Secured Transactions Flashcards
1
Q
To spot a secured transaction, look for
A
1) a credit transaction and
(2) an agreement that creates a lien in favor of the creditor in the debtor’s personal property to secure the debt.
2
Q
secured party
A
the creditor, lender, or seller
3
Q
security interest
A
an interest in personal property or fixtures that
secures payment or performance of an obligation.
4
Q
collateral
A
property subject to a security interest
5
Q
Purchase Money Security Interest (PMSI)
A
- The secured party sells the goods to the debtor on credit and retains a security interest in the goods sold, or
- The creditor loans the funds to the debtor to enable the debtor to buy specific collateral, those funds are used by the debtor to acquire the specific collateral, and the creditor takes a security interest in that collateral.
6
Q
Three Requirements for a Secured Transaction
A
Attachment
Perfection
Financing Statement
7
Q
Goods
A
include all things which are movable at the time the security interest attaches
8
Q
consumer goods
A
goods used or bought primarily for personal,
family, or household purposes
9
Q
equipment
A
goods that are used or bought for use in a business.
10
Q
farm products
A
crops or livestock or supplies used or produced
in farming operations or products of crops or livestock in their unmanufactured states if they are in the possession of a debtor engaged in farming operations
11
Q
inventory
A
goods held for sale or lease, goods that are to be furnished under service contracts, and materials used or consumed in a business in a short period of time
12
Q
instruments
A
Pieces of paper representing the right to be paid
money, like promissory notes, drafts (for example, checks), and certificates of deposit
13
Q
documents
A
A document that represents the right to receive
goods (for example, a bill of lading, a warehouse receipt)
14
Q
chattelpaper
A
A record or records which evidence both (1) a monetary obligation, and (2) a security interest in or a lease of specific goods.
15
Q
investment property
A
Includes items such as stocks, bonds, mu-
tual funds, and brokerage accounts containing such items
16
Q
accounts
A
Includes a right to payment (that is not evidenced by an instrument or chattel paper) for property sold or services rendered.
17
Q
deposit accounts
A
An account maintained with a bank. (but only business accounts)
18
Q
commercial tort claims
A
A tort claim where (1) the claimant is an organization or (2) the claimant is an individual, the claim arose out of the claimant’s business or profession, and the claim does not include damages for personal injury or the death of an individual
19
Q
general intangibles
A
Any personal property not coming within the scope of the other definitions, such as patent and trademark rights, copyrights, and goodwill.
20
Q
catch all catageory for consumer goods?
A
equipment
21
Q
Three Requirements for Attachment
A
- agreement to create the security interest (security agreement),
- Value must be given by the secured party, and
- The debtor must have rights in the collateral
22
Q
Evidence a security agreement has been created (3)
A
1) the creditor taking possession of the collateral, (2) an authenticated security agreement,
(3) the creditor taking control of nonconsumer deposit accounts, electronic chattel paper, and
investment property
23
Q
The Security Agreement must be evidenced by a ______ and must show ______
A
- record (writing)
- intent to create a security interest
24
Q
A security agreement be _____
A
Authenticated.
must be signed by the debtor. any symbol made with intent to authenticate will work (even an X or an emoji)
25
the security agreement must contain
a description of the collateral that reasonably identifies the collateral.
Can be in either article 9 type or ordinary langugae
26
supergeneric descriptions
description of collateral such as “all of the debtor’s assets” or “all of the debtor’s personal property” is not a sufficient description.
27
Requirements for "Value"
consideration sufficient to support a contract
past consideration is also okay
28
Duties of a secured party in possession
- must use reasonable care in storing and preserving the collateral
- entitled to reimbursement for
reasonable expenses in caring for the collateral.
- may hold any increase in value of, or profits from,
the collateral (except money) as additional security, - money so received must be given to the debtor or applied against the secured obligation.
29
the risk of loss of property in the secured party's possession is on the
debtor
30
Overview of Attachment
Must Have
1.) agreement, value, debtor rights in the collateral
2) There must be an authenticated security agreement OR
3) The creditor must take possession or control of the collateral
31
does a security agreement require any magic words?
no, just need intent
32
Future Advances Clause
collateral will serve as security not only for the present obligation, but also for advances the creditor makes to the debtor in the future.
