perfection Flashcards
what is perfection
process by which secured party obtains an interest in the collateral that is effective against the world, not just the debtor
methods of perfection
(1) automatic perfection for PMSI in consumer goods
(2) perfection by taking possession
(3) perfection by control
(4) temporary perfection for proceeds
(5) perfection by filing
[not for deposit accts and money]
perfection by filing - requirements
(A) FINANCING STATEMENT includes
(1) debtor’s name and mailing address
(a) individual –name must match unexpired driver’s license or other form of ID issued by VA
(b) registered organization – name must match most recent public organic record
(2) secured party’s name and mailing address
– errors not a big deal
(3) description of the collateral
- can be supergeneric
(4) need not mention after-acquired property if description in statement is Brough enough to cover such property
(B) DEBTOR MUST AUTHORIZE ITS FILING
—- EITHER in signed writing either before or after it is filed
– OR automatic authorization when authenticated (signed) security agreement covering the same collateral as the financing statement
NOTE:
(C) authenticated security agreement may be filed as the financing statement as long as it contains the proper elements
where to file when perfecting by filing
File in state where debtor is located (principal residence) if individual
[if corp = where incorporated]
IN VA - GENERAL RULE – Virginia Corporation Commission
exception – timer, minerals fixtures must be filed in the county where the mortgage on the real estate is filed or recorded
effect of error in debtor;s name in financing statement
minor error = no effect
seriously misleading error = invalid
“seriously misleading” = individual would not be discovered in filing officer search under debtor’s correct name using standard search logic
financing statements for real property
in addition to regular requirements, must include also:
(1) description of real property
(2) name of record owner, if not the debtor
(3) indication that it is to be filed in the real property records
perfection by possession
you can perfect your security interest by taking possession of the item unless it is a good that cannot be physically possessed (intangibles)
perfection begins from moment of possession and continues as long as item is retained
this is the only way to perfect interest in money
perfection by control
only way to perfect deposit accounts [unless perfected as proceeds]
Other things that are perfected by control typically
(1) investment property
(2) electronic chattel paper
perfection by notation of lien on certificate of title
this is for items covered by the certificate of title statute
= cars and trucks
EXCEPTION: security interests in vehicles created by dealers when the vehicles are held in inventory are perfected by filing
if debtor moves across state lines after filing financing statement:
secured party will be unperfected 4 months after debtor’s move unless he files in the new state
if collateral moves across state lines:
secured party has 1 year to file in new state, otherwise becomes unperfected
how long does financing statement last
5 years
must file continuation statement when first statement is 4.5 years old, to continue its life for 5 more years
[new authorization from debtor NOT required]
termination statement
when there is no more debt, debtor sends creditor authenticated demand for termination statement, which creditor must file within 20 days or give to debtor
but for consumer goods, file within one month or 20 days of demand
