Part 11- Appendix B: Uniform Commercial Code, Note 22

Perfection by Possession or Control § 9-313: Perfection by Possession or Delivery    When Perfection by Possession Applies: o Collateral types include negotiable documents, goods, instruments, money, and tangible chattel paper. o Certificated securities can be perfected by delivery. Third-Party Possession: o A secured party may perfect a security interest through a third party who acknowledges possession on behalf of the secured party. o Perfection begins when possession is taken and continues as long as possession is retained. Temporary Perfection: o For certain goods or documents made available to the debtor (e.g., for sale, processing, or presentation), perfection lasts for 20 days. § 9-314: Perfection by Control   Types of Collateral: o Investment property, deposit accounts, letter-of-credit rights, and electronic chattel paper. Conditions for Control: o Control occurs when the secured party has exclusive authority over the collateral (e.g., account instructions, electronic records). o Perfection lasts as long as control is maintained. Rights in Collateral and Proceeds § 9-315: Secured Party’s Rights After Disposition of Collateral    Continuation of Security Interest: o A security interest remains in collateral even after its sale, lease, or exchange unless the secured party authorizes the disposition free of the interest. Proceeds: o A security interest attaches to identifiable proceeds of the collateral. o Commingled proceeds can be traced using lawful methods, such as equitable principles. Perfection of Proceeds: o Proceeds remain perfected if:  The original collateral’s security interest was perfected.  They consist of identifiable cash proceeds.  A financing statement covers them. Change in Governing Law § 9-316: Continued Perfection Following Jurisdictional Changes   General Rule: o A security interest perfected under one jurisdiction's law remains effective for four months after a debtor or collateral relocates to another jurisdiction. o If re-perfected under the new jurisdiction's law within this period, perfection continues uninterrupted. Possessory Interests: o A possessory interest remains perfected if collateral moves across jurisdictions, provided the secured party maintains possession. Priority Rules § 9-317: Subordinate Interests and Buyers’ Rights   Priority of Perfected Interests: o Perfected security interests take precedence over lien creditors or unperfected interests. o Buyers or lessees of goods without knowledge of an unperfected interest take free of it. Purchase-Money Security Interests (PMSIs): o PMSIs take priority over other interests if perfected by filing within 20 days of the debtor’s receipt of the collateral. § 9-318: Rights in Sold Accounts or Chattel Paper   No Retained Interest by Seller: o A seller of accounts or chattel paper retains no legal or equitable interest after the sale. Unperfected Buyer Risks: o If a buyer’s interest in sold accounts or chattel paper is unperfected, creditors of the seller may have claims. § 9-319: Consignee’s Rights   Consignee’s Title: o A consignee is deemed to hold rights and title equivalent to the consignor for determining creditors’ claims. Other Law: o Local laws may impact creditors’ rights regarding goods in a consignee’s possession. Buyers and Licensees in the Ordinary Course § 9-320: Buyers of Goods   Buyers in the Ordinary Course: o Buyers take goods free of security interests created by the seller if purchased in good faith, even if the interest is perfected. Consumer Goods: o Buyers of consumer goods for personal use take free of a perfected security interest unless a financing statement has been filed. § 9-321: Licensees and Lessees   Licensees of General Intangibles: o A licensee in the ordinary course of business takes rights free of security interests if acting in good faith. Lessees of Goods: o Lessees who give value and take delivery without knowledge of a security interest also take free of it. Key Takeaways 1. Perfection: o Possession or control ensures secure perfection for certain types of collateral. o Temporary perfection provisions apply to enable business operations involving goods or documents. 2. Proceeds: o Proceeds remain subject to security interests, with specific rules for identifying and perfecting interests in mixed or commingled funds. 3. Jurisdictional Changes: o Relocation requires action within specific timeframes to maintain continuous perfection. 4. Priority and Buyers’ Rights: o Buyers and lessees acting in good faith generally take precedence over unperfected or non-compliant security interests. 5. Special Rules for Consumer Goods and Consignment: o Consumer buyers and consignees may gain stronger protections under specific provisions.