Perfection by Possession
Perfection by POSSESSION is the ONLY way to perfect a security interest in...
Money!
A secured party may perfect a security interest in specific intangible collateral by taking...
control of that collateral.
When another Statute (non-Article 9) governs how a security interest is perfected, you must...
follow the rules of THAT statute.
Some types of collateral will automatically perfect when a security interest attaches; with no filing, possession, or control required. The most common type is...
Purchase money security interest in consumer goods.
*(PMSI in consumer goods)
Security interests in tangible collateral may be perfected if the secured party takes...
Possession of the collateral!
Deposit Accounts, Investment Property, Electronic documents, and what other types of collateral may be perfected by control?
Electronic chattel paper and letter of credit rights.
Most likely to be tested: perfection under a...
state certificate of title statute.
*Applicable to cars, motorcycles, or other vehicles that have title.
Angela buys a dishwasher on credit from a department store for use in her home. She signs an agreement promising to pay over time and granting the store a security interest in the dishwasher. Store does not have to file a...
financing statement!
*Store is nevertheless perfected because the dishwasher is a consumer good and store's purchase money security interest is automatically perfected.
What are the (4) other methods of perfection?
1. Perfection by Possession;
2. Perfection by Control;
3. Perfection Under Alternate Perfection Systems;
4. Automatic Perfection.
Control is the exclusive method for perfecting a security interest in both deposit accounts and...
letter of rights.
Filing, possession of the car, or possession of the title are insufficient to perfect in most cars. You MUST perfect by...
Noting a security interest on that certificate of title.
*Exception when cars are inventory
If a certificate of title statute governs, then...
NO automatic perfection.
Money, Goods, Instruments, and what other types of collateral may be perfected by possession?
Negotiable documents and Tangible chattel paper.
If a lender files a financing statement to perfect a security interest in a deposit account or letter of credit right, the filing will be...
ineffective!
*Treat the lender as unperfected unless the lender obtains control of the collateral.
Exception to cars and perfecting by noting a security interest on the certificate of title: When cars are INVENTORY. They are sitting on the lot/If you purchase a new car, that car likely did not have title when purchased so there was no title on which to note the lien. What can you do here?
Perfection by filing!
Angela instead buys a car on credit, granting dealer a purchase money security interest in the car to secure her obligation to pay. This PMSI is not automatically perfected; the secured party must...
NOTE its interest on the certificate of title.
As soon as the secured party has possession, the interest is...
Perfected!
*The interest remains perfected as long as the secured party retains possession. (There are exceptions that temporarily allow possession even after it gives up possession)
Control can be obtained over a deposit account in one of (3) ways:
1. The secured party is the bank that has the deposit account - lender and bank are the same party.
2. The secured party, the bank, and the debtor agree in an authenticated record that the lender (secured party) has control over the deposit account.
What is the 3rd way?
The secured party can become the bank's customer with respect to the deposit account.
Filing, possession of the car, or possession of the title are insufficient to perfect in most cars. You MUST perfect by...
Noting!
Automatic perfection applies only to PMSI's in CONSUMER GOODS. A PMSI in inventory, equipment, or farm products is...
NOT automatically perfected.