer 2

When a debtor has moved to another state, the creditor has four months of perfection in the new state, which can be continued with filing a financing statement in the debtor’s new state.

Question 3

Describe filing locations.

Answer 3

Central (state level) except for fixtures and crops (local with property records).

Question 4

List the methods of perfection.

Answer 4

1. Attachment (automatic upon creation of security interest);
2. Possession - Control;
3. Filing;
4. Automatic;
5. Temporary.

Question 5

Define “perfection.”

Answer 5

A means by which a secured party gains priority to a debtor’s collateral over other third parties who also claim to have an interest in the same collateral.

Question 6

Describe possession as a means of perfection.

Answer 6

Instruments can be perfected by possession; creditor can be in possession by controlling when title can be passed (field warehousing).

Question 7

List the two situations in which perfection by attachment is automatic upon creation of a security interest.

Answer 7

1. Purchase money security interest in consumer goods;

2. Security interest created by assignment of a beneficial interest in a decedent’s estate.