Security Interests: Perfection

Question 1

Perfection Definition

Answer 1

Means by which a secured party gains priority to a debtor’s collateral over third parties who also claim to have an interest in the same collateral.

Question 2

Methods of Perfecting:

Filing

Answer 2

1. A form
2. Name and address of both debtor and creditor
3. Contain a description of the collateral
   * File at state office generally*
   * Perfection occurs when file and fee tendered or upon acceptance*
   - effective for 5 years and can be continued 5 more

Question 3

Methods of Perfecting:

Posession

Answer 3

Creditor has possession of the collateral

Question 4

Methods of Perfecting:

Automatic Perfection

Answer 4

Purchase Money Security Interest in consumer goods:
- consumer goods to be bought by person, family, etc.
- interest is taken/retained by seller to secure price (advancing funds for the purchase of collateral)
- creditor need not be a merchant
Intangibles
Promissory Notes

Question 5

Methods of Perfecting:

Temporary Perfection

Answer 5

1. for 20 days from creation of interest

- certified securities, negotiable documents

Question 6

Rights of Secured Parties on Filing for Perfection

Answer 6

Release: release all or part of collateral
Assignment: assign all or part of collateral
Amendment: can be amended
Information Request: available from state