33
In the Hilda signs a security agreement with a future advances clause suppose that First Bank
loans Hilda $20,000 on the date of the transaction, March 5. On May 10, First Bank lends Hilda an additional $5,000. No new security agreement is signed. What is the amount of debt secured?
25K because of the future advances clause
34
After-Acquired Property Clause
- clause must be EXPLICIT
- security interest will attach to property acquired after the signing of the agreement as soon as the debtor acquires an interest in the collateral
35
What happens if there is no after-acquired property clause or if the clause is not explicit
the secured party’s security interest only reaches
collateral that the debtor had rights in at the time the debtor signed the security agreement.
36
a security interest will attach automatically to
collateral of a type that’s rapidly depleted and replenished, such as accounts and inventory
37
A security interest will automatically attach to _______ of collateral, even without an after-acquired property clause
identifiable proceeds
38
Does an after-acquired property clause
does apply to commercial tort claims
no
39
proceeds
Whatever is received upon the sale, exchange, collection, or other disposition of collateral.
*includes second generation proceeds
*includes insurance payable by reason of loss or damage to collateral
40
Proceeds must be "identifiable". What does Identifiable mean?
the proceeds can be traced back to the original collateral.
41
Lowest Intermediate Balance Rule
If proceeds are commingled with other cash, the identifiable proceeds are traced using the lowest intermediate balance rule.
look at the bank account starting at the time the proceeds are deposited and ending at the time you are applying the rule. The lowest balance during
that time period is the secured party’s identifiable proceeds. But the amount cannot exceed the value of the cash proceeds originally deposited
42
Hilda’s bank account had a $1,000 balance (all non-proceeds) just before the $3,000 from the inventory sale was deposited. The account balance never drops below $4,000. How much of the bank account is the secured party’s identifiable proceeds?
$3K (lowest amount after deposit that does not exceed the 3K deposit)
43
Hilda’s bank account had a $1,000 balance (all
non-proceeds) just before the $3,000 from the inventory sale was deposited. The account balance then dips to $1,000, increases to $7,000, drops to $50, increases to $2,000, and dips again to $750.
How much of the bank account is the secured party’s identifiable proceeds?
$50
44
The attachment of a security interest _______ extends to a supporting obligation for that collateral
automatically
45
To acquire maximum priority in the collateral over most such third parties, the secured party must _____ the security interest
perfect
46
Five Methods of perfection
1) filing;
(2) taking possession of the collateral;
(3)control;
(4) automatic perfection; and
(5) temporary perfection
47
If all of the steps for perfection are taken
before the security interest has attached, perfection will occur
upon attachment
48
can an interest be perfected before attachment?
no
49
Perfection Method 1) Filing
A secured party may obtain perfection by filing a financing statement containing:
1. the debtor's name and mailing address
2. the secured party's name and mailing address
3. a description of the collateral covered by the financing statement
50
Perfection Method 2) Taking possession
Where the secured party takes actual possession of the collateral, the security interest is perfected from the moment of possession and continues as long as possession is retained.
51
Perfection Method 3) taking control
Security interests in investment property, nonconsumer deposit accounts, and electronic chattel paper may be perfected by “control.”
52
security interests in nonconsumer deposit accounts can only be perfected by
control
53
Perfection Method 4) Automatic Perfection
A PMSI (purchase money security interest) in Consumer Goods perfects automatically upon attachment
54
Perfection Method 5) Temporary Perfection
- 20 days when a secured party gives new value under a security agreement where collateral is a negotiable document, instrument, or certificated security;
- 20 days where a secured party makes available a negotiable document, instrument, certificated security, or goods in possession of a bailee on a
temporary basis
- four months where debtor moves from one state to another if debtor’s location governs perfection.
55
In what items can a security interest not be perfected by possession?
general intangibles,
deposit accounts,
nonnegotiable documents,
electronic chattel paper,
certificate of title goods,
accounts
56
The bank in which a nonconsumer deposit account is maintained automatically has _____ over the deposit account.
control
57
3 Methods of control for Deposit Accounts
* Putting the deposit account in the secured party’s name, or
* by control agreement that the bank will comply with the secured party’s orders regarding the deposit account without requiring the debtor’s consent
58
When does a party have control over electronic chattel paper?
when a system put in place to show the transfer of interests in chattel paper reliably establishes the secured party as the assignee.
59
When does a party have control over an investment property
when the secured party has taken whatever steps are necessary to be able to have the investment property sold without further action from the owner.
