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Prerequisites for a Valid SI 9-203 Attachment and Enforceability of Security Interest (b) except as otherwise provided in subsection (c)

c) through (i), a security interest is enforceable against the debtor and third parties with respect to collateral only if: (1) value has been given [ 1-204 except as otherwise provided in Articles 3,4, and 5, a person gives

value for rights of the person acquires them: (1) in return for binding commitment to extend credit or for the extension of immediately available credit, whether or not a charge-back is provided for in the event of difficulties in collection; (2) as security for, or in total or partial satisfaction of a preexisting claim; (3) by accepted delivery under a preexisting contract for purchase; or (4) in return for any consideration sufficient to support a simple contract.]

(2) the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party [rights is not defined. Right typically exist if debtor has full ownership. If debtor has
partial rights, a SI only attaches to the rights he has.]

(3) one of the following conditions is met: (A) the debtor has authenticated a security agreement that provides a description of the collateral and, if the SI covers timber to be cut, a description of the land concerned; [9-102(a)(7) authenticate means to sign; or with present intent to adopt or accept a

record, to attach to or logically associate with the record an electronic sound, symbol, or process. 9-102(a)(74) security agreement means an agreement that creates or provides for a security interest. 9-102(a)(28) debtor means a person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor; (B) a seller of accounts, chattel paper, payment intangibles, or promissory notes; or (3) a cosignee. {a debtor is not always the secured party}. 9-108 Sufficiency of Description Except as otherwise provided in subsections (c), (d), and (e), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.]

(B) the collateral is not a certificated security is in the possession of the secured party under 9-313 pursuant to the debtors security agreement; [note 4 the phrase
debtors security agreement refers to the agreement to the secured partys possession for the purpose of creating a SI; it does not mean an authenticated SA. 9-313 specifies the types of collateral a secured party can possess: tangible negotiable documents, goods, instruments, money, or tangible chattel paper. A secured party satisfies this requirement only while it retains possession]

*** (f) The attachment of a SI in collateral gives the secured party the rights to proceeds provided by 9-315 and is also attachment of a SI in a supporting obligation for collateral. [9-315(a)(2) A SI attaches to any identifiable proceeds of collateral. 9-102(a)(64) Proceeds is defined expansively. Perfection of a SI 9-308 (a) Except as otherwise provided in this section and section 9-309, a SI is perfected if it has attached and all of the applicable requirements for perfection in sections 9-310 through 9316 have been satisfied. A security interest is perfected when it attaches if the applicable requirements are satisfied before the SI attaches. [the last sentence means that it doesnt matter

(C) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under 8-301 pursuant to the debtors security agreement (the most common certificated security is a stock certificate that specifies the owner of the stock) (D) the collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents, and the secured party has control under 7-106, 9-104,5,6,7 pursuant to the debtors security agreement

(b) * * * (c) [continuous perfection; perfection by different methods] A SI or agricultural lien is perfected continuously if it is originally perfected by one method under this article and is later perfected by another method under this article, without an intermediate period when it was unperfected. *** 9-310 When Filing Required to Perfect SI or AL; SIs and ALs to which filing provisions do not apply
(a)

which order you do things, you can attach and then perfect, or perfect and then attach.]

[General rule: perfection by filing] Except as otherwise provided in subsection (b), a financing statement must be filed to perfect all SIs and ALs. [9-102(a)(39) defines financing

statement means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement. 9-102(a)(70) defines record means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.]

(b) [Exceptions: filing not necessary] The filing of a financing statement is not necessary to perfect a SI: 1. That is perfected under 9-308(d), (e), (f), or (g); 2. That is perfected under 9-309 when it attaches; 3. In property subject to a statute, regulation, or treaty described in 9-311(a); 4. In goods in possession of a bailee which is perfected under 9-312(d)(1) or (2); 5. In certified securities, documents, goods, or instruments which is perfected without filing, control, or possession under 9-312(e), (f), or (g) 6. In collateral in the secured partys possession under 9-313 7. In certificated security which is perfected by delivery of the security certificate to the secured party under 9-313; 8. In deposit accounts, electronic chattel paper, electronic documents, investment property, or letter-of-credit rights which is perfected under control by 9-314; 9. In proceeds which is perfected under 9-315; or 10. That is perfected under 9-316. (c) [Assignment of perfected security interest.] If a secured party assigns a perfected security interest or AL, a filing under this article is not required to continue the perfected status of the SI against creditors of and transferees from the original debtor. Perfection by filing a financing statement creates three principle questions: (1) What is filed? (2) Where is it filed? (3) How long is the filing effective? (1) What is filed? 9-502 Contents of Financing Statement; Record of Mortgage as Financing Statement; Time of Filing Financing Statement (a) [Sufficiency of financing statement.] Subject to subsection (b), a financing statement is sufficient only if it: 1. Provides the name of the debtor; [ 9-503 describes the requirements concerning sufficiency of 2. Provides the named of the secured party or a representative of the secured party; and [ 9-503 covers secured party name as well. 9-506 Note 2 says Inasmuch as searches are not

