Jurisdictional Rules Flashcards
What is the general rule for the law which governs perfection of the security interest?
It is the law of the state where the debtor is located.
How is the location of a debtor determined?
- If the debtor is an individual, she is located in the state of her principal residence
- If the debtor is a registered organization, the debtor is located in the state under whose laws it is organized
- If the debtor is an unregistered organization, it is located at its place of business or at its chief executive office if it has more than one place of business
Exceptions
Possessory Security Interests and Security Interests in Fixtures and Timber to Be Cut
The perfection of possessory security interests, as well as security interests in fixtures and timber to be cut, is governed by the law of the state in which the collateral is located.
Exceptions
Goods covered by certificate of title
If goods are covered by a certificate of title, the law of the state issuing the most recent certificate of title governs perfection
Exceptions
Deposit Accounts
If the collateral is a deposit account, unless the debtor’s agreement with the bank provides otherwise, the law of the state in which the bank has its chief executive office governs perfection.
Exceptions
Investment Property
- If the collateral is a certificated security, the law of the state where the certificated security is located governs perfection
- If the collateral is an uncertificated security, unless the debtor’s agreement with the issuer provides otherwise, the law of the state where the issuer was organized governs perfection
- If the collateral is a securities account, unless the debtor’s agreements with the securities intermediary provides otherwise, the law of the state where the securities intermediary’s chief executive office is located ogverns perfection
Exceptions
Agricultural Liens
The perfection of an agricultural lien is governed by the law of the state in which the farm product covered by the lien is located.
Movement of the debtor or collateral from one state to another - GENERALLY
If the perfection of a security interest in collateral is governed by the law of the state where a person or collateral is located and that person or collateral moves to another state, the security interest generally remains temporarily perfected.
- If the secured party does not perfect in the new state before the temporary perfection period lapses, the security interest will become unperfected and lose its time of priority
General Rule
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 will remain perfected until four months after the debtor moves or until perfection in the first state lapses, whichever occurs earlier
General Rule
New Debtor in Different State
A new debtor is one who becomes bound by someone else’s security agreement.
- If collateral is transferred to a new debtor located in a different state, the security interest will remain perfected without any further action until one year after the sale of the collateral or until perfection in the first state lapses, whichever occurs earlier
Exceptions
Security Interest Perfected by Possession
If a perfected security interest is a possessory security interest and the collateral is moved from one state to another, the security interest remains perfected as long as the security interest is also perfected by possession under the laws of the new state
Exceptions
Certificate of Title Property (Automobiles and Other Vehicles)
Florida requires security interests in vehicles to be perfected by notation on a certificate of title.
- 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 property 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