60
How do Ordinary people perfect a security interest in a motor vehicle?
security interests in motor vehicles required to be titled can only be perfected by notation on the certificate of title issued by the state.
61
How do Dealers perfect a security interest in a motor vehicle
Security interests created by dealers in vehicles held in inventory for sale or lease are perfected by filing a financing statement under the ordinary Code rules even if a certificate of title covering the vehicle is outstanding.
62
When does a party have control over electronic chattel paper?
when a system put in place to show the transfer of interests in chattel paper reliably establishes the secured party as the assignee.
62
3 Methods of control for Deposit Accounts
* The bank in which a nonconsumer deposit account is maintained automatically has control over the deposit account.
* Putting the deposit account in the secured party’s name, or
* by control agreement that the bank will comply with the secured party’s orders regarding the deposit account without requiring the debtor’s consent
63
When does a party have control over an investment property
when the secured party has taken whatever steps are necessary to be able to have the investment property sold without further action from the owner.
64
How to determine an individual debtor's name for filing purposes
1. Use the name on the individuals unexpired driver's license
2. If no unexpired drivers license, use the debtor's personal name or sure name
65
3 Methods of control for Deposit Accounts
* The bank in which a nonconsumer deposit account is maintained automatically has control over the deposit account.
* Putting the deposit account in the secured party’s name, or
* by control agreement that the bank will comply with the secured party’s orders regarding the deposit account without requiring the debtor’s consent
66
When does a party have control over an investment property
when the secured party has taken whatever steps are necessary to be able to have the investment property sold without further action from the owner.
66
How to determine an organizational debtor's name for filing purposes
If the debtor is a registered organization the debtor’s name must match its most recent
public organic record
*use of the debtor's trade name is insufficient
66
How to determine an organizational debtor's name for filing purposes
If the debtor is a registered organization the debtor’s name must match its most recent
public organic record
*use of the debtor's trade name is insufficient
66
3 Methods of control for Deposit Accounts
* The bank in which a nonconsumer deposit account is maintained automatically has control over the deposit account.
* Putting the deposit account in the secured party’s name, or
* by control agreement that the bank will comply with the secured party’s orders regarding the deposit account without requiring the debtor’s consent
66
When does a party have control over an investment property
when the secured party has taken whatever steps are necessary to be able to have the investment property sold without further action from the owner.
66
How to determine an individual debtor's name for filing purposes
1. Use the name on the individuals unexpired driver's license
2. If no unexpired drivers license, use the debtor's personal name or sure name
66
How to determine an individual organization's name for filing purposes
If the debtor is a registered organization, the debtor’s name must match its most recent public organic record
*using a debtor's trade name is insufficient
66
What name should be used on the financing statement if the debtor is Mike Sabbath, operating under the trade name The Sabbath Commeth?
drivers license name
66
Effect of a minor error in the Debtor's name
Minor errors in the debtor’s name won’t invalidate a financing statement
66
effect or seriously misleading errors in debtor's name?
Would be invalid.
seriously misleading = would not be discovered in a filing office search under the debtor’s correct name, using the filing office’s standard search logic
A serious spelling error could be seriously miss-leading
67
Effect of errors by filing office
the failure of the filing office to correctly index a financing statement does not impact its effectiveness.
68
What Happens if a debtor changes their name?
the financing statement is effective only against collateral acquired by the debtor before the name became insufficient and within 4 months after.
For collateral acquired after the 4-month period, the secured party must refile using the debtor’s correct name.
69
Description of Collateral in a financing statement
collateral must be reasonably identifiable from the description. Super generic descriptions of the collateral such as "all my assets" is okay
70
Does a financing statement have to mention after-acquired property to perfect a security interest in such property
no as long as the description in the financing statement is broad enough to cover the after acquired property
71
effect of an error in the secured party's name
will not make the financing statement seriously misleading
72
Additional Requirements for property-related financing statements
(1) a description of the related real property,
(2) the name of the record owner (if not the debtor), and
(3) an indication that it is to be filed in the real property records.
73
For a financing statement to be effective the debtor must
authorize the filing in any signed writing either before or after it is filed.
74
effect of missing address
If a financing statement that doesn’t contain the debtor’s and/or secured party’s mailing address is accepted by the filing office, the financing statement is effective despite the lack of the address(es).