the debtors name also take into account note 2 of this section. 9-506(b) and (c) discusses the effective of filing under an incorrect debtor name. 9-507(c) discusses a change in the debtors name.]

3.

conducted under the secured partys name, and no filing is needed to continue the perfected status of the SI after it is assigned, an error in the name of the secured party or its representative will not be seriously misleading.] Indicates the collateral covered by the financing statement. [ 9-504 says a financing statement sufficiently indicates the collateral that it covers if the financing statement provides: (1) a

description of the collateral pursuant to section 9-108; or (2) an indication that the financing statement covers all assets or all personal property. Remember though that all assets is insufficient for a security agreement. Note 2 on 9-108 says that the test of sufficiency of description is that the description make it possible to identify the collateral described.]

(b) [Real-property-related financing statements.] (c) [Record of mortgage as financing statements.] (d) [Filing before security agreement or attachment.] A financing statement may be filed before a SA is made or a SI otherwise attaches. 9-516 What Constitutes Filing; Effectiveness of Filing. (a) [What constitutes filing.] Except as otherwise provided in subsection (b), communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing. (b) [Refusal to accept record; filing does not occur.] Filing does not occur with respect to a record that a filing office refuses to accept because: 1. The record is not communicated by a method or medium of communication authorized by the filing office; 2. An amount equal to or greater than the applicable filing fee is not tendered; 3. The filing office is unable to index the record because: A. In the case of an initial financing statement, the record does not provide a name for the debtor; B. In the case of an amendment or information statement, the record: i. Does not identify the initial financing statement as required by 9-512 or 9-518 as applicable; or ii. identifies an initial financing statement whose effectiveness has lapsed under 9-515; C. In this case of an initial filing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtors surname; or D. In the case of a record filed in the filing office described in 9-501(a)(1), the record does not provide a sufficient description of the real property to which it relates; 4. In the case of an initial filing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party or record; 5. In the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not: A. Provide a mailing address for the debtor; or B. Indicate whether the name provided as the name of the debtor is the name of an individual or organization 6. In the case of an assignment reflected in an initial financing statement under 9514(a) or an amendment filed under 9-514(b), the record does not provide a name and mailing address for the assignee; or 7. In the case of a continuation statement, the record is not filed within the six-month period prescribed by 9-515(d) (c) [Rules applicable to subsection (b).] For purposes of subsection (b): 1. A record does not provide information if the filing office is unable to read or decipher the information; and 2. A record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by 9-512, 514, or 518, is an initial financing

statement. (d) [Refusal to accept record; record effective as filed record.] A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b), is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files. 9-520 Acceptance and Refusal to Accept Record. (a) [Mandatory refusal to accept record.] A filing office shall refuse to accept a record for filing for a reason set forth in 9-516(b) and may refuse to accept a record for filing only for a reason set forth in 9-516(b). (b) [Communication concerning refusal.] * * * (c) [When filed financing statement effective.] A filed financing statement satisfying 9-502(a) and (b) is effective, even if the filing office is require to refuse to accept it for filing under subsection (a). However 9-338 applies to a filed financing statement providing information described in 9-516(b)(5) which is incorrect at the time the financing statement is filed. (d) * * * 9-510 Effectiveness of Filed Record. (a) [Filed record effective if authorized.] A filed record is effective only to the extent that it was filed by a person that may file it under 9-509. (b) [Authorization by one secured party of record.] A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record. (c) [Continuation statement not timely filed.] A continuation statement that is not timely filed within the six-month period prescribed by 9-515(d) is ineffective. 9-509 Persons Entitled to File a Record (a) [Person entitled to file record.] A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if: 1. The debtor authorizes the filing in an authenticated record or pursuant to subsection (b) or (c); or 2. The person hold an AL that has become effective. (b) [Security agreement as authorization.] By authenticating or becoming bound as a debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment covering: 1. The collateral described in the security agreement; and 2. Property that becomes collateral under 9-315(a)(2), whether or not the security agreement expressly covers proceeds. (c) [Acquisition of collateral as authorization.] By acquiring collateral in which a SI or AL continues under 9-315(a)(1), a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under 9315(a)(2). (d) [Persons entitled to file certain amendments.] * * * (e) [Multiple secured parties of record.] * * * 2. Where is it filed? 9-501 Filing Office 3. How long is filing effective?

