Perfection of the Security Interest

Question 1

General

Answer 1

Perfection deals primarily w/rights as between the secured party & 3rd parties

• 2 DIFF. Worlds =
  (1) Attachment = Debtor-Creditor
  (2) Perfection = Creditor-Other Creditors

Question 2

Methods of Perfection

Answer 2

Usually a security interest is “perfected” when it has attached AND when some additional step (possession or filing) is taken

(1) Auto Perfection = PMSI in consumer goods –> AUTO perfected
(2) Possession of collateral by secured party

(3) Perfection by “control” = In investment property and electronic chattel paper MAY be perfected by control. Security interests in NONCONSUMER deposit accounts can ONLY BE perfected by control
- NONCONSUMER Deposit Accounts:
(1) Bank in which a nonconsumer deposit account is maintained auto has control over deposit account
(2. 1) Putting deposit account in the secured party’s name
(2. 2) Agreeing in an control agreement (debtor-bank-creditor)

(4) Notation of lien on certificate of title = Only way to perfect a security interest in a car/truck is for the secured party to note its lien on cert of title
- Unless inventory of cars (rental cars/dealer)

(5) Filing A Financial statement = MOST Common. UCC-1 Form
- Contents: Debtor’s name; Description of collateral (no sig. required BUT authorize…authenticates security agreement covers it)

(6) Authenticated agreement itself may be filed if it is filed, must contain all of elements discussed

Question 3

Where to File

Answer 3

Choice of Law

• 4 mos. for secured party unperfect
• 1 year after collateral moves
• 6 mos. window (effective for 5 years)