75
Generally, filing must be done _____ in the office of the secretary of state.
“centrally”
76
If the collateral is timber to be cut or minerals, or if the collateral is or is to become a fixture and the filing is a fixture filing, filing is in
the county where a mortgage on real estate is filed (“locally”)
77
Which state's law governs perfection
the state where the debtor is located generally governs perfection of the security interest.
78
Location of debtor
individual = principal residence
registered organization = where organized
unregistered organization = place or business or chief executive office
79
governing law for deposit accounts
state in which the bank has its chief executive office
80
governing law for titled goods
state issuing the most recent certificate of title
81
governing law for fixtures and timber to be cut
state in which the collateral is located
82
agricultural liens
state in which the farm product covered by the lien is located
83
If the debtor moves and the secured party fails to has how long to refile a new financing statement in the new jurisdiction before their interest becomes unsecured
4 months
84
If collateral is transferred to a new owner who is located in a different state, the security interest will become unperfected ______ after the collateral moves unless the secured creditor files a financing statement in the new jurisdiction before that _____ period is up.
one year
85
a financing statement is good for _____ years
five
86
what must be filed to keep a financing statement valid
a continuation statement
87
how long is a continuation statement good for
5 years
88
when do you file a continuation statement
he continuation statement can only be filed within 6 months before the lapse of the filed statement.
89
must a debtor authorize a continuation statement?
on, just the secured party
90
termination statement
if there is no outstanding obligation of the
debtor and no commitment on the part of the secured party to make further advances, or if the debtor didn’t authorize the filing of the initial financing statement, the secured party must, on demand of the debtor, within 20 days, file a termination statement or provide one to the debtor.
91
Termination statements for consumer goods
the secured party must file the termination statement within 1 month after there is no obligation or commitment, or if the debtor demands it, within 20 days of the demand.
92
If a secured party has a perfected security interest in collateral, the secured party automatically has a perfected security interest in any proceeds of the collateral for 20 days after receipt of the proceeds. The security interest in proceeds will continue to be perfected beyond the 20 days if:
* The proceeds are identifiable cash proceeds
* The security interest in the original collateral was perfected by filing a financing statement, a security interest in the type of collateral constituting the proceeds would be filed in the same place as the financing statement for the original collateral, and the proceeds were not purchased with cash proceeds of the collateral
* The security interest in the proceeds is perfected within the 20-day period
93
perfected Secured Party v perfected Secured Party; who wins?
first party to either 1) file or 2) perfect, WINS
94
unperfected secured party v unperfected secured party; who wins?
first interest to attach wins
95
unperfected secured party v perfected secured party; who wins?
perfected secured party wins
96
PMSI v perfected secured creditor
PMSI wins if the interest is perfected before or within 20 days after the debtor recieves possession of the goods
97
PMSI in inventory v perfected secured creditor
PMSI wins if
- It is perfected at the time the debtor gets possession of the inventory
- Any secured party who has filed their security interest in the same inventory receives authenticated notification of the PMSI before the debtor receives possession of the inventory, and the notification states that the purchase money party has or expects to take a PMSI in inventory of the debtor described by kind or type. The notification is effective for deliveries of the same type of collateral for 5 years.
98
seller PMSI v Finance PMSI
seller PMSI
99
seller PMSI v seller PMSI
firest party to file or perfect wins
100
When is a PMSI in consumer goods perfected
automaticaly
101
when is a PMSI in equipment perfected
perfected usually by filing any time within 20 days after the debtor gets possession of the colateral
102
when is a PMSI in inventory perfected?
perfected usually by filing by the time the debtor gets possession of the collateral and others with a previously filed security interest in the inventory must be given notice
103
A security interest perfected by control v. a security
interest perfected by any other method; who wins?
the one perfected by control
104
perfected secured interest perfected by control v perfected secured interest perfected by control
rank according to the time of obtaining control
105
For deposit accounts, A secured party who has obtained control by putting the deposit account in the party’s name has _____
priority over all other secured parties with control
106
A bank that has control because it maintains the deposit account has priority over all secured parties with control, other than
the party who has obtained control by putting the account in their name.
107
True or False When a buyer (or lessee) buys or leases something with a security interest on it, the security interest stays on the item.
true-- but sugject to exceptions
108
In an authorized sale, does the buyer take subject to the security interest
no. The authorization by the secured party may be express, or it may be implied from the type of sale or from the seller’s conduct.