9-515 Duration and Effectiveness of Financing Statement; Effect of Lapsed Financing Statement. (a) [Five year effectiveness.] Except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing statement is effective for a period of five years after the date of filing. (b) * * * (c) * * * (d) [When continuation statement may be filed.] A continuation statement may be filed only within six months before the expiration of the five-year period specified in subsection (a) or the 30 year period specified in subsection (b), whichever is applicable. (e) [Effect of filing continuation statement.] * * * (f) * * * (g) * * * 4. Incorrect Information 9-506 Effects of Errors and Omissions. (a) [Minor errors and omissions.] A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading. [Note 2 says (a) is in line with the policy of this
Article to simplify formal requisites and filing requirements. It is designed to discourage the fanatical and impossibly refined reading of statutory requirements which courts have occasionally indulged in. 9-102(a)(39) defines financing statement meaning a record or records composed of an initial financing statement and any filed record relating to the initial financing statement. An amendment is a record related to the filing statement so this applies to amendments as well.]

(b) [Financing statement seriously misleading.] Except as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with 9-503(a) is seriously misleading. (c) [Financing statement not seriously misleading.] If a search of the records of the filing office under the debtors correct name, using the filing offices standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with 9-503(a), the name provided does not make the financing statement seriously misleading. [Note 2 says errors in the name of the secured party are not seriously misleading. 9-502 Note 2
says that The notice itself indicates merely that a person may have a security interest in the collateral indicated. Further inquiry from the parties concerned will be necessary to disclose the complete state of affairs.A financing statement is effective to encompass transactions under a SA not in existence and not contemplated at the time it was filed, if the indication of collateral in the financing statement is sufficient to cover the collateral concerned. Courts have held that a financing statement with a non-existing address was effective because the particular searcher knew where the debtor was located and was required to make further inquiry. So addresses are unlikely to be a problem but could be. As well, if an indication of collateral excludes a certain type that was meant to be included, this is most likely to be seriously misleading.

(d) [Debtors correct name.] For purpose of 9-508(b), the debtors correct name in subsection (c) means the correct name of the new debtor. 5. Debtor Correcting an Inaccurate or Wrongfully Filed Record - 9-518 6. Effect of Post-Filing Events of Effectiveness of Financing Statement 9-507 Effect of Certain Events on Effectiveness of Financing Statement (a) [Disposition] A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a SI or AL continues, even if the secured party knows of or consents to the disposition. [The transferee becomes a debtor under

the definition of debtor in 9-102(a)(28) because debtors include a person having an interest in the collateral regardless of whether the person is the obligor. 9-315(a) determines whether the SI continues in the collateral after disposition. (1) a SI or AL continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the SI or AL; and (2) a SI attaches to any identifiable proceeds of the collateral.]

(b) [Information becoming seriously misleading.] Except as otherwise provided in subsection (c)

and 9-508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under 9-506. (c) [Change in debtors name.] If the name that a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under 9-503(a) so that the financing statement becomes seriously misleading under 9-506: 1. The financing statement is effective to perfect a SI in collateral acquired by the debtor before, or within four months after, the filed financing statement becomes seriously misleading; and 2. The financing statement is not effective to perfect a SI in collateral acquired by the debtor more than four months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement which renders the financing statement misleading is filed within four months after the filed financing statement becomes seriously misleading. 9-508 Effectiveness of Financing Statement if New Debtor Becomes Bound by Security Agreement. 7. Amendment of a Financing Statement 9-512 Amendment of a Financing Statement Simple to file a UCC1Ad Form adopted in 9-521(b) 8. Termination Statement 9-513 Termination Statement 9-313- When Possession by or Delivery to Secured Party Perfects Security Interest Without Filing. (a) [Perfection by Possession or Delivery.] Except as otherwise provided in subsection (b), a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral. A secured party may perfect a SI in certificated securities by taking delivery of the certificated securities under 8-301. [Note 3 says possession is not defined and that a person can hold collateral as an agent for both the secured party and the debtor, but the debtor himself cannot qualify as an agent. (b) [Goods covered by certificate of title.] With respect to goods covered by certificate of title issued by this State, a secured party may perfect a SI in the goods by taking possession of the goods only in the circumstances described in 9-316(d). (c) [Collateral in possession of person other than debtor.] With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of the collateral in the possession of a person other than the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course of the debtors business when: 1. The person in possession authenticates a record acknowledging that it holds possession of the collateral for the secured partys benefit; or 2. The person takes possession of the collateral after having authenticated a record acknowledging that it will hold possession of the collateral for the secured partys benefit. (d) [Time of perfection by possession; continuation of perfection.] If perfection of a SI depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession. (e) [Time of perfection by delivery.] * * * (f) [Acknowledgment not required.] A person in possession of collateral is not required to

