Secured Transactions - Creation of a Security Interest
Terms in this set (9)
TECHNICAL VALIDITY OF THE FORMS
Need a security agreement and financing statement to create and perfect a security interest:
The security agreement
is the contract between the debtor & the creditor and grants the creditor a security interest in the collateral. Private between the parties, not filed. Where the collateral is in the possession of the secured party no written security agreement is required by law, but If The property is to leave the creditors' control you create a security interest through 9-203. Requirements for Attachment : (a) Authenticated by the debtor (signed) & (b) Describe the collateral. THE DESCRIPTION ON THE SECURITY AGREEMENT CONTROLS
The financing statement
is the notice that is filed that gives other creditors an awareness that the collateral is encumbered.
9-203(b) Requirements for attachment
(1) Creditor provide value to the debtor (by a loan, extend of credit); (2) Debtor have rights in the collateral; (3) Security agreement must: (a) Be signed by debtor [9-102(a)(7)] & (b)Describe the collateral
A good security agreement provides
(a) The parties; (b) Describes the collateral; (c) grants the creditor a SI in the collateral; (d)Specify the contractual understanding of the parties. (e) SI can be in any form
Financing Statement must contain
(a) Name of debtor; (b) Name of secured party ; (c) description of the collateral (d) signed by debtor. MUST HAVE ALL THESE
debtors can encumber not only their current property, but also future property under 9-204(a) A security agreement may create or provide for SI in after-acquired collateral.
Perfection of the Security Interest
(1) Money = Possession Only (2) Goods, negotiable instruments, tangible chattel paper = Filing & Possession; (3) Accounts, general intangibles, commercial tort claims = Filing only; (4) Investment Property, electronic chattel paper = Filing and or control; (5) Deposit accounts letter of credit rights = Control Only
Methods of Perfections 9-310
(i.)Physical Possession of the Collateral; (ii) Filling of a Financial Statement (The UCCs most common means of perfection); (iii) Control over the collateral; (iv) Some types of collateral the SI is automatically perfected without filing or possession: attachment is all that is required.