Perfection Flashcards
When is a security interest perfected?
If it has attached and met some other requirement for perfection - like filing, possession, or control
How is a security interest perfected by filing?
Filing can be done
(1) in the Secretary of State’s Office OR
(2) when the collateral is fixtures, in the Office of the County Clerk in the county where the collateral is located OR
(3) if perfecting by financing statement, security interest must be filed in the correct office
For perfecting by filing a financing statement, where should it be filed?
Where the debtor is located
Where is a registered organization debtor located?
In its state of organization
Where is a non-registered organization debtor located?
At its lone place of business or otherwise is chief executive office
Where is an individual debtor located?
At its principle residence
How is a security interest perfected by possession?
Taking possession of the collateral is only possible when the collateral is tangible. Will perfect a security interest in goods, negotiable instruments, money, or chattel paper
What is required of a secured party who has possession of collateral?
Use reasonable care in its custody and preservation.
Reasonable expenses incurred in the custody/preservation may be charged to the debtor
How is a security interest perfected by control?
Taking control of the collateral applies only to investment securities, letter-of-credit rights, deposit accounts, and electronic chattel paper
When does a secured party have control of a deposit account?
(1) If the secured party is the bank with which the deposit account is maintained; OR
(2) there’s an authenticated agreement among the debtor, secured party, and bank that the bank will follow the secured party’s instructions without consent of the debtor; OR
(3) the secured party becomes the bank’s customer with respect to the deposit account
When is perfection automatic?
When the security interest is a PMSI in security goods (perfects upon attachment)
When does automatic permanent perfection happen?
(1) If the security interest is a PMSI in consumer goods (except motor vehicles and fixtures)
(2) assignment of accounts or payment intangibles
(3) a security interest in investment property created by a broker
When does automatic temporary perfection happen?
A perfected security interest in PROCEEDS perfects when the security interest in the original collateral is perfected but only temporarily
How long does temporary automatic perfection last for proceeds?
20 days after attachment
How long does temporary perfection last for PMSI’s that aren’t consumer goods?
20 days and the perfection relates back to the date the security interest attached