acknowledge that it holds possession for a secured partys benefit. (g) [Effectiveness of acknowledgement; no duties or confirmation.] If a person acknowledges that it holds possession for the secured partys benefit: * * * (h) [Secured partys delivery to person other than debtor.] * * * (i) Effect of delivery under subsection (h); no duties or confirmation] * * * 9-311 Perfection of Security Interests in Property Subject to Certain Statutes, Regulations, and Treaties. (a) [Security interest subject to other law.] Except as otherwise provided in subsection (d), the filing of a financing statement is not necessary or effective to perfect a SI in property subject to: [article 9 still governs attachment, priority and default] 1. A statute, regulation, or treaty of the US whose requirements for a SIs obtaining priority over the rights of a lien creditor with respect to the property preempt section 9-310(a); 2. [list any statute covering automobiles, trailers, mobile homes, boats, farm tractors, or the like, which provides for a SI to be indicated on a certificate of title as a condition or result of perfection, and any non-UCC central filing statute]; or 3. A statute of another jurisdiction which provides for a SI to be indicated on a certificate of title as a condition or result of the SIs obtaining priority over the rights of a lien creditor with respect to the property. (b) [Compliance with other law.] Compliance with the requirements of a statute, regulation, or treaty described in subsection (a) for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this article. Except as otherwise provided in subsection (d) and 9-313 and 9-316(d) and (e) for goods covered by a certificate of title, a SI in property subject to statute, regulation, or treaty described in subsection (a) may be perfected only by compliance with those requirements, and a SI so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral. (c) * * * (d) * * * 9-312 Perfection of SI in Chattel Paper, Deposit Accounts, Documents, Goods Covered by Documents, Instruments, Investment Property, Letter-of-Credit Rights, and Money; Perfection by Permissive Filing; Temporary Possession Without Filing of Transfer of Possession (a) [Perfection by filing permitted.] A SI in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing. (b) [Control or possession of certain collateral.] Except as otherwise provided in Section 9-315(c) and (d) for proceeds: 1. A security interest in a deposit account may be perfected only by control under 9-314; 2. And except as otherwise provided in 9-308(d), a SI in a letter-of-credit right may be perfected only by control under 9-314; and 3. A SI in money may be perfected only by the secured partys taking possession under 9313. (c) [Goods covered by negotiable document.] While goods are in the possession of a bailee that has issued a negotiable document covering the goods: * * * (d) [Goods covered by nonnegotiable document.] 9-314 Perfection by control. (a) [Perfection by control.] A SI in investment property, deposit accounts, letter-of-credit rights, electronic chattel paper, or electronic documents may be perfected by control of the collateral under Sections 7-106, 9-104, 105, 106, or 107. [9-102(a)(49) Investment property means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account. 8-106 governs control of a security (certificated or

uncertificated, or security account). 9-106 governs control of a commodity contract, commodity account, and a securities account. (b) [Specified collateral: time of perfection by control; continuation of perfection.] A SI in deposit accounts, electronic chattel paper, letter of credit rights, or electronic documents is perfected by control under Sections 7-106, 9-104, 105, or 107 when the secured party obtains and remains perfected by control only while the secured party retains control. (c) [Investment property: time of perfection by control; continuation of perfection.] A SI in investment property is perfected by control under 9-106 from the time the secured party obtains control and remains perfected by control until: [8-106 governs control of a security.] 1. The secured party does not have control; and 2. One of the following occurs A. If the collateral is a certificated security, the debtor has or acquires possession of the security certificate; [8-102(5) Certificated security means a security that is represented by a security certificate (usually stock) B. If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or C. If the collateral is a security entitlement, the debtor is or becomes the entitlement holder. 9-106. Control of Investment Property (a) [Control under Section 8-106.] A person has control of a certificated security, uncertificated security, or security entitlement as provided in 8-106. (b) [Control of commodity contract.] A secured party has control of a commodity contract if: 1. The secured party is the commodity intermediary with which the commodity contract is carried; or 2. The commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. (c) [Effect of control of securities account or commodity account.] A secured party having control of all security entitlements, or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account. 8-106. Control. (a) A purchaser has control of a certificated security in bearer form if the certificated security is delivered to the purchaser. [A bearer form certificated security exists when the terms of the certificate make
the security payable to the bearer of the certificate.1-102(b)(29) and (30) define purchase and purchaser to include acquiring rights by taking a SI. 8-301establishes requirements for delivery.] (b)