109
example of an authorized sale
the sale of inventory
110
Bank extends credit to an appliance store and obtains a security interest in the store’s inventory. The security agreement is silent on the issue of selling the collateral. The appliance store sells a washer and dryer to Harry Homebody. Is this sale authorized?
yes
111
Bank extends credit to D, a hog farmer, and obtains a security interest in D’s hogs. The security agreement provides that D would not sell the hogs without written consent of the bank. Despite this
provision, the bank acquiesced in over 100 sales of these hogs over a 5-year period. Were these sales authorized?
yes, authorized by acquesience
112
Do buyers in the ordinary course of business (“BIOC”) take free of a perfected security interest in the goods created by the seller?
yes
113
Definition of “Buyer in the Ordinary Course”
one who buys goods
(1) in good faith,
(2) without knowledge that the sale violates the
rights of another person in the goods, and
(3) in the ordinary course of business from a seller in the business of selling goods of the kind purchased.
114
When will a buyer in the ordinary course of business take subject to the security interest?
the buyer knows that the sale violates the security agreement
115
Will A buyer not in the ordinary court of business take subject to a perfected security interest?
yes
116
Will A buyer not in the ordinary court of business take subject to an unperfected security interest?
No, they will take free from unperfected security interests unless they know of the security interest when they give value or take delivery
117
buyer not in the ordinary course of business v a a future advances clause
A buyer or lessee not in the ordinary course of business has priority over future advances or commitments to make future advances made by a secured party either after the secured party learns of the purchase or lease or more than 45 days after
the purchase or lease.
118
in a consumer to consumer sale, buyer takes free of a security interest, even though it’s perfected, if the buyer buys
1) without knowledge of the security interest,
(2) for value,
(3) for the buyer’s own personal, family, or household purposes, and
(4) before a financing statement covering the goods has been filed.
119
Consumer buys a new television set on credit from S. S retains a security interest but does not file a financing statement. Consumer holds a garage sale and sells the television to Irma (who will use the television in her home). Does Irma take free of S’s security interest?
yes
120
Consumer buys a new television set on credit from S. S retains a security interest but does not file a financing statement. Consumer holds a garage sale and sells the television to Irma. Irma knows of S’s security interest. Does Irma take free of S’s security interest?
no. irma takes subject to the security interest
121
Consumer buys a new television set on credit from S. S retains a security interest and files a financing statement. Consumer holds a garage sale and sells the television to Irma. Does Irma take free of S’s security interest?
no. irma takes subject to the security interest
122
Secured Party vs. Holder in Due Course
A holder in due course of a negotiable instrument has priority over a security interest in the negotiable instrument.
123
Secured Party vs. Judicial Lien Creditor
first in time wins
if leavy date before perfection, judicial lien wins
if perfection before leavy date, secured party wins
124
PMSI v Judicial lien
PMSI probably wins
if the secured party files a financing statement with respect to a PMSI within 20 days after the debtor receives the collateral, the secured party will have priority over a judicial lien arising between the time
the security interest attaches and the time of filing
125
perfected future advance v judicial lean
For a perfected future advance to gain priority over a subsequent judicial lien, the future advance must be made
(1) without knowledge of the lien,
(2) within 45 days of the lien arising, or
(3) pursuant to a commitment entered into without knowledge of the lien.
126
Secured Party vs. Possessory (Statutory) Lien
Holder
statutory lien takes priority as long as the goods or services were provided in the ordinary course of business and the collateral remains in the lien
holder’s possession.
(ex. a mechanics lien)
127
SECURED PARTY VS. ARTICLE 2 CLAIMANT
Article 2 claimant has priority over an Article 9 secured party as long as the Article 2 claimant retains possession of the goods.
128
General Hierarchy of who takes first after default when there are multiple interests
* Buyer in the ordinary course of business
* Holder in due course
* Transferee of money or funds from deposit accounts
* Possessory/statutory lien-holder
* Article 2 claimant with possession
* PMSI (consumer/consumer transaction exception)
* Perfected security interests and judicial liens that have attached
* first perfected security interest to file
* attached liens
* Purchaser who buys for value and receives delivery without notice
* first Unperfected security interests to attach
* Debtor
129
default
The right of the secured party to proceed against collateral is triggered by default. Terms of default specified in the security agreement
130
When can a creditor exercise self help remedies
the secured party is entitled to take possession of the collateral by “self-help” if this can be done without a breach of the peace.
