ST: Attachment

Question 1

What does it mean to have proper attachment?

Answer 1

It means the security interest is enforceable.

Question 2

What are the three requirements for attachment?

Answer 2

VCR!

1. Value given by the creditor (i.e. a loan),
2. Contract (the security agreement),
3. Rights (debtor has rights in the collateral)

Question 3

What are the requirements for the contract (the security agreement)?

Answer 3

If the creditor takes physical possession of the collateral, there is no need for a writing.

If the creditor does not take physical possession of the collateral, the security agreement must be recorded: it is authenticated by the debtor and reasonably identifies the collateral.

Question 4

What is an after-acquired collateral clause?

Answer 4

It’s basically a floating lien - “whether now held or hereinafter acquired.”

Question 5

Is an after-acquired collateral clause enforceable?

Answer 5

Yes.