A purchaser has control of a certificated security in registered form if the certificated security is delivered to the purchaser and: [A registered form certificated security exists when the terms of the

certificate specify a person entitled to it (like a check) and its transfer can be registered on the books of the issuer. 8-301 establisher requirements for delivery.] 1. The certificate is indorsed to the purchaser or in blank by an effective endorsement; or [8-102(11) defines indorsement.]

2. The certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer. (c) A purchaser has control of an uncertificated security if: [an uncertificated security is a security not

represented by a certificate.] 1. The uncertificated security is delivered to the purchaser; or [8-301(b) describes delivery of an uncertificated security.] 2. The issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner. [8-106(g) says that an issuer cannot enter a control agreement with a secured party without the registered owners or entitlement holders consent.

Nonetheless, even then, the issuer does not have to agree.] (d)

A purchaser has control of a security entitlement if: [8-102(a)(17) defines a security entitlement as the
rights and property interest of an entitlement holder with respect to a financial asset (the e-trade brokerage).]

1. The purchaser becomes the entitlement holder; 2. The securities intermediary has agreed it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or 3. Another person has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on the behalf of the purchaser. (e) * * * (f) * * * (g) * * * 9-104. Control of a Deposit Account. (a) [Requirement for control.] A secured party has control of a deposit account if: 1. The secured party is the bank with which the deposit account is maintained; 2. The debtor, secured party, and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; or [9-342 authorizes
a bank to refuse to enter this agreement even if the customer requests it do so.]

3. The secured party becomes the banks customer with respect to the deposit account.

[You become a customer of the bank by having an account with the bank. Consequently, a secured party cannot become the banks customer as to the debtors deposit account unless the debtor agrees to allow the secured party to become a party to the account, either solely or jointly with the other account owners. A secured party with control of a deposit account is subject to the duties imposed by sections 9-207(c) and 9-208(b)(1) and (2).]

(b) [Debtors right to disposition.] A secured party that has satisfied (a) has control, even if the debtor retains the right to direct the disposition of funds from the account. 9-105. Control of Electronic Chattel Paper. 9-107. Letter-of-Credit Rights. Automatic Perfection 9-308. When SI or AL is Perfected; Continued Perfection *** (d) [Supporting obligation] Perfection of a SI in collateral also perfects a SI in a supporting obligation for the collateral. [9-102(a)(78) Supporting obligation means a letter-of-credit right or secondary

obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument, or an investment property.]

(e) [Lien securing payment.] Perfection of a SI in a right to payment or performance also perfects a SI in a SI, mortgage, or lien on person or real property securing that right. [Note 6.] (f) [Security entitlement carried in securities account.] Perfection of a SI in a securities account also perfects a SI in the securities entitlements carried in the securities account. (g) [Commodity contract carried in commodity account.] Perfection of a SI in a commodity account also perfects a SI in the commodity contracts carried in the commodity account. 9-309. Security Interest Perfected on Attachment. The following SIs are perfected when they attach: 1. A purchase-money SI in consumer goods, except as otherwise provided in 9-311(b) with respect to consumer goods that are subject to statute or treaty described in 9-311(a); [9-

102(a)(23) consumer goods are goods used or bought for use primarily for personal, family, or household purposes. 9-103 defines purchase money security interests. It is created when a seller of goods on credit takes a SI in the goods to secure all or part of the purchase price or when a lender makes a loan to enable the debtor to

purchase the goods and takes a SI in the goods to secure the loan.]

2. An assignment of accounts or payment intangibles which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignors outstanding accounts or payment intangibles. 3. A sale of a payment intangible; 4. A sale of a promissory note; 5. A SI created by the assignment of a health-care-insurance receivable to the provider of the health-care goods or services; 6. * * * * 9-312(e)-(g) Temporary Automatic Perfection in Certificated Securities, Negotiable Documents, Instruments, or Goods Possessed by a Bailee Issuing a Nonnegotiable Document 9-315. Secured Partys Rights on Disposition (a) [Disposition of Collateral: Continuation of SI or AL; proceeds.] Except as otherwise provided in this article and 2-403(2): 1. A SI or AL continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the SI or AL; and 2. A SI attaches to any identifiable proceeds of collateral .[9-203(f) says a SI that attaches to collateral
automatically gives the secured party a right to proceeds of collateral provided by 9-315.]

