Perfection of SI

Question 1

Perfection of SI

Answer 1

The process that stakes the secured party’s claim, so that the secured party might have PRIORITY over a later party

Question 2

Methods of Perfection

Answer 2

(1) Filing
(2) Possession
(3) Control
(4) State’s Certificate of Title Law
(5) Automatic Perfection

Question 3

Perfection by Filing: In General

Answer 3

Must file FINANCING STATEMENT in central filing office

Question 4

Perfection by Filing: What Must a Financing Statement Contain?

Answer 4

(1) Debtor’s LEGAL name
(2) Secured party’s name
(3) Description of the collateral

Question 5

Perfection by Filing: Where to File?

Answer 5

In the central filing office in the state where the DEBTOR IS LOCATED

Often the secretary of state’s office

Question 6

Perfection by Filing: What Type of Collateral Can Be Perfected This Way?

Answer 6

All collateral, except:

(1) Deposit account;
(2) Money;
(3) Letters of credit;
(4) Collateral subject to other perfection methods

Question 7

Perfection by Filing: Authorization

Answer 7

Debtor must authorize a financing statement in an authenticated record

Does NOT have to sign it

Secured party must deliver the financing statement to the debtor WITHIN 30 DAYS of filing

Question 8

Perfection by Filing: Effective Date of Filing

Answer 8

Effective upon delivery to filing office and tender of filing fee

Question 9

Perfection by Filing: Length of Perfection

Answer 9

Effective for 5 YEARS

Question 10

Perfection by Filing: Errors in Financing Statement

Answer 10

Minor errors in a financing statement do not affect perfection unless they make the financing statement SERIOUSLY MISLEADING

If there is an error in debtor’s name and a search for the correct name of the debtor would uncover the financing statement with the error, the error is NOT seriously misleading

Question 11

Perfection by Filing: Unjustified Refusal to Accept by Filing Office

Answer 11

Financing statement treated as having been filed

Question 12

Perfection by Filing: Filing Office’s Incorrect Indexing of a Financing Statement

Answer 12

If the filing office indexes the financing statement incorrectly, that has NO EFFECT on perfection

Question 13

Perfection by Filing: Continuation Statement

Answer 13

May be filed within last 6 MONTHS before financing statement lapses to continue financing statement for another 5 years

Question 14

Perfection by Filing: What Happens if a Financing Statement Lapses?

Answer 14

Secured party loses perfection

Secured party may file new financing statement to re-perfect, but might lose its place in a priority contest

Question 15

Perfection by Filing: Termination Statement

Answer 15

Terminates effectiveness of a financing statement

Used for when the obligation is paid back

Question 16

Perfection by Possession: In General

Answer 16

SI in TANGIBLE collateral may be perfected if secured party takes possession of the collateral

Question 17

Perfection by Possession: Collateral That Can Be Perfected By Possession

Answer 17

(1) Money
(2) Goods
(3) Instruments
(4) Negotiable documents
(5) Tangible chattel paper

Question 18

Perfection by Possession: When is the Interest Perfected?

Answer 18

As soon as the secured party has possession

Question 19

Perfection by Possession: How Long Does Perfection Last?

Answer 19

SI remains perfected as long as the secured party retains possession

Question 20

Perfection by Control: In General

Answer 20

Secured party may perfect an SI in specific INTANGIBLE collateral by taking control of that collateral

Question 21

Perfection by Control: Collateral That Can Be Perfected By Control

Answer 21

(1) DEPOSIT ACCOUNTS
(2) Investment property
(3) Electronic documents
(4) Electronic chattel paper
(5) LETTER OF CREDIT RIGHTS

Question 22

Perfection by Control: Exclusive Method of Perfecting SI in….

Answer 22

(1) Deposit accounts

(2) Letter of credit rights

Question 23

Perfection by Control: Three Ways to Obtain Control Over a Deposit Account

Answer 23

(1) SECURED PARTY IS THE BANK that has the deposit account
(2) The secured party, the bank, and the debtor AGREE IN AN AUTHENTICATED RECORD that the lender secured party has control over the deposit account
(3) SECURED PARTY BECOMES BANK’S CUSTOMER with respect to the deposit account

Question 24

Perfection Under a State Certificate of Title Statute

Answer 24

MUST perfect by noting SI ON THE CERTIFICATE OF TITLE

Applicable to cars, 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