Creation of Security Interest Flashcards
Rights of a creditor against the debtor are established by . . .
attachment
Rights of a creditor against a third party are established by . . .
perfection
A security interest is not enforceable unless it has . . .
attached
What are the three requirements for attachment?
1) the parties must agree to create the security interest; 2) value must be given by the secured party; and 3) the debtor must have rights in the collateral.
How can an agreement between a creditor and a debtor to create a security interest be evidenced?
by 1) the creditor taking possession of the collateral; 2) the debtor’s authentication of a security agreement describing the collateral; or 3) the creditor taking control of certain types of collateral.
An authenticated security agreement must contain what?
a description of the collateral by type of specifically.
Is “all of the debtor’s assets” a sufficient description of collateral in a security agreement?
no
What kinds of collateral can a creditor take control over?
nonconsumer deposit accounts; electronic chattel paper; and investment property.
Where a creditor takes control of collateral, what duty do they have?
the creditor must use reasonable care in storing and preserving the collateral, but is entitled to reimbursement for reasonable expenses in caring for the collateral.
Can a security agreement create a security interest in property that has not yet been acquired by the debtor?
yes
When does the security in future-acquired property attach?
when the property is acquired by the debtor.
Are after-acquired security interests inherent in all security agreements?
no, to have interest in property that has not yet been acquired by the debtor, there must be an express after-acquired security interest clause in the security agreement.
Future Advance
an agreement similar to an after-acquired security clause which states that certain collateral will be security for advancements from the creditor not yet made.
