Scope of the Security Interest

Question 1

Scope

Answer 1

(A) Debt secured may include FUTURE ADVANCES

(B) Property Secured may include AFTER-ACQUIRED PROPERTY

• W/out an explicit after-acquired property clause in the security agreement, the secured party’s security interest only reaches collateral that the debtor had rights in AT THE TIME THE DEBTOR SIGNED THE SECURITY AGREEMENT
• Exception: IF turns over rapidly etc.

(C) Property Secured Generally INCLUDES PROCEEDS

• WHATEVER!
• Identifiable = Creditor can prove that those proceeds came from its original collateral
• UNLESS otherwise agreed, a security interest AUTO gives the secured party a right to IDENTIFIABLE PROCEEDS
• Remember commingling & Lowest Intermediate Balance Test

(D) The attachment of a security interest in collateral also is an attachment of a security interest in a supporting obligation for that collateral