Introduction (Five Inquiries)

Question 1

What is the scope of Article 9 of the UCC?

Answer 1

Applies to consensual security interests in personalty (i.e. goods; things) and fixtures

Note: Does not apply to statutory liens or mechanics liens (not voluntary)

Note: when the collateral is real estate, apply the law of mortgages (NY Real Property Law)

Question 2

How does a creditor ATTACH (create an enforceable security interest in debtor’s collateral)?
(VCR)

Answer 2

Value
Contract
Rights in the collateral

Question 3

Once attached, how does a creditor attain PERFECTION?

Answer 3

Putting the world on record notice of its existence (dibs)

Question 4

When more than one creditor has a stake in the same collateral what are the rules of PRIORITY?

Answer 4

Generally, the first to perfect takes first

“first in time, first in right”

Question 5

What if a debtor DEFAULTS on the debt or obligation?

Answer 5

Article 9 Lender has statutory and judicial remedies