Perfection Flashcards
When is a security interest perfected?
A security interest is perfected upon: ATTACHMENT + PERFECTION (if perfected first, then perfection occurs upon attachment)
Ways to perfect
+ Filing a financing statement (most common)
+ Possession
+ Control
+ Automatic perfection
Where to file a financing statement
Collateral = fixture: county clerk’s office in county where land to which the fixture is attached is located.
All other collateral: secretary of state’s office in jx where Debtor is located.
+ Debtor is an individual, located at person’s principal residence.
+ Debtor is a non-registered org. (e.g. partnership), located at is place of business (if more than one, chief executive office).
+ Debtor is registered org. (e.g. corp.), located in its state of organization.
Purpose of a filing statement
To provide notice that there’s a security interest in the collateral described.
What must a filing statement include?
+ Names of Debtor and the secured party (or their representative); AND
+ a sufficient description of the collateral covered by the filing statement.
A description is sufficient if it: reasonably identifies what is described, including by UCC type OR has a super-generic description (super-generic descriptions are ok on filing statements)
Additional requirements for FIXTURE filings
A fixture filing must also:
+ indicate that it covers a fixture;
+ indicate that it will be filed in the real property records;
+ describe the real property to which the fixture is related; AND
+ provide the name of the owner of the real property, if different from Debtor.
When is a filing statement INEFFECTIVE?
FS is ineffective if it:
+ is filed in the wrong place;
+ does not include the required information; OR
+ is not authorized by Debtor.
FS with minor errors is effective unless the errors make it SERIOUSLY MISLEADING.
Failure to sufficiently provide Debtor’s name on filing statement
Failure to sufficiently provide Debtor’s name is seriously misleading, UNLESS a search of the records using the financing office’s standard search logic would disclose the filing statement.
Automatic perfection of SI in proceeds of original collateral
Unless the security agreement states otherwise, an SI in proceeds from the original collateral is perfected AUTOMATICALLY for 20 days.
Automatic perfection continues after 20 days only if:
+ a filed filing statement covers the original collateral, proceeds are collateral in which a SI may be perfected by filing in the office in which the FS has been filed, and the proceeds are not acquired with cash proceeds;
+ proceeds are identifiable cash proceeds; OR
+ SI in proceeds is otherwise perfected when the SI attaches to the proceeds or within 20 days thereafter.
Effect of Debtor’s name change on effectiveness of filing statement
Filing statement will perfect a security interest in collateral acquired within 4 months of Debtor’s name change, unless the secured party files an amendment to the filing statement within that 4 month period.
Effect of Debtor moving to another state on filing statement
Secured Party must file a new filing statement in Debtor’s new state within 4 months of Debtor’s move.
How long is a filed filing statement effective?
A filed filing statement is effective for 5 YEARS from date of filing.
How can a secured party extend a filing statement?
A continuous statement must be filed within 6 months before the 5 year effective period expires.
Extends the original filing statement for another 5 year term from the date the filing statement would have become ineffective.
Filing statement will LAPSE if it expires without a continuation statement being filed.
Upon lapse, filing statement becomes ineffective and the security interest perfected by the filing statement becomes unperfected.
Perfection by Possession
Security interest is perfected if the secured party, or a third-party authorized by SP, takes possession of the collateral.
This applies only if the collateral is:
1) tangible negotiable docs
2) goods
3) instruments
4) money
5) tangible chattel paper
Perfection by Control
Security interest is perfected if the secured party takes control of the collateral.
Applies only if the collateral is:
1) an investment security
2) rights to a letter of credit
3) a deposit account
4) an electronic chattel paper.
