Perfection of Security Interest

Question 1

Perfection

Answer 1

Acquiring maximum priority in the collateral over other third parties who have an interest.

Question 2

Methods of Perfection

Answer 2

1) filing
2) taking possession of the collateral
3) control
4) automatic perfection
5) temporary perfection

Question 3

Time of Perfection

Answer 3

SI not enforceable until attachment.

IF perfection before attachment then perfection will occur simultaneously

Question 4

1) Perfection by filing

Answer 4

filing a financing statement including

1) debtors name + address
2) secured party’s name + address
3) indication of the collateral
4) IF real property then a description of the real property & name of the record owner

Does not apply to deposit accounts or money

Question 5

Effect of error in debtors name (Filing)

Answer 5

minor errors will not invalidate

seriously misleading errors will

Question 6

Debtor name change (Filing)

Answer 6

if name change leads to seriously misleading error than only collateral acquired Before the name change and 4 months after will be subject to

Question 7

Effect of missing address (Filing)

Answer 7

still effective

Question 8

Indication of collateral (Filing)

Answer 8

can be broad or specific and even “all assets”

Question 9

Authorizing Filing of Financial Statement (Filing)

Answer 9

Debtor must authorize it in an authenticated record. either before or after filing. Either by authenticating the financing statement or a security agreement covering the same collateral as the financing statement

Question 10

Place of filing

Answer 10

Generally must be centrally filed

Except when timber, minerals, or fixtures, then locally

Question 11

Period for which filing is effective

Answer 11

5 years. can file a continuation within 6 months of end to extent 5 more years

Question 12

2) Perfection by Taking Possession (Pledge)

Answer 12

Taking possession can simultaneously satisfy attachment and perfection, if possession is the last thing needed for attachment

Question 13

Collateral that cannot be pledged (Possession)

Answer 13

general intangibles, non-consumer deposit accounts, nonnegotiable documents, electronic chattel paper, certificate of title goods

Question 14

Time of Perfection (Possession)

Answer 14

Perfected at the moment of possession and continues as long as possession is retained.
If with bailee then once bailee authenticates a record acknowledging it is holding

Question 15

3) Perfection by Control

Answer 15

Investment property, non-consumer deposit accounts, and electronic chattel can be perfected by control

Question 16

4) Automatic Perfection - PSMI in consumer goods

Answer 16

PMSI on consumer goods is perfected as soon as it attaches

Question 17

Limitations on Automatic Perfection

Answer 17

Cars - need notation on the vehicles title

Question 18

5) Temporary Perfection

Answer 18

1) Twenty-Day period for Proceeds
2) twenty-day period for instruments, negotiable documents, and certificated securities
3) interstate shipments

Question 19

Continuation of Perfection of Interest in Proceeds

Answer 19

Will continue beyond 20 days if

1) perfected by filing a finance statement and the proceeds would be filed in the same place (same office rule)
2) proceeds are identifiable cash proceeds (cash proceeds rule
3) perfected by other method in the 20 day window