Perfection of Security Interest

Question 2

Methods of Perfection

Answer 2

Under Article 9, there are four ways a secured party can perfect a security interest:

i) Filing of a financing statement;

ii) Possession of the collateral;

iii) Control over the collateral; and

iv) Automatic perfection (either temporary or permanent).

Question 3

Filing

Answer 3

A security interest in any collateral, except a deposit account, money, or letter-of-credit rights that are not a supporting obligation, may be perfected by filing a financing statement.

Question 4

Possession

Answer 4

A secured party may perfect a security interest in most collateral by taking possession of the collateral. As a rule, this security interest remains perfected only while the secured party retains possession

Question 5

Control

Answer 5

A secured party may perfect a security interest in specific collateral by taking control of the collateral. The security interest remains perfected only while the secured party retains control

Question 6

Automatic Perfection

Answer 6

Under some circumstances, a security interest is automatically perfected upon attachment. This perfection may extend indefinitely or may be subject to a time limitation, in which case it is referred to as “temporary perfection.”

Question 7

Timing of Perfection

Answer 7

A security interest is perfected upon (1) attachment of that interest and (2) compliance with one of the methods of perfection.