Perfection by other means

Question 1

Possession

Answer 1

The following collateral can be perfected by possession
Money
Goods
Instruments
Negotiable documents
Tangible chattel paper
Possession is the only way to perfect a SI in money

Timing- As soon as the SP has possession, the interests is perfected
The interest remains perfected as long as the secured party retains possession

Question 2

Control

Answer 2

The following can be perfected by control
Deposit accounts
Control can be obtained over a deposit account in one of three ways

1. The SP is the bank that has the deposit account (lender and bank are same party)
2. The SP, the bank and the debtor agree in an authenticated record that the lender (SP) has control over the deposit account (deposit account control agreement)
3. The SP can become the banks customer with respect to the deposit account

Investment property
Electronic documents
Electronic chattel paper
Letter of credit rights

Control is the exclusive method of perfection a SI in both deposit accounts and letter of credit rights

Question 3

Alternate perfection systems

Answer 3

When another statute governs how a SI is perfected, you must follow the rules of that statue
Mostly likely to be tested: perfection under a state certificate titles statutes
Applicable to cares, motorcycles, or other vehicles that have a title
filing , possession of the car, or possession of the title are insufficient to perfect in most cars
Perfect by noting the SI on the certificate of title
Exception cars that are inventory can be perfected by other means

Question 4

Automatic perfection (can be temporary or permanent)

Answer 4

Some types of collateral will automatically perfect when a SI attaches
The most common example is PMSI in consumer goods
Exception - if a certificate of title statute governs, then no automatic perfection

Automatic perfection applies only to PSMI in consumer goods
A PSMI in inventory, equipment, or farm products is NOT automatically perfected