Security Interest
A creditor's right to use collateral to recover a debt.
Attachment
1. Secured Party (creditor) gives value
2. Borrower (debtor) has rights in the collateral
3. A security agreement
Security Agreement
Requirements:
ID Parties
Need to be in writing (for our purposes)
Describe the collateral with some level of precision
"after acquired property" - like inventory in a store. Can still be taken under a
SA
Terms of the security interest
, Authencated by debtor (not necessarily a sig but usually)
D.O.T.S.
Attachment is only effective against the debtor, but not 3rd parties (OTS)...we
need perfection, think (DOTS)
Debtor
Other Creditors
Trustees in Bankruptcies
Subsequent Purchasers
Perfection
= attachment plus one of the following
1. Filing of financing statement
2. Possession of collateral by the secured party
3. Automatic perfection based on attachment (in ceratin circumstances)
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