(b) [When commingled proceeds identifiable.] Proceeds that are commingled with other property are identifiable proceeds: 1. If the proceeds are goods, to the extent provided by 9-336; and 2. If the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this article with respect to commingled property of the type involved. (c) [Perfection of SI in proceeds.] A SI in proceeds is a perfected SI if the SI in the original collateral was perfected. (d) [Continuation of perfection.] A perfected SI in proceeds becomes unperfected on the 21st day after the SI attaches to the proceeds unless: 1. The following conditions are satisfied: [covers all proceeds except cash proceeds and proceeds acquired
with cash proceeds.]

A. A filed financing statement covers the original collateral; B. The proceeds are collateral in which a SI may be perfected by filing in the office in which the financing statement has been filed; AND C. The proceeds are not acquired with cash proceeds; 2. The proceeds are identifiable cash proceeds; or [9-102(a)(9) defines cash proceeds as money,
checks, deposit accounts or the like. Note 7 If the SI in the original collateral was perfected, a SI in identifiable cash proceeds will remain perfected indefinitely, regardless of whether the SI in the original collateral remains perfected. Indefinitely means forever. Money deposited into an account is still identifiable under the lowest intermediate balance rule.]

3.

The SI in the proceeds is perfected other than under subsection (c) when the SI attaches to the proceeds or within 20 days thereafter. [generally not automatic. Usually applicable to
proceeds acquired with cash proceeds.]

(e) [When perfected SI in proceeds becomes unperfected.] If a filed financing statement covers the original collateral, a SI in proceeds which remains perfected under subsection(d)(1) becomes unperfected at the later of: 1. When the effectiveness of the filed financing statement lapses under 9-515 or is terminated under 9-513; or 2. The 21st day after the SI attaches to the proceeds.

PRIORITY RULES 1. Perfected v. Unperfected 9-317. Interests That Take Priority over or Take Free of SI or AL. [Note 2: This section lists classes of
persons who take priority over, or take free of, an unperfected security interest. A security interest that has attached, but as to which a required perfection step has not been taken is unperfected.]

(a) [Conflicting security interests and rights of lien creditors.] A SI or AL is subordinate to the right of: 1. A person entitled to priority under 9-322; and [Section 9-322 governs the priority between
conflicting perfected security interests. Thus, this means that an unperfected SI is subordinate to a perfected one. Note that time of attachment doesnt matter.]

2. Except as otherwise provided in subsection (e), a person that becomes a lien creditor before the earlier of the time: [9-102(a)(52) defines a lien creditor means a creditor that has acquired a lien on the property involved by attachment, levy, or the like; an assignee for benefit of creditors from the time of assignment; a trustee in bankruptcy from the date of the filing of the petition; or a receiver in equity from the time of appointment.] A. The SI or AL is perfected; or B. One of the conditions specified in 9-203(b)(3) is met and a financing statement covering the collateral is filed. [9-203(b) talks about debtor authenticating a SA or takes control.] (b) [Buyers that receive delivery.] Except as otherwise provided in subsection (e), a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instrument, or certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the SI or AL and before it is perfected. (c) [Lessees that receive deliver.]* * * (d) [Licenses and buyers of certain collateral.]* * * (e) [Purchase-money security interest.] 9-322. Priorities among Conflicting Security Interests in and AL on Same Collateral. (a) [General Priority Rules.] Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules: 1. Conflicting perfected SI and AL rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the SI or AL is first perfected, if there is no period thereafter when there is neither filing nor perfection. [This requires determining the time when each conflicting SI become perfected, or, if the SI is perfected by filing, the time the financing statement was filed. The earlier of of those two times is the date of priority, if there is no gap in perfection. Then, compare priority dates of the conflicting SIs and the one with the earliest wins. See not 4] 2. A perfected SI or AL has priority over a conflicting unperfected SI or AL 3. The first SI or AL to attach or become effective has priority if conflicting SI and AL are unperfected. (b) [Time of perfection: proceeds and supporting obligations.] For the purposes of subsection (a)(1): 1. The time of filing or perfection as to a SI in collateral is also the time of filing or perfection as to a SI in proceedings; and [Proceedings is the same as collateral.] 2. The time of filing or perfection as to a SI in collateral supported by a supporting obligation is also the time of filing of perfection as to a SI in the supporting obligation. (c) [Special priority rules: proceeds and supporting obligations.] Except as otherwise provided in

