Security Interest (SI)

Question 1

How is a SI created?

Answer 1

(1) a security agreement or possession by the SP

AND

(2) attachment

Question 2

Security Agreement requirements

Answer 2

(1) in writing;
(2) be authenticated (i.e., signed) by Debtor;
(3) contain a granting clause; and
(4) describes the collateral enough to reasonably identify it [must “reasonably identify what is described”]

Question 3

SI by possession requirements

Answer 3

(1) SP in possession of the collateral with intent to secure a debt

**if SP in possession the security agreement can be oral

Question 4

What is a PMSI?

Answer 4

Purchase-Money Security Interest

Question 5

How does a SP get a PMSI?

Answer 5

The obligation incurred by the debtor is all or part of the price of the collateral (e.g., a direct-financing seller); or for value given to enable the debtor to acquire or use the collateral, if the value is in fact so used (e.g., a bank loans Debtor money to purchase the collateral)