Perfection of Security Interest Flashcards
What are the five methods of perfecting a security interest?
filing, taking possession of the collateral, control, automatic perfection, and temporary perfection.
Perfection
acquiring maximum priority to collateral over other creditors.
Can a creditor perfect a security interest before the interest is attached?
no
Can attachment and perfection happen simultaneously?
yes
Perfection by Filing
perfecting one’s security interest in collateral by filing a financing statement.
In order for a financing statement to be effective, what must happen?
the debtor must authorize the financing statement in an authenticated record.
How does a debtor authorize a financing statement?
by authenticating the financing statement or a security agreement covering the same collateral as the financing statement.
Does a financing statement have to mention after-acquired property in order for after-acquired property to be covered by the financing statement?
no, so long as the descriptive language of the agreement is broad enough to encompass the after-acquired property.
Where must filing of a financing agreement be filed?
in the office of the secretary of state.
Where must filing of a financing agreement be if the security interests is in something like timber cutting, minerals or fixtures?
in the local county office where mortgages or other real estate liens are filed.
Perfection by filing is valid for how long?
five years
Can perfection by filing be continued?
yes, for another five years.
When can one submit a continuation statement to have a perfection by filing continued?
only during the final six months of the first five years of the perfection by filing.
Must the debtor authorize the continuation of the perfection by filing?
no
Perfection by Taking Possession
perfecting one’s security interest in collateral by taking physical possession of it.
What kinds of collateral cannot be perfected by possession?
intangible collateral.
When does perfection by possession begin and how long does it last?
when the creditor takes possession. It lasts as long as possession does.
Perfection by Control
the perfecting of a security interest over non consumer deposit accounts, investment property, and electronic chattel paper.
Automatic Perfection
the automatic perfection of a security interest in collateral upon the security interest’s attachment.
A PMSI in consumer goods is perfected as so as . . .
it attaches
A security interest in motor vehicles can be perfected only by . . .
notation on the vehicle’s certificate of title.
Temporary Perfection
where a security interest in collateral is perfected only for a limited period of time.
A security interest in proceeds of collateral is only perfected for how long?
20 days from the debtor’s receipts of the proceeds of collateral.
A security interest in instruments, negotiable documents, and certified securities is only perfected for how long?
20 days after attachment.
Can a temporary perfection be reperfected?
yes
How is a temporary perfection reperfected?
by filing or taking possession.
What is the result of a debtor moving from one state to another with a perfected security interest?
the security interest is temporarily perfected in the new state.
When will the security interest in proceeds of collateral continue past the 20 day limit?
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.