subsection (f). a SI in collateral which qualifies for priority over a conflicting SI under Section 9327,328,329,330, or 331 also has priority over a conflicting SI in: [327(deposit accounts), 328(investment property), 329(letter-of-credit rights), 330(chattel paper and instruments), 331 (purchasers of instruments, documents, and securities under other articles 1. Any supporting obligation for the collateral; and 2. Proceeds of the collateral if: a. The SI in proceeds is perfected; b. The proceeds are cash proceeds or of the same type as the collateral; and c. In the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral. (d) [First-to-File priority rule for certain collateral.] Subject to subsection (e) and except as otherwise provided in subsection (f), if a SI in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is perfected by a method other than filing, conflicting perfected SI in proceeds of the collateral rank according to priority in time of filing. **** 9-338. Priority of SI or AL perfected by filing financing statement providing certain incorrect information. 9-333. Priority of Certain Liens Arising by Operation of Law. 2. Priority Rules for Security Interests in Specific Collateral. [Although 9-322 establishes a rule for determining priority between perfected SIs, it yields to priority rules that Article 9 adopts for SIs in specific types of collateral.] 9-330 Priority for Purchaser of Chattel Paper or Instruments [9-102(a)(11) defines chattel paper as means a
record or records that evidence both an obligation and a SI interest in specific goods, a SI in specific goods and license of software used in the goods, a lease of specific goods, or a lease of a specific goods and license of software used in the goods.* * * If a transaction is evidence by records that include instruments or a series of instruments, the group of records taken together constitutes chattel paper. 9102(a)(47) instrument means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a SA or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary endorsement or assignment. The terms does not include* * *. 9-102(b)(29)and(30) purchaser means a person that take by means of sale, lease, discount, negotiation, mortgage, pledge, lien, SI, issue or reissue, gift, or any other voluntary transaction creating an interest in property.]

(a) [Purchasers priority: SI claimed merely as proceeds.] A purchaser of chattel paper has priority over a SI in the chattel paper which is claimed merely as proceeds of inventory subject to a SI if: 1. In good faith and in the ordinary course of the purchasers business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under 9-105; and [9-102(a)(43) good faith means honest in fact and the observance of
reasonable commercial standards of fair dealing. Comment 6 of 9-330 says good faith does not require that purchaser search the UCC filing records. 9-102(a)(57) new value means (i)money, (ii)moneys worth in property, services, or new credit, or (iii) release by a transferee of an interest in property previously transferred to the transferee. The term does not include an obligation substituted for another obligation. Ordinary course of business means that the institution must buy the paper in the ordinary course of its business. This will likely be fulfilled by a financial institution. 9-105 discusses control of electronic chattel paper.]

2. The chattel paper does not indicate that it has been assigned to an assignee other than the purchaser.[Note 5: there is no condition on whether or not purchaser has knowledge of an
additional assignee.]

(b) [Purchasers priority: other SIs.] A purchaser of chattel paper has priority over a SI in the chattel paper which is claimed other than merely as proceeds of inventory subject to a SI if the purchaser gives new value and takes possession of the chattel paper or obtains control of the

chattel paper under 9-105 in good faith, in the ordinary course of the purchasers business, and without knowledge that the purchase violates the rights of the secured party. [Note 6: knowledge
means actual knowledge. Purchaser has knowledge if there is a legend. (see subsection (f)).]

(c) [Chattel paper purchasers priority in proceeds.] Except as otherwise provided in 9-327, a purchaser having priority in chattel paper under subsection (a) or (b) also has priority in proceeds of the chattel paper to the extent that: 1. 9-322 provides for priority in proceeds; or 2. The proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchasers SI in the proceeds is unperfected. (d) [Instrument purchasers priority.] Except as otherwise provided in 9-331(a), a purchaser of an instrument has priority over a SI in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party. [Instruments include checks or
promissory notes.]

(e) [Holder of purchase money SI gives new value.] For purposes of subsection (a) and (b), the holder of a purchase-money SI in inventory gives new value for chattel paper constituting proceeds of the inventory. (f) [Indication of assignment gives knowledge.] For purposes of subsections (b) and (d), if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party. 9-331 Priority Rights of Purchasers of Instruments, Documents, and Securities Under Other Articles; Priority of Interest in Financial * * * * 9-327 Priority of SIs in Deposit Account [9-102(a)(29 deposit account means a demand, time, savings,
passbook, or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument.]

