Perfection of Security Interest

Question 1

What are the five methods of perfecting a security interest?

Answer 1

filing, taking possession of the collateral, control, automatic perfection, and temporary perfection.

Question 2

Perfection

Answer 2

acquiring maximum priority to collateral over other creditors.

Question 3

Can a creditor perfect a security interest before the interest is attached?

Answer 3

no

Question 4

Can attachment and perfection happen simultaneously?

Answer 4

yes

Question 5

Perfection by Filing

Answer 5

perfecting one’s security interest in collateral by filing a financing statement.

Question 6

In order for a financing statement to be effective, what must happen?

Answer 6

the debtor must authorize the financing statement in an authenticated record.

Question 7

How does a debtor authorize a financing statement?

Answer 7

by authenticating the financing statement or a security agreement covering the same collateral as the financing statement.

Question 8

Does a financing statement have to mention after-acquired property in order for after-acquired property to be covered by the financing statement?

Answer 8

no, so long as the descriptive language of the agreement is broad enough to encompass the after-acquired property.

Question 9

Where must filing of a financing agreement be filed?

Answer 9

in the office of the secretary of state.

Question 10

Where must filing of a financing agreement be if the security interests is in something like timber cutting, minerals or fixtures?

Answer 10

in the local county office where mortgages or other real estate liens are filed.

Question 11

Perfection by filing is valid for how long?

Answer 11

five years

Question 12

Can perfection by filing be continued?

Answer 12

yes, for another five years.

Question 13

When can one submit a continuation statement to have a perfection by filing continued?

Answer 13

only during the final six months of the first five years of the perfection by filing.

Question 14

Must the debtor authorize the continuation of the perfection by filing?

Answer 14

no

Question 15

Perfection by Taking Possession

Answer 15

perfecting one’s security interest in collateral by taking physical possession of it.

Question 16

What kinds of collateral cannot be perfected by possession?

Answer 16

intangible collateral.

Question 17

When does perfection by possession begin and how long does it last?

Answer 17

when the creditor takes possession. It lasts as long as possession does.

Question 18

Perfection by Control

Answer 18

the perfecting of a security interest over non consumer deposit accounts, investment property, and electronic chattel paper.

Question 19

Automatic Perfection

Answer 19

the automatic perfection of a security interest in collateral upon the security interest’s attachment.

Question 20

A PMSI in consumer goods is perfected as so as . . .

Answer 20

it attaches

Question 21

A security interest in motor vehicles can be perfected only by . . .

Answer 21

notation on the vehicle’s certificate of title.

Question 22

Temporary Perfection

Answer 22

where a security interest in collateral is perfected only for a limited period of time.

Question 23

A security interest in proceeds of collateral is only perfected for how long?

Answer 23

20 days from the debtor’s receipts of the proceeds of collateral.

Question 24

A security interest in instruments, negotiable documents, and certified securities is only perfected for how long?

Answer 24

20 days after attachment.

Question 25

Can a temporary perfection be reperfected?

Answer 25

yes

Question 26

How is a temporary perfection reperfected?

Answer 26

by filing or taking possession.

Question 27

What is the result of a debtor moving from one state to another with a perfected security interest?

Answer 27

the security interest is temporarily perfected in the new state.

Question 28

When will the security interest in proceeds of collateral continue past the 20 day limit?

Answer 28

if 1) the security interest in the proceeds of collateral was perfected by filing a financing agreement in the same place as the financing agreement for the original collateral; 2) the proceeds are identifiable cash proceeds; or 3) the security interest in the proceeds is perfected within the 20-day period.