131
breach of the piece
physical presence by debtor + verbal objection = potential to lead to violence
or breaking and entering into a residence
132
judicial action for repossession
replevin
133
Without removal, the secured party may also make __________ unusable and dispose of it on the debtor’s property if the secured party can do so without a breach of the peace.
equipment
134
Self-Help in Accounts
If the debtor defaults and the collateral is an account, the secured party can notify the person owing money to the debtor to make payment to the secured party, rather than to the debtor.
135
Strict foreclosure means
creditor keeps property
136
when is strict foreclosure okay?
1) when other creditors have been notified and consented and
2) the debtor consents
if either of these fail the property must be sold
137
Is partial strict foreclosure available in consumer transactions
no. a secured party may not keep the collateral in partial satisfaction of the debt and seek a deficiency judgment. The secured party may keep the collateral only in full satisfaction of the debt.
138
Consumer Goods 60% Rule
If the debtor has paid 60% of the cash price on a PMSI in consumer goods, or 60% of the loan on a non-PMSI in consumer goods, the secured party must dispose of the collateral within 90 days after repossession.
139
Resale of collateral reasonable notification requirements
reasonable written notice must be given
1) to the debtor and any sureties on the debt
2) to any other secured parties who have notified the secured party of their interest
3) to any secured parties who have perfected by filing a financing statement or making a notation on a certificate of title
140
can the right to notice be waived in an authenticated agreement?
yes
141
when must the notice be sent
a reasonable time before the sale
(10 days for nonconsumer transactions)
142
what must notice include?
1) public sale -- time and place of sale
private sale -- notice of the time after which the sale willoccur
2) description of the parties and collateral
143
The foreclosure sale must be
commercially reasonable
144
what to look at for determine if a sale is commercially reasonable
- method, manner, time, place, and terms
- The sufficiency of the advertising,
- If the collateral had a limited market, whether people in that market were contacted,
- Whether the collateral needed cleaning or repair,
- If the sale was by public auction, the convenience of the time and place
145
at a foreclosure sale, the secured party must show that they
made an effort to obtain the best price for the collateral.
146
may the secured party buy the collateral?
The secured party may buy the collateral at any public sale but may buy at a private sale only if the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations.
147
Deficiency judgement
If the collateral when sold doesn’t bring in enough to pay the expenses of the sale and the secured party’s debt, the secured party may recover any deficiency from the debtor
148
Redemption
Any time before the secured party has resold the collateral or has entered into a contract for its disposition, or the obligation has been discharged, the debtor may redeem the collateral by paying the full amount (due to acceleration clauses) owed plus additional reasonable expenses
149
Fixture
goods that have become so related to real property
that an interest in them arises under real property law.
150
how to perfect a security interest in a fixture
a fixture filing must be made in the office where a mortgage on the real estate would be filed. a fixture filing financing statement must reasonably identify the real estate and must show the name of the owner
151
for fixtures: Secured Party v. Subsequent Real Estate Interest
A security interest in fixtures has priority over any real estate interest that is recorded subsequent to the perfection of the security interest by fixture filing.
152
for fixtures: Secured Party v. Prior Real Estate Interest
A prior real estate interest that is properly recorded has priority over a security interest that subsequently arises.
153
for fixtures: PMSI
A PMSI takes priority over an earlier in time realty interest if it’s perfected by a fixture filing before the goods become fixtures or within 20 days thereafter.
154
PMSI in fixtures v Construction mortgage
A construction mortgage takes priority over a subsequent PMSI in fixtures
155
When is a fixture file not necessary
for readily removable
(1) factory or office machines,
(2) equipment that is not primarily used or
leased for use in the operation of the real estate, or (3) replacements of domestic appliances which are consumer goods.
Any method of perfection before such goods become fixtures entitles the secured party to priority
156
Accession
goods that are physically united with other goods in such a manner that the identity of the original goods is not lost (for example, tires on a car)
157
perfection of an interest in an accession
If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral.
158
Accession v security interest in a whold
A security interest in an accession is subordinate to a security interest in a whole (for example, a car) which is perfected by compliance with the requirements of a certificate-of-title statute.