The following rules govern priority among conflicting SIs in the same deposit account: (1) A SI held by a secured party having control of the deposit account under 9-104 has priority over a conflicting SI held by a secured party that does not have control. (2) Except as otherwise provided in paragraphs (3) and (4). SIs perfected by control under 9-314 rank according to priority in time of obtaining control. (3) Except as otherwise provided in paragraph (4), a SI held by the bank with which the deposit account is maintained has priority over a conflicting SI held by another secured party. (4) A SI perfected by control under 9-104(a)(3) has priority over a SI held by the bank with which the deposit account is maintained. 9-332 Transfer of Money; Transfer of Funds from Deposit Account. (a) [Transferee of money.] A transferee of money takes the money free of a SI unless the transferee acts in collusion with the debtor in violating the rights of the secured party. (b) [Transferee of funds from deposit account.] A transferee of funds from a deposit account takes the funds free of a SI in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party. [Note 2: transferee is not defined, but it is not the
debtor.]

9-328 Priority of SIs in Investment Property [9-102(a)(49) investment property means a security, whether
certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account. ]

- Priority is determined by method of perfection of the SI. **** 9-329 Priority of SIs in Letter-of-Credit Right. ****

9-334 Priority of SIs in Fixtures and Crops [fixture roughly means anything attached to real property that you

cannot remove in five minutes using a screwdriver. 9-102(a)(41) defines fixtures as goods that have become so related to particular real property that an interest in them arises under real property law.]

9-335 Accessions [accession means goods that are physically united with other goods in such a manner that the
identity of the original goods is not lost. E.g.: if a secured party has a security interest in an engine that is installed on a tractor, the engine is the accession and the tractor is the other goods. The accession and other goods unite to form the whole.]

9-336 Commingled Goods. [goods physically united with other goods in such a manner that their identity is lost in
the resulting product or mass. E.g.: flour that is baked into bread.]

9-337 Priority of SIs in Goods Covered by Certificate of Title. 9-324. Priority of Purchase-Money SIs [a purchase money security interest exists only in collateral consisting of
goods or software in goods. 9-103 purchase money collateral means goods or software that secures a purchase-money obligation incurred with respect to that collateral. Purchase money obligation means an obligation of an obligor incurred as all or part of the price of the collateral for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used. Note 3 says a purchase-money obligation includes expenses incurred in connection with acquiring rights in the collateral.]

(a) [General rule: purchase-money priority.] Except as otherwise provided in subsection (g), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in Section 9-327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter. [9-315 governs perfection of proceeds.] (b) [Inventory purchase-money priority.] Subject to subsection (c) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in Section 9-330, and, except as otherwise provided in Section 9-327, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if: (1) the purchase-money security interest is perfected when the debtor receives possession of the inventory; [secured party must file financing statement by time debtor receives possession. Next three
apply only if conflicting interest was perfected by filing.(see subsection (c)).]

(2) the purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest; (3) the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and (4) the notification states that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory. (c) [Holders of conflicting inventory security interests to be notified.] Subsections (b)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory: (1) if the purchase-money security interest is perfected by filing, before the date of the filing; or (2) if the purchase-money security interest is temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder. (d) [Livestock purchase-money priority.] * * * (e) [Holders of conflicting livestock security interests to be notified.] * * * (f) [Software purchase-money priority.] * * * (g) [Conflicting purchase-money security interests.]If more than one security interest qualifies for priority in the same collateral under subsection (a), (b), (d), or (f):

(1) a security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and (2) in all other cases, Section 9-322(a) applies to the qualifying security interests. 9-323 Future Advances. [when the secured party makes a loan to the debtor after the secured party gives the
initial value for attachment of the SI.]

3. Priority Rules When the Debtor Transfers Collateral Two questions arise when a debtor transfers the property that is the collateral for a security interest: 1. Does the SI continue in the collateral not withstanding the transfer? 2. If so, which interest has prioritythe secured party or transferee? The general rule is that a SI or AL survives the disposition of the collateral. 9-315. UCC That Allow a Transferee to Take the Collateral Free of the SI: 2-403(b), 9-320, and 9-321 9-320 Buyer of Goods. certain buyers can take collateral free of the SI. (buyers of consumer goods, buyers of oil, gas, and minerals, some other buyers) 9-321 licensees and lessees 2-403(2) entrusting of collateral The double debtor problem. 9-325 Priority of SI in Transferred Collateral. The business changes and the debtors identity changes. 9-326 Priority of SI created by New Debtor. DETERMINING THE JURISDICTION THAT GOVERNS THE SI 9-301 to 9-307