Perfection

Question 1

Methods of perfection

Answer 1

1) automatic
2) possession of collateral by secured party
3) perfection by control
4) notation of lien on certificate of title
5) filling a financing statement

Question 2

Automatic perfection

Answer 2

PMSI in consumer goods

Question 3

Perfection by Possession of Collateral by secured party

Answer 3

1) perfected from moment of possession

2) continues so long as possession is maintained

Question 4

Perfection by control

Answer 4

1) investment property and electronic chattel MAY be perfected this way
2) non consumer deposit accounts MUST be perfected this way
3) deposit accounts under control when: bank in which a deposit account is maintained automatically has control over the account, other secured party puts the deposit account in the secured party’s name, or agrees in authenticated record with the debtor and the bank that the bank will follow the secured party’s orders without further consent by the debtor

Question 5

Perfection by notation of lien on certificate of title

Answer 5

1) ONLY way to perfect on automobile

2) UNLESS debtor is holding automobile as inventory then the secured party may perfect with a financing statement

Question 6

Perfecting by filing a financing statement

Answer 6

1) MAY do a notice filing
2) correct contents: debtor’s name, description of collateral, secured party’s name, no signature required
3) filed with secretary of state UNLESS real property, then filed with county records office
4) authorized by debtor

Question 7

Financing Statement: Debtor’s name

Answer 7

1) individual’s name, based on valid drivers license (no trade names): if name misspelled effective unless seriously misleading (could you find it in a search) OR
2) corporate name, partnership name

Question 8

Financing Statement: description of collateral

Answer 8

1) any description that reasonably ID’s the collateral

2) much broader than description in security agreement

Question 9

Financing Statement: authorization by debtor

Answer 9

1) don’t need to sign

2) automatically authorized if authenticates a security agreement covering the same collateral

Question 10

Financing Statement: What state to file in

Answer 10

1) Where the debtor is located
2) if an individual at her principal residence
3) if a registered organization, located in the where the entity is organized (DE)
4) if unregistered (partnership) location where business is organized
5) if more than 1 place of business, where chief executive office is

Question 11

Financing Statement: When debtor/collateral moves after filing

Answer 11

1) Debtor: Secured party has 4 months to file in new jurisdiction
2) Collateral: secured party has 1 year to file in new jurisdiction

Question 12

Financing Statement: Continuation

Answer 12

1) lasts for 5 years
2) must file a continuation statement to extend
3) continuation statement must be filed in the last 6 months of the 5 year life of the financing statement

Question 13

Financing Statement: Termination statement

Answer 13

1) secured party must file within 20 days after receiving an authenticated demand by debtor once obligation is fulfilled
2) for consumer goods: within 1 month after obligation fulfilled or within 20 days of authenticated demand, secured party must file termination statement
3) if the secured party F’s up, liable to debtor for $500 and any loss

Question 14

Perfection: proceeds

Answer 14

1) if has perfected security interest in collateral automatically has perfected interest in proceeds for 20 days
2) after 20 days must take new action to perfect interest (amend financing statement) UNLESS
3) identifiable cash proceeds
4) security interest in collateral was perfected by filing a financing statement, security interest in proceeds would be filed in the same place as the financing statement, proceeds were not purchased with cash proceeds of the collateral (